ExxonMobil quarterly profit edges up to $9.5bn
ExxonMobil Corp said yesterday its quarterly profit edged up, helped by higher earnings in its chemicals business but oil and gas production fell.
Earnings per share topped Wall Street expectations but the gains largely came after a big stock buyback that reduced the number of outstanding shares by 5%.
“Their reliance on share buybacks mutes the earnings per share beat,” said Brian Youngberg, energy company analyst at Edward Jones in St Louis. “I’d rather see them give the cash to shareholders in the form of a dividend increase.”
First-quarter profit for the world’s largest publicly traded oil company totalled $9.5bn, or $2.12 per share, compared with $9.45bn, or $2 per share, a year earlier.
Analysts, on average, expected the Irving, Texas, company to report a profit of $2.05 per share.
Total oil and natural gas production declined 3.5% to 4.395mn barrels oil equivalent per day from the same quarter a year ago.
Profit in Exxon’s exploration and production unit fell about 10% to $7bn, but low natural gas prices in North American led to a 62% increase in profit in its chemicals business.
UPS
United Parcel Service Inc said it expects the small-package delivery market to grow faster than the US economy in 2013, after reporting a higher quarterly profit on strong post-holiday season demand.
“Increased focus by traditional retailers on using their brick-and-mortar locations as distribution sites is creating more pickups at retail locations for ultimate residential delivery,” chief financial officer Kurt Kuehn said on a post-earnings conference call.
As cost-conscious consumers shift from air express to cheaper but slower modes of shipping, UPS’s stronger North American domestic network puts it in a better position than rival FedEx Corp, which focuses more on international air shipments.
UPS also said it expected economic uncertainty to continue and that a weak global freight market would offset gains from post-holiday US sales in January. However, the company reaffirmed its full-year earnings forecast of $4.80-$5.06 per share.
The company’s daily package volume in the US grew 4.4% in the first quarter, led by UPS Ground, which delivered 531,000 more packages per day.
UPS, like No 2 package delivery company FedEx, is viewed as an economic bellwether because of the volume of goods it handles.
UPS’s international package revenue was flat in the quarter, while sales in the US rose 3.4%. Total revenue rose 2.2% to $13.43bn.
Net income rose to $1.04bn, or $1.08 per share, in the quarter ended March 31, from $970mn, or $1 per share, a year earlier.
Excluding items, UPS earned $1.04 per share.
Analysts on average expected earnings of $1.01 per share, excluding items, on revenue of $13.46bn, according to Thomson Reuters I/B/E/S.
Harley-Davidson
Harley-Davidson Inc reported profits yesterday that were in line with expectations and kept its full-year shipment forecast unchanged as its five-year-long restructuring effort continued to boost its financial performance.
The Milwaukee-based motorcycle maker posted a first-quarter profit of $224.1mn, or 99¢ a share, up from $172.0mn, or 74¢ a share a year ago. The gains came even as dealer retail sales in several key markets showed signs of weakness.
Overall revenue from bikes, parts and accessories, and apparel rose 9.8% to $1.57bn, the company said, due to sharply higher shipments to the company’s dealers and distributors.
Analysts, on average, expected Harley-Davidson to report a profit of 99¢ a share on sales on $1.46bn, according to Thomson Reuters I/B/E/S.
The results contained about a penny a share in restructuring charges. Harley-Davidson has been revamping its manufacturing operations in recent years to cuts costs, become more efficient and introduce flexibility in its workforce.
Harley-Davidson said it expects its gross margins, which have widened considerably in recent years as a result of the restructuring, to continue to grow in 2013 to 35.25 to 36.25%, up from 34.8% in 2012.
Retail sales of the company’s motorcycles in the US and Canada, its No 1 market, fell nearly 13%. Sales were also down in Europe, the Middle East and Africa.
During the first quarter, Harley-Davidson said it shipped 75,222 bikes worldwide, up 17.1% from a year ago. It is those shipments - rather than dealer retail sales - that drive the company’s top line and provide a gauge of dealer expectations regarding future consumer demand.
Biogen
Biogen Idec Inc reported higher-than-expected first quarter profit yesterday and raised its full year forecasts, and the US biotechnology said it sees its new drug Tecfidera becoming the leading oral medicine for multiple sclerosis.
Biogen management declined to give any sales details from Tecfidera’s first few weeks on the market, but Chief Executive George Scangos called the March 27 US approval “a watershed event for our company.”
Tecfidera is widely seen as Biogen’s most important future growth driver, with analysts estimating 2013 sales of about $300mn and eventual peak sales in excess of $3bn.
