That exceeded a forecast of $1.73bn in a company-provided survey of analysts and compared to $2.81bn in the second quarter of 2019.
The drop will not come as a surprise to Investors after BP indicated earlier this month that it would take a non-cash charge of $2bn to $3bn in the quarter as it gets closer to disposing of assets worth $10bn by the end of 2019, a year ahead of schedule.
The $2.6bn charge nevertheless pushed the firm to its first quarterly net loss, of $700mn, since the second quarter of 2016.
Although profit came under pressure, cashflow, seen as the main measure of BP’s underlying performance, was unchanged from a year earlier at $6.1bn. Oil and gas production, excluding its share from its 19.75% stake in Russia’s Rosneft, was down 2.5% from a year earlier at 2.568mn barrels of oil equivalent per day as a result of maintenance at several high-margin fields and a two-week disruption to production in the US Gulf of Mexico from Hurricane Barry.
A 17% drop in oil prices in the third quarter from a year earlier also weighed heavily on profits of other energy companies including Italy’s Eni and Norway’s Equinor. “BP delivered strong operating cash flow and underlying earnings in a quarter that saw lower oil and gas prices and significant hurricane impacts,” chief executive officer Bob Dudley said in a statement.
Pfizer
Pfizer Inc reported a higher-than-expected third-quarter profit yesterday on increased sales of cancer drug Ibrance and a strong launch of new heart medicine Vyndaqel, prompting the largest US drugmaker to lift its earnings forecast for the year.
Pfizer raised its 2019 adjusted earnings forecast to $2.94 to $3.00 per share from its prior estimate of $2.76 to $2.86, and its shares rose 3.6%. Analysts on average were expecting $2.82, according to Refinitiv IBES.
Pfizer chief executive Albert Bourla, on a conference call, also raised the 2019 revenue growth forecast for the company’s Upjohn unit in China to “mid-to-high single digits” from an earlier view of low-to-mid single digits, even as it prepares to spin off that business. The New York-based drugmaker announced in July it would separate the Upjohn unit, which sells off-patent branded drugs, and combine it with generic drugmaker Mylan NV, allowing Pfizer to focus on its more profitable newer medicines.
Mylan will be able to leverage a strong base in Asia through Upjohn, whose headquarters Pfizer had shifted to China, a prime market for the older branded drugs with high name recognition such as Lipitor.
Bourla said he envisions Pfizer as a “smaller, science-based company” following close of the Mylan deal, expected next year.
While sales of breast cancer drug Ibrance rose 25% to $1.28bn rheumatoid arthritis drug Xeljanz had a sales jump of nearly 39% to $599mn, the performance of Vyndaqel out of the gate was an eye opener. Total revenue fell about 5% to $12.68bn as sales of pain treatment Lyrica, which now faces generic competition in the United States, fell by more than half to $527mn.
Stora Enso
Finnish paper firm Stora Enso said geopolitical uncertainties would dampen demand and prices in the fourth quarter, pushing its shares and those of its European peers lower yesterday.
The pulp, paper and packaging board maker — one of the largest globally — warned that demand growth is forecast to slow across its businesses and the decline in demand for paper would continue in Europe.
While the shift to online reading has reduced the need for newspaper and magazine paper for years, growth in e-commerce has increased the usage of shipping boxes and packaging materials.
But research firm Fastmarkets said that boost was beginning to fade with the biggest online companies focusing on using less packaging after a rise in corrugated and containerboard prices in the last few years.
Stora Enso forecast an adjusted operating profit of €100mn-€180mn in the fourth quarter as prices for pulp and paper weaken, missing all analyst expectations which ranged from €182mn to €315mn, according to Refinitiv data.
“Deteriorating trading conditions caused by geopolitical uncertainties related to trade wars and a possible hard Brexit are expected to impact Stora Enso negatively,” said chief executive Karl-Henrik Sundstrom.
Stora Enso reported a sharp drop in profit in the three months to September, with adjusted operating profit in the third quarter falling 35% from a year earlier to €231mn ($256mn) and missing the average forecast of €236mn in a Refinitiv analyst poll.
