Credit Suisse posts surprise Q4 loss on charges and risky assets

Dougan: ‘disappointing performance’

Credit Suisse posted a surprise fourth-quarter net loss as its investment bank struggled and it took almost 1bn Swiss francs ($1.1bn) of charges as it slashes costs and risky assets to meet stiffer capital rules.“Our performance for the fourth quarter 2011 was disappointing,” said chief executive Brady Dougan yesterday.“It reflects both the adverse market conditions during the period and the impact of the measures we have taken to swiftly adapt our business to the evolving market and regulatory requirements.”The bank said the charge of 981mn francs was due to the accelerated implementation of a risk reduction plan, steps to exit unprofitable businesses and expenses due to the rapid execution of cost cutting programmes.The charge pushed Credit Suisse into a quarterly net loss of 637mn francs – its first quarterly loss in three years - missing average analyst expectations for a profit of 430mn. Credit Suisse also proposed nearly halving its dividend to 0.75 Swiss francs per share, from 1.30 francs in 2010.Stripping out the charge, analysts said underlying performance was still disappointing, particularly the slump in revenues from fixed income sales and trading in the investment bank as well as lower profitability in private banking.“On an underlying basis the investment bank reported a poor result with over a 300mn franc loss, higher than for UBS or Deutsche Bank. We need to see whether the downsized strategy will work in the future,” said Kepler analyst Dirk Becker.Other investment banks like UBS, Goldman Sachs, JPMorgan and Deutsche Bank have also reported a poor foruth quarter as clients stopped doing deals and pulled back from markets due to the eurozone debt crisis.

CiscoNetwork equipment maker Cisco Systems Inc promised further revenue growth after its second quarter results beat estimates, thanks to a restructuring, leading to a dividend increase.The company, a sector bellwether because of its global scale and diverse client base, forecast 5 to 7% growth in fiscal third-quarter revenue.That translates into a sales outlook of $11.4bn to $11.6bn, matching or slightly exceeding Wall Street’s average forecast of $11.46bn.Executives also forecast gross margins of 61.5 to 62% in the fiscal third quarter ending April.Revenue rose 10.6% from the year-ago quarter to $11.5bn. Analysts on average were expecting $11.23bn. Net income grew to $2.2bn, or 40¢ per share, from $1.5bn, or 27¢ share, a year earlier.Excluding items, earnings were 47¢ per share, beating the average estimate of 43¢ a share, as compiled by Thomson Reuters I/B/E/S.Cisco said on Wednesday it plans to pay a quarterly dividend of $0.08 per common share, up 2¢ from the previous quarter.Cisco last year scaled back on consumer businesses and laid off thousands in a sweeping 4-month overhaul, aiming to cut expenses by $1bn.

Rio TintoGlobal miner Rio Tinto took an $8.9bn charge on its struggling aluminium business yesterday, triggering a second-half net loss amid a gloomy medium-term outlook for the metal.Five straight years of surpluses in aluminium and rising input costs have hammered margins in the industry, sharply reducing the book value of Rio’s Alcan unit, purchased for $38bn at the height of the commodities boom in 2007.The write-off and losses prompted chief executive Tom Albanese and chief financial officer Guy Elliott to forego their bonuses.“As the acquisition of Alcan happened on my watch, I felt it only right not to be considered for an annual bonus this year,” Albanese said.Total one-off charges including a writedown on its diamonds business totalled $9.3bn, causing net results for July-December to swing to a loss of $1.76bn following a profit of $8.4bn the previous year.Despite the loss, Rio hiked its dividend by a third and said it was confident about its long-term outlook.Analysts said Rio’s 145¢ dividend showed Rio remained upbeat in the face of volatility in commodity prices.

GDF Suez French gas and power company GDF Suez said 2012 net income would at least match that of last year, striking a cautious tone as it battles overcapacity in European gas markets, tough regulations and seeks to rein in debt.GDF Suez, 36%-owned by the French government, said net recurring income should reach €3.5-4bn in 2012, against 3.5bn in 2011, and grow to about €5bn ($6.6bn) by 2015, assuming average weather conditions and no significant regulatory or economic changes.Core earnings before interest, tax, depreciation and amortisation (Ebitda) rose 9.5% to 16.5bn euros last year. This should reach an estimated 17bn in 2012, but GDF Suez refrained from confirming an earlier 2013 Ebitda target of 20bn.GDF Suez said it aimed to keep its net debt at less than or equal to 2.5 times its core earnings, having brought net debt down to €37.6bn last year, helped by asset sales.Excluding the weather impact and the gas tariff shortfall in France, core earnings reached €17.4bn, meeting the group’s target of 17-17.5bn.