The new drug is expected to gain European approval during the current quarter, with an initial launch in Germany, followed by other European nations in 2014, the company said.
Biogen said it had a net profit of $426.8mn, or $1.79 per share, in the first quarter, up from $302.7mn, or $1.25 per share, in the year earlier period.
Excluding special items, the company earned $1.97 per share, topping analysts’ average forecasts by 36 cents, according to Thomson Reuters I/B/E/S.
The results were helped by a $33mn tax benefit and other tax credits that added 16 cents a share to net profit. Its tax rate for the quarter was just 13.2%.
Total revenue grew 10% to $1.42bn, matching Wall Street expectations.
Electrolux
Electrolux, a leading maker of household appliances, reported yesterday a 28% drop in net profit in the first quarter owing to the weak business climate in Europe and a strong krona.
The Swedish company posted a net profit of 361mn kronor (€42mn, $55mn) in the January to March period, while sales dipped by 2.0% to 25bn.
Those figures came in below the forecasts of analysts surveyed by Down Jones Newswires, who had predicted an average net profit of 519mn and sales of 26bn.
Electrolux said the slowing demand for household appliances in Europe had weighed down revenue, as consumers held back on purchases amid the sluggish economy. Sales in the Europe, Africa and Middle East region slid by 8.1% to 7.6bn kronor.
However, sales improved in the North America and Asia Pacific regions, rising by 8.0% to 7.7bn and by 5.8% to 1.9bn respectively.
Electrolux said the strong Swedish currency, the krona, had a negative effect of 318mn kronor on its operating profit, which plunged by 30% in the quarter to 638mn kronor.
Chief executive officer Keith McLoughlin, speaking to Swedish news agency TT, said there was “no point in panicking” about the currency effects since they could not be controlled.
In 2013, demand is expected to decline in Europe but rise in North America, Electrolux said.
Raytheon
US weapons maker Raytheon Co yesterday increased its profit forecast for 2013 after a stronger-than-expected jump in first-quarter earnings, the only major arms company to boost its earnings guidance despite fresh US defence budget cuts.
The company, which makes Patriot missiles and a wide array of other military equipment, said it now expected earnings per share of $5.26 to $5.41 from continuing operations for the full year, up from an earlier forecast of $5.16 to $5.31.
Chief financial officer David Wajsgras said mandatory US budget cuts that took effect on March 1 will likely trim Raytheon Co’s US bookings by $400mn to $600mn this year, but that was in line with expectations and no new surprises have emerged during talks with the Pentagon.
“We have been talking about sequestration for well over a year. What we see today is not really different from what we had been expecting,” Wajsgras told Reuters in an interview.
Raytheon said first-quarter earnings from continuing operations rose 8.9% to $490mn from $450mn in the year-earlier period. Earnings per share rose 12% to $1.49 from $1.33 in the year earlier period, while revenue edged 1% lower to $5.88bn from $5.93bn.
Analysts polled by Thomson Reuters I/B/E/S had forecast EPS of $1.28 for the quarter on revenues of $5.69bn.
Raytheon revised its revenue target for the full year downward slightly to a range of $23.2bn to $23.7bn from the earlier forecast of $23.6bn to $24.1bn.
Southwest Airlines
Southwest Airlines Co reported a higher-than-expected quarterly profit yesterday as higher fares boosted passenger revenue.
The traditional discount carrier cautioned that a key revenue measure, unit revenue, would weaken in April but said May and June bookings were looking stronger. It added that lower fuel prices were expected to offset the April softness.
Net income at Southwest came to $59mn, or 8¢ a share, for the first quarter, compared with $98mn, or 13¢ a share, a year earlier.
Excluding items, profit was 7¢ a share compared with 2¢ a share expected by analysts, according to Thomson Reuters I/B/E/S.
Quarterly revenue rose 2% to $4.1bn. Operating expenses rose 1%.
The number of passengers boarding Southwest planes fell 1% in the quarter but the average fare rose nearly 4% to $152.29.
Bristol
Bristol-Myers Squibb’s first-quarter earnings plunged 45% on generic competition for its drugs, but surprisingly low taxes enabled the company to meet Wall Street’s forecast.
The company said yesterday that it earned $609mn, or 37¢ per share, compared with $1.1bn, or 64¢ per share, a year earlier.
Excluding special items, Bristol-Myers earned 41¢ per share, matching the analysts’ average forecast, according to Thomson Reuters I/B/E/S.
The company’s effective tax rate fell to 11% from 26.7% a year earlier, due to a new federal credit for research and development. Wall Street had been expecting a tax rate in the 15% range.