Air Canada
Air Canada yesterday posted record operating revenues and strong earnings, but missed forecasts, which it blamed on the grounding of Boeing’s 737 MAX jetliners over the past eight months.
The nation’s flagship carrier was forced to idle its 36 MAX aircraft in March following an Ethiopian Airlines crash that killed 157, and after a MAX operated by Indonesian carrier Lion Air plunged into the Java Sea months earlier, killing all 189 aboard.
Boeing’s entire global fleet of almost 400 MAX planes has been out of service ever since. Air Canada said in its third quarter report that it does not expect to return its MAX planes into service until at least mid-February. But it also declined to adjust its long-term financial targets, saying it remains hopeful that the grounding of the MAX planes will soon be lifted.
In a statement, Air Canada president Calin Rovinescu said the MAX grounding has caused “serious disruption to our operations and to our cost structure.”
“The removal of a scheduled 36 737 MAX aircraft during our peak summer season exacted a toll from a financial, route, product, and human resources perspective and the grounding is preventing us from realising our full potential,” he said.
In the third quarter, Air Canada posted revenues of Can$5.5bn ($4.2bn), up from Can$5.4bn a year earlier.
Its net profit of Can$636mn ($487mn) or Can$2.27 ($1.74) per share in the three months ended September 30, however, was down from Can$702mn and missed analysts’ expectations of Can$2.35 per share.
Orsted
Lower output forecasts and project returns from Orsted eclipsed a jump in third-quarter profit, sending shares in the world’s largest offshore wind energy developer down as much as 10% yesterday. Upgraded modelling of expected energy production prompted the lower output forecasts, it said.
“Our current production forecasts underestimate the negative impact of two effects across our asset portfolio, i.e. the blockage effect and the wake effect,” the company said.
Growth in average core earnings from operating wind farms through 2023 will remain unchanged at around 20%, however its target for “unlevered lifecycle IRR”, its returns on seven wind farm projects, would be reduced to 7.0-8.0% from 7.5-8.5%, it said.
It lowered its projected annual production from 10 European wind farm projects to 48% of maximum capacity from an earlier 48-50%.
“Investors have grown accustomed to (and perhaps therefore taken for granted), that there could come further upgrades to guidance. So the downgrade hits extra hard,” Nordnet analyst Per Hansen said.
“Not to talk it down, but for me this is not a major setback for the industry at all,” chief financial officer Wiinholt said in a conference call with media. “The industry will still grow, we are in a way more competitive than gas and coal,” she added. It reported an 85% jump in EBITDA to 4.12bn Danish crowns ($611.45mn), topping the 3.27bn forecast by seven analysts in a poll provided by the company.
It maintained its outlook for the year — a target it raised in September with earnings before interest, tax, depreciation and amortisation (EBITDA) seen at 16-17bn Danish crowns, up from a previous 15.5-16.5bn.
Mastercard
Mastercard Inc yesterday beat Wall Street estimates for quarterly profit as customers shrugged off fears of an economic slowdown and spent more with their credit and debit cards, boosting fees for the world’s second-largest payment processor.
The company’s gross dollar volume, the dollar value of transactions processed, rose 12.4% to $1.65tn in the third quarter.
Around 28.2bn transactions were processed, up about 22% from a year earlier.
The gain was led by a near 12% rise in the United States and a 31.4% jump in Europe.
Larger rival Visa Inc and credit card issuer American Express Co had also reported better-than-expected quarterly earnings, benefiting from a rise in consumer spending.
Cross-border volumes at Mastercard jumped 17% from a year earlier. The company’s net income rose to $2.11bn, or $2.07 per share, in the third quarter ended September 30 from $1.9bn, or $1.82 per share, a year earlier. Excluding one-time items, the company earned $2.15 per share, while analysts had expected a profit of $2.01 per share, according to IBES data from Refinitiv. Shares of the company were up 1.6% at $280.3 in pre-market trading.