INGDutch banking giant ING said yesterday its 2011 net profit doubled to 5.77bn but the lender was guarded on the outlook and decided not to pay shareholders a dividend. Net profit in the fourth quarter came to €1.18bn ($1.56bn), eight times the 2010 period result but this reflected a gain of 1.29bn on the sale of assets. Analysts surveyed by Dow Jones Newswires had expected a fourth quarter net profit of €2.07bn. ING also cited the need to meet new tighter banking sector regulations and to repay state aid for its decision to pay no dividend. The lender got €10bn from the government in 2008 as the global financial crisis broke as the authorities tried to stabilise the banking sector. It said the “economic environment became more challenging in the fourth quarter of 2011.

BG GroupBritish energy producer BG Group said yesterday that net profits surged by 26% in 2011, bolstered by higher global energy prices and soaring revenues, especially in Asia. Earnings after taxation rallied to $4.234bn (€3.184bn) last year, compared with $3.351bn in 2010, BG Group said in a results statement. Revenue jumped by 22% to $21.148bn. BG Group said that the bumper earnings reflected “the benefit of higher realised prices and an increase in the number of Liquefied Natural Gas (LNG) cargoes sold to markets outside of the USA, particularly Asia.”However, total production edged one percent lower to 234.1mn barrels of oil equivalent per day, hit by a series of outages and third-party infrastructure restrictions in the North Sea.

Lenovo China’s Lenovo Group beat market forecasts yesterday with its third-quarter net profit thanks to its fast expanding market share.The Beijing-based, Hong Kong-listed company reported a net profit of $153.46mn for the three months ended December, up 54% from $99.65mn a year earlier and outpacing the $130.2mn in a poll by Thomson Reuters I/B/E/S. Third-quarter revenue rose 44% from a year earlier to $8.37bn.In the last fiscal quarter, Lenovo shipped 400,000 tablets globally and 6.5mn handsets, including smartphones, executives said yesterday. Lenovo is now the No.2 tablet provider in China, ranking behind Apple.

PepsiCoPepsiCo, maker of Sierra Mist soda, Tropicana juice and Gatorade sports drink, also reported better-than-expected fourth-quarter profit and forecast a 5% decline in 2012 earnings as it increases advertising and marketing by $500mn to $600mn.PepsiCo Inc expects to cut 8,700 jobs as part of a plan to save an extra $1.5bn over the next three years, as it pours more money into its brands. The job cuts will occur in 30 countries, PepsiCo said.The company reported a fourth-quarter profit of $1.42bn, or 89¢ per share, up from $1.37bn, or 85¢ per share, a year earlier.Excluding items, PepsiCo earned $1.15 per share, topping analysts’ average estimate of $1.13 per share, according to Thomson Reuters I/B/E/S. Revenue rose 11% to $20.2bn.

FinnairFinnish airline Finnair posted a net loss of €87.5mn ($116mn) in 2011, a four-fold increase from the previous year despite increased sales, the company said yesterday. In 2010, the company registered a full-year loss of €22.8mn. Sales were up nearly 12% year-on-year, reaching €2.25bn, up from 2.02bn in 2010, the company noted. Strong growth in the airline industry slowed down after the end of the first quarter when an earthquake and resulting tsunami struck in Japan, affecting traffic to Japan, the company noted. For the fourth quarter alone, Finnair posted a net loss of €32.6mn, compared with a loss of 5.7mn a year earlier.Etihad gains in 2011, first-ever net profitEtihad Airways, the fast-growing carrier of Abu Dhabi, yesterday posted a net profit of $14mn for 2011, exceeding its goal of breaking even for the first time ever, a statement said. The flag carrier of the United Arab Emirates said its revenues were up 36% in 2011 to $4.1bn. The carrier transported 8.3mn passengers in 2011, up 17% from the previous year, with an average seat factor of 75.8%. Earnings before interest, tax, depreciation, amortisation and rentals (Ebitdar) stood at $648mn, while earnings before interest and tax only amounted to $137mn. Etihad posted $1.72bn in revenues for the first half of 2011, up 28% on the same period of 2010.“This is an historic day for Etihad Airways and an amazing achievement for an airline just eight years old,” said James Hogan, president and chief executive officer of Etihad. “Five years ago we said we would be profitable by 2011. Despite the global financial crisis, continued high oil prices, regional instability and natural disasters, we have delivered,” he said. Etihad began operations in 2003.