Bristol-Myers said it still expected full-year earnings of $1.78 to $1.88 per share, which would be a decline of up to 11% from 2012.
Sales plunged 27% to $3.83bn, slightly below Wall Street expectations of $3.88bn, as the company’s Avapro blood pressure drug and Plavix blood clot preventer faced competition from cheaper generics. Plavix had been the world’s second-biggest-selling medicine before losing US patent protection last May.
Plavix sales dropped 95% to $91mn in the quarter, while Avapro’s fell 78% to $46mn.
Hershey
Chocolate maker Hershey Co reported a better-than-expected quarterly profit as lower commodity prices and cost cutting boosted margins.
The maker of Kit Kat, Twizzlers and Reese’s Peanut Butter Cups benefited from lower cocoa prices, which fell to an 11-month low in March.
Hershey’s gross margin rose 2.4 percentage points to 46.5% in the quarter ended March 31.
On an adjusted basis, the candymaker earned $1.09 per share, 5¢ more than analysts had estimated on average.
The candymaker posted a 6% increase in revenue to $1.83bn, driven by higher sales in the US, its largest market, and the introduction of Brookside Foods Ltd products into its line-up.
Analysts were looking for revenue of $1.84bn, according to Thomson Reuters I/B/E/S.
The net income rose to $241.9mn, or $1.06 per share, from $198.7mn, or 87¢ per share, a year earlier.
Colgate
Colgate-Palmolive Co’s first-quarter profit matched Wall Street’s expectations yesterday, as the toothpaste maker raised prices and spent more to advertise new products while cutting other costs.
February’s devaluation of the Venezuelan bolivar led Colgate to take a hefty charge for the quarter and to plan for additional charges later in the year. For US companies that do business in the country, the devaluation means their earnings in bolivars are now worth less when converted back to dollars.
Excluding after-tax charges of $111mn from Venezuela and $55mn from restructuring, Colgate said it had earned $626mn, or $1.32 per share, matching the analysts’ average forecast, according to Thomson Reuters I/B/E/S.
On a net basis, Colgate’s first-quarter profit fell to $460mn, or 97¢ per share, from $593mn, or $1.23 per share, a year earlier.
Sales rose 2.5% to $4.32bn, topping the analysts’ forecast of $4.29bn. The volume of goods sold rose 4%, and pricing was up 1.5%.
Organic sales, which strip out the effects of foreign exchange fluctuations, acquisitions and divestitures, rose 6%.
Colgate affirmed its forecast of 2013 earnings-per-share growth of 5.5% to 6.5% on a dollar basis.
Dow Chemical
Dow Chemical Co’s first-quarter earnings beat analysts’ estimates, helped by higher demand for its seeds and crop-protection chemicals in the Americas.
Sales at its agriculture science business, which supplies seeds, oils and farm chemicals, jumped 14% in the quarter, the highest growth among its business units.
Net income rose about 33% to $550mn, or 46¢ per share, in the first quarter from $412mn, or 35¢ per share, a year earlier.
Excluding one-time items, earnings were 69¢ per share.
Revenue fell 2% to $14.4bn.
Analysts on average expected earnings of 61¢ per share on revenue of $14.88bn, according to Thomson Reuters I/B/E/S.
AstraZeneca
AstraZeneca’s sales fell by a bigger-than-expected 13% in the first quarter as patent expiries took a heavy toll, underscoring the turnaround challenge facing Britain’s second-largest drugmaker.
Much of the damage was caused by loss of exclusivity on antipsychotic medicine Seroquel and heart drug Atacand in many markets.
But the company’s top-selling cholesterol fighter Crestor was also hit by generic competition in Canada, pricing pressure in Australia and worse-than-expected sales in the US.
The poor performance suggests new chief executive Pascal Soriot has his work cut out to reverse the fortunes of the struggling drugmaker, despite some tentative signs of improvement in a few growth areas.
Sales in the quarter of $6.39bn generated “core” pre-tax profit, which excludes certain items, down 25% at $2.23bn and earnings down the same amount at $1.41 a share, the company said yesterday.
Analysts had, on average, forecast sales of $6.51bn and earnings of $1.31, according to Thomson Reuters I/B/E/S.
The beat on earnings reflected a lower-than-expected tax rate and lighter-than-anticipated expenditure, although with the full-year outlook unchanged this phasing impact is not likely to affect full-year earnings forecasts.
Chief financial officer Simon Lowth said AstraZeneca’s strategy was on track, in terms of investing for future growth, with a lot more effort being put behind the promotion of Brilinta in the US market in particular.