Merck
Merck & Co Inc blew past Wall Street expectations for third-quarter profit yesterday, as sales of its blockbuster immunotherapy Keytruda crossed the $3-billion mark for the first time in a quarter and beat lofty estimates.
Shares of the Kenilworth, New Jersey-based company rose 1.4% to $82.2 in early trading after the drugmaker raised its 2019 profit forecast.
Keytruda has driven much of Merck’s recent growth, given its position as a mainstay treatment for newly diagnosed patients with advanced lung cancer, the most lucrative oncology market.
Besides lung cancer, Keytruda’s strength was also powered by continued use of the drug in patients with certain types of kidney cancer, Merck said.
Sales of the therapy rose 62.5% to $3.07bn in the third quarter, sweeping past estimates of $2.88bn, according to five brokerages polled by Refinitiv. Profit was also boosted by the company’s line of vaccines for diseases, including chickenpox and measles, that brought in revenue of $2.5bn, an increase of 17%. Higher demand in China, along with higher prices in the United States, boosted sales of Gardasil, the company’s vaccine to prevent cancer caused by human papillomavirus.
Gardasil sales rose 26% to $1.32bn and beat estimates of $994.3mn. Total sales rose 14.9% to $12.40bn, surging past estimates of $11.64bn. Sales of medicines in China grew by 90%, excluding the impact of a stronger dollar, helping overall revenue grow nearly 15% to $12.40bn.
Analysts had expected quarterly sales of $11.64bn.
Net income fell to $1.90bn, or 74 cents per share, in the third quarter from $1.95bn, or 73 cents per share, a year earlier.
Nomura Holdings
Japan’s Nomura Holdings posted its strongest quarterly profit in more than 17 years, lifted by the sale of a stake in an affiliate as well as trading gains and improved performance at its wholesale division. Nomura, the country’s biggest brokerage and investment bank, has been in heavy cost-cutting mode after a bleak performance at its wholesale business led to the company’s first annual loss in a decade last year.
Pretax income for the wholesale business, which serves corporations and institutional investors, has since rebounded sharply.
It registered nearly fourfold year-on-year growth to ¥18.9bn ($173.5mn) in its second quarter, helped by equities trading and investment banking.
This helped to lift Nomura to post a net profit from a loss in the same period last year despite a 57% plunge in retail investment pretax profit. Retail operations in the three months to September 30 were hurt by worsening investor sentiment against the backdrop of the US-China trade war.
Chief financial officer Takumi Kitamura struck a cautiously optimistic tone at a post-earnings briefing yesterday.
“While our bottom line was very much buoyed by the sale of shares in Nomura Research Institute, the main business didn’t do too badly in a difficult market environment,” he said.
The company posted a profit of ¥138.6bn in the quarter, against a loss of ¥11.2bn a year earlier, helped by a one-off profit of ¥73.3bn on the sale of the 13.5% stake in Nomura Research Institute.
This was the company’s third straight quarter of overall net profit and a second consecutive quarter of pretax profit for its international business.
Vattenfall
Swedish state-owned energy group Vattenfall reported yesterday a rise in third-quarter operating profit, driven mainly by its hydro and nuclear power businesses and protected by hedging of electricity prices against a fall in spot prices.
Chief executive Magnus Hall said that in the first nine months of the year, Vattenfall for the first time in a very long time hit its targets for return on capital employed and debt.
Operating profit before items affecting comparability at the electricity and heat producer and distributor rose to 3.6bn crowns ($369mn), from 2.1bn crowns a year earlier, on a 12% increase in sales to 36bn crowns.
“We saw positive development in the underlying operations with important contributions from higher achieved prices and a growing wind power portfolio,” Hall said. Vattenfall’s core markets are Sweden, Germany, the Netherlands, Denmark and Britain.
Hydro and nuclear power accounted for the bulk of third-quarter profit growth, on the back of higher prices, Hall told Reuters.
“Net sales increased mainly owing to an improved hedge result.
Lower spot prices in the Nordic countries and lower internal sales of CO2 emission allowances had a countering effect,” the group said on its division that includes hydro and nuclear power operations. Vattenfall sees offshore wind power as a key growth area.
Last year it generated 42% of electricity from nuclear power, 27% from hydro power, 24% from coal fired power and 6% from wind power. In the third quarter, generation from wind grew to 2.2 terawatt hours (TWh) from 1.5, while total generation grew to 29 TWh from 28.
Operating profit including items affecting comparability — in the third quarter of 2019 mainly gains from the sale of a district heating operation in Germany and of production rights for German nuclear power — rose to 8.7bn crowns from 3.7bn.
Plus500
Online trading platform Plus500 reported a jump in third-quarter revenue on Tuesday, as more customers signed up to trade in a volatile period for financial markets driven by the US-China trade spat and Brexit.
The company’s revenue rose 10% to $110.6mn in the three months ended September 30 from a year earlier, while the number of new customers surged to 24,359 from 20,684.
“The period benefited from geopolitical events in the quarter, with this heightened activity reflected in trading patterns,” said Plus500, adding that it was on track for annual targets.
The strong update pointed to a recovery for the company, which saw profits tank last year when regulators in Europe and Britain cracked down on trading of some high-risk financial products.
As amateur clients were restricted from trading in contracts for differences (CFDs), Plus500 saw a slowdown in active customer growth in 2018 after rampant growth for at least five years.
Plus500 offers a platform for investors to trade CFDs, which expose investors to price movements in securities without owning the underlying asset.
Over the last few months, the equity markets have seen increased volatility amid major headlines related to tariffs dispute between the United States and China as well as the European Union agreeing to a Brexit deal with the UK. Plus500’s peer IG Group had last month said it added more clients and saw improved trading activity in August.
Hunting
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British oilfield services firm Hunting Plc warned yesterday that annual core profit would be at the lower end of market expectations as it grapples with a slowdown in the US onshore drilling market, sending its shares down as much as 7%. Without giving numbers, Hunting said profit for the third-quarter had declined compared with the two preceding quarters while quarterly revenue and operating profit at its biggest unit Hunting Titan also fell.
It reported underlying earnings before interest, tax, depreciation and amortisation in the first quarter of about $35mn and annual profit of $142.3mn in 2018.
“Management continue to anticipate a slowing in drilling across North America in Q4, which will further impact the results for the second half of the year,” said the company, which services oil producers like Chevron and Anadarko as well as bigger service providers Halliburton and Schlumberger. With global oil prices stuck around $60 a barrel, cuts in spending by US producers have hit the big services firms hard, with Schlumberger last week taking an almost $13bn charge as its new chief sought to reboot the business.
Alphabet
Google parent Alphabet on Monday reported a sharp drop in profit over the past quarter as it ramped up spending for a wide array of new gadgets and services. Profit dipped 23% from a year ago to $7.1bn as revenue grew 20% to $40.5bn for the California tech giant and internet search leader.
Shares in Alphabet fell 1.1% in after-hours trade on the weaker-than-expected profits.
Digital advertising on Google continued to be the primary money-maker for Alphabet — accounting for some $34bn in revenue.
Industry tracker eMarketer forecast that Google will generate $105.33bn in net digital ad revenue this year, taking a 32% share of the worldwide digital ad market. “Alphabet continues to show strong growth in ad revenues, even as CPCs (costs per click) were down again year-over-year, showing strong continued growth in impressions and paid clicks,” said eMarketer principal analyst Nicole Perrin.
The analyst added that the cost of acquiring internet traffic appeared by be stabilizing, which is a good sign for Alphabet profitability.
Meanwhile, the earnings report showed that revenue from other sources including cloud computing climbed more than 40% to $6.4bn. Alphabet has been pumping money into research and development for artificial intelligence, cloud infrastructure, and launching new Pixels smartphones and other hardware.
The company, which faces antitrust reviews over its dominance of internet search on both sides of the Atlantic, has been seeking to diversify its business with more hardware and new services.