Santander
Santander, the eurozone’s largest bank, reported a 26% drop in first-quarter net profit as slowing growth in some South American markets added to the gloom at home in Spain.
The bank, which relies on South America for about half its profit, missed analysts’ forecasts as lending in continental Europe shrank and lower interest rates ate into margins.
Santander is one of Spain’s healthier lenders and survived a real estate market crash without state help. The country was forced to seek €41bn ($53bn) of European aid for its ailing banks last year.
But while Santander’s overseas businesses have helped offset problems at home, earnings have come under pressure in Brazil, which contributes a quarter of profit.
Santander said the first quarter compared unfavourably with a strong start in 2012 and insisted this year would be one of strong earnings growth, although Chief Executive Alfredo Saenz said he saw no “drastic change” in the economic outlook.
Net profit fell to €1.21bn, below the average estimate of €1.3bn in a Reuters poll. Net profit from Latin America fell 18% and in Britain it was down by nearly a quarter.
Spanish banks wrote billions of euros off the value of their property loans after the government enforced a clean-up of their books last year.
They face rising bad loans as the economy keeps shrinking. Spain’s unemployment rate rose to a new record of 27% in the first quarter, with 6.2mn people out of work, more than the population of Denmark.
Posco
South Korean steel giant Posco said yesterday it had suffered a 54% drop in its first-quarter net profit because of weakening global demand and lower prices.
Consolidated net profit in the January-March period fell to 292bn won ($260mn) from 636bn won a year earlier, the company said in a statement.
“Fewer orders from shipbuilders and construction companies dented the bottom line amid a prolonged slump,” a Posco spokesman told Dow Jones Newswires.
“Slower-than-expected recovery in China’s steel market also weighed on the outcome.”
Sales were down 10.6% year-on-year at 14.58tn won, while operating profit slipped 4.7% to 717bn won.
The world’s third-largest steelmaker by output has streamlined its business lineup and boosted sales of high-end products to cope with oversupply of steel and slowing demand.
Posco vowed to step up sales of high-priced steel products saying global demand was expected to recover slightly from the second quarter. This year the company aims to post sales of 64tn won.
Vale
Brazilian mining giant Vale has reported a 10.1% drop in first-quarter net profit, citing lower sales, higher taxes and currency fluctuations.
A statement from the world’s top iron ore producer said net profit totalled $3.199bn during the period, down 10.1% from the same period last year.
But the first-quarter result was better than the fourth quarter of 2012, when net profit totalled $1.95bn.
Market analysts had expected net profit of $2.7bn in the first quarter of this year and Vale said it was pleased with its progress.
“Despite the slight fall in iron ore production, we had positive surprises in the production of basic metals” such as copper and nickel, said Luciano Siani, Vale’s chief financial officer.
Last week, Vale reported a 3.5% slump in iron output due to operational problems and rainfall.
But it maintained a production target of 306mn tonnes for this year.
New York Times
The New York Times Company reported a sharp drop in first-quarter income yesterday and unveiled details of its new growth strategy to boost digital revenues.
The company, owner of the venerable New York Times and other newspapers, posted net income of $3.1mn for the first three months of the year, down almost 93% from $42.1mn in the year-ago period.
The sharp year-on-year decline was partly due to the sale of investments in the 2012 first quarter that produced a nearly $18mn gain.
Revenues in the January-March period fell 2.0% to $465.9mn.
Circulation revenues increased 6.5% but were dwarfed by an 11.2% dive in advertising revenues.
The company pointed to a hefty 81.2% jump in operating profit, to $22.8mn, driven by growth in circulation revenues, led by digital subscriptions, and tightly managed costs.
Hyundai Motor
South Korea’s top automaker Hyundai Motor said yesterday net profit in the January-March quarter fell 15% from a year earlier, mainly due to work stoppages and a strong won.
The company’s consolidated net profit for the first quarter fell to 2.088tn won ($1.87bn) from 2.453tn won a year earlier, it said in a statement. Operating profit was down 11% year-on-year at 1.869tn won as sales rose 6.0% at 21.367tn won.
“Cuts in weekend work and subsequent decrease in output at local factories amid slow demand in the domestic market resulted in the fall,” Hyundai said, adding a strong won and a weak Japanese yen were also to be blamed.
Plant workers from Hyundai’s 45,000-member union have refused to work weekends since March 9 following the implementation of a new shift arrangement that resulted in lower wages for weekend work.
The idling of plants cost the company an estimated 950bn won in production losses.
The Korean won’s strength against the yen contributed to the deceleration in profits by giving Japanese cars a competitive pricing edge in key overseas markets.