Losses on “other bets” such as self-driving cars and delivering internet services from high-altitude balloons swelled to $941mn in the quarter, compared to a $727mn loss in the same period a year earlier.
Google chief Sundar Pichai said in a statement: “I am extremely pleased with the progress we made across the board in the third quarter, from our recent advancements in search and quantum computing to our strong revenue growth driven by mobile search, YouTube and Cloud.”
The results were impacted by a one-time charge of $549mn linked to a tax settlement with French authorities, according to Porat. Alphabet said it set aside nearly $1.6bn as a provision for income taxes, up from $891mn last year, and that its effective tax rate would be 18%, double that from a year earlier. Capital expenditures included a billion dollars spent to buy buildings in the Silicon Valley city of Sunnyvale and a pair of buildings in Amazon’s home city of Seattle, according to Porat. Major areas of expense in the quarter were associated with data centres to support the heavy demand for cloud computing power and costs of content for YouTube subscription streaming services.
BAWAG Group
Austrian bank BAWAG Group reported a higher-than-expected increase in its third-quarter pre-tax profit yesterday, helped by acquisitions and retail partnerships.
The former trade union bank, which is backed by US private equity group Cerberus, said profit before tax reached €164mn ($182mn) in the three months ended September, and net interest income was at €220mn.
Analysts on average had forecast third-quarter pre-tax profit to come in at €154mn and a net interest income of €224mn, according to Refinitiv Eikon data.
The lender with 2.5mn customers has been focusing on bolt-on takeovers and retail-partnerships that strengthen its consumer lending business in the German-speaking region to drive growth.
“While the market environment for European financials continues to be challenging, the fundamentals of the bank remain strong,” said chief executive Anas Abuzaakouk. “We are on track to deliver on all of our targets in 2019 as we continue to adapt to the changing operating environment.”
The group expects to reach a pre-tax profit of more than €600mn this year, and of more than €640mn next year.
BAWAG launched a €400mn buyback programme last week, offering investors to purchase up to 10.9% of its shares for €36.84 per share.
General Motors
General Motors Co yesterday posted a stronger-than-expected quarterly profit on robust US demand for its lucrative pickup trucks and SUVs, offsetting the $3bn hit from a US labour strike that led it to slash its earnings forecast.
Wall Street analysts have viewed the strike costs as a trade-off for three US plant closures agreed to with the union that will boost GM’s profitability. Shares in GM were up 4.3% yesterday.
“The underlying business was strong this quarter,” chief financial officer Dhivya Suryadevara told reporters at GM’s headquarters, describing the strike as a “one-time impact.”
The Detroit-based automaker reported a 6% increase in third-quarter US sales, led by its highly-profitable full-size pickup trucks, SUVs and crossovers that helped it race to a strong profit margin of almost 11% in North America. It’s that underlying business that has investors excited.
“Frankly, I’m as emboldened as ever,” said Chris Susanin, co-portfolio manager at Levin Easterly Partners, which owned more than 4mn GM shares at the end of June. “I don’t see why this stock isn’t north of $100 (a share) in a couple years.”
Virtually all of the pre-tax profits came from its North American business and its captive finance arm.
In China, where GM reported a 17.5% drop in third-quarter sales, the company’s equity income fell 40% to $300mn.
It was the fifth straight quarterly sales decline for GM in China, the world’s largest auto market, where the industry is expecting a second consecutive annual sales drop. The China Association of Automobile Manufacturers expects a 5% decline in industry sales in 2019, then contracting or growing slowly over the next three years.
The No 1 US automaker said the full-year impact of the strike would be around $2 per share, or around $3bn.
GM said it now expected full-year adjusted earnings per share between $4.50 to $4.80, down from its previous forecast of $6.50 to $7 per share.
The company said it now expected full-year adjusted automotive free cash flow in a range from zero to $1bn, down from its previous forecast of $4.5bn to $6bn. GM’s adjusted automotive free cash flow stood at $2.4bn at the end of the third quarter.