Shell renaissance CEO Voser to retire early; Q1 tops forecasts
Royal Dutch Shell’s 54-year old chief executive Peter Voser (pictured) is to retire next year in a surprise early departure he said was driven by a desire for a change of lifestyle.
Over the past nine years the softly spoken and widely respected Swiss national has helped drive the group’s structural reorganisation and recovery from sector laggard to a leading position in the burgeoning industry of liquefied natural gas (LNG).
He took over as finance director of Europe’s top oil company in 2004 amid the board-level bloodshed that followed its shocking downgrade of reserves estimates and became CEO in 2009.
His departure comes as the company and the industry face huge new challenges.
Shell is the western world’s number two company by production behind ExxonMobil. But, like its peers, it is struggling to replace reserves and boost production and faces a squeeze on earnings as costs rise while the price of oil threatens to fall decisively below the psychologically important $100 a barrel level.
Finance director Simon Henry said the company was well-placed for the recent fall in prices.
“We also think there are quite few players in the market, quite a few companies, who actually have bet the farm on $100-plus oil prices. We don’t,” he said.
Nevertheless, analysts say that among the world’s top oil companies, Shell spends more on exploration per barrel produced than any of its competitors. Its most high-profile exploration failure has been in Alaska, where it has spent $5bn since 2006, and has yet to drill a single complete hole.
The last of the western world’s four biggest oil companies to report results, Shell joined its peers yesterday in delivering a first-quarter profit that topped market expectations.
Adjusted net profit on a current cost of supply basis rose to $7.5bn from $7.3bn a year ago, compared with expectations of around $6.5bn.
As was the case with BP’s results on Tuesday, Shell exceeded expectations by a big margin thanks in large part to its trading activities, which were not split out from the rest of its operations.
Siemens
German industrial bellwether Siemens lowered its profit outlook for this year due to weak demand from industry and delays in delivering high speed trains and connecting offshore wind farms.
Siemens also stepped up cost cutting efforts to cope with the global economic slowdown, although it said four big deals had pushed orders back to growth after six quarters of declines.
The engineering group, whose products range from gas turbines to hearing aids, said it now expected net profit from continuing operations to reach the lower end of its outlook range of between €4.5bn ($5.9bn) and €5bn in the current year.
Analysts in a Reuters poll had on average seen profit for the group’s financial year through September declining to €4.8bn from €5.2bn last year, partly because of a 1bn hit from its cost-cutting programme.
In its fiscal second quarter, profit stagnated and revenue fell for the first time in two years on weak demand for industrial products such as automation and drive technologies as well as fewer sales of power plants.
Orders jumped 20% to €21.45bn, beating consensus thanks to four major European orders for trains and wind farms. Orders in Siemens’ bread-and-butter industry business were down by 11%.
Siemens, which runs its business year from October to September, said net profit grew by 10% to €1.03bn, falling short of analysts’ expectations.
Kellogg
Kellogg Co reported lower quarterly earnings yesterday, hurt by higher ingredient costs, and said it was on track to meet its full-year goals.
The maker of Corn Flakes cereal, Keebler cookies and Eggo waffles, whose shares fell nearly 2% in premarket trading, said net income was $311mn, or 85¢ per share in the first quarter, down from $351mn, or 98¢ per share, a year earlier.
The decline in profit was largely due to the rising cost of commodities, Kellogg said, adding that the first quarter included a majority of the inflation it expects for the full year.
Excluding accounting adjustments, costs from integrating the newly acquired Pringles business and a hit from the devaluation of Venezuela’s currency, earnings were $1.02 per share. That was in line with company expectations and analysts’ average estimate, according to Thomson Reuters I/B/E/S.
CME Group
CME Group Inc, the world’s largest futures exchange operator, reported a drop in first-quarter profit as trading in some of its more lucrative products slumped and average revenue per trade fell.
Net income declined to $235.8mn, or 71¢ a share, from $266.6mn, or 80¢ a share, a year earlier, the Chicago-based company reported yesterday.
Excluding a $12mn expense due to currency losses, profit was 73¢ a share, in line with the average analyst estimate, according to a poll by Thomson Reuters I/B/E/S.
CME, which operates five US futures exchanges and plans a sixth one in London, has struggled in recent quarters with lacklustre trading.
Overall trading activity rose 1.4% in the quarter to 12.5mn contracts on an average day.
Trading in energy products, among CME’s most lucrative, fell about 11%, and the average revenue per contract, a key measure for CME, fell to 78.5¢ from 81.1¢ in the year-ago quarter.
Statoil
Norwegian oil group Statoil announced yesterday a 58% plunge in its first quarter net profit, attributing the decline to falling production and oil prices.
Net profit fell to 6.4bn kroner (€841.9mn, $1.1bn) from 15.1bn a year ago. The adjusted net profit, which is closely watched since it excludes financial items such as variations in the value of inventories, registered a more moderate decline of 28.6% to 12bn kroner.
Operating profit was down by 34.4% to 38bn kroner, while sales slumped by 17.2% to 161.7bn.
The earnings were significantly lower than what analysts had forecast, and the Statoil share price was down by 3.13% in midday trading on the Oslo stock exchange.
Statoil’s oil and gas production declined by 9% in the first three months of the year, to 2mn barrels of oil equivalent per day, and the company maintained its forecast that production in 2013 would be lower than in 2012.
Swiss Re
Switzerland-based reinsurance giant Swiss Re yesterday posted a first quarter net profit that was 21% higher than in the same period a year earlier at $1.4bn (€1.1bn), as fewer catastrophes resulted in lower-than-expected claims.
The strong result, which was also driven by soaring activity in the company’s crucial property and casualty reinsurance division, easily beat market expectations.
Analysts polled by Swiss financial newswire AWP had expected Swiss Re to rake in just $1.06bn during the first three months of the year.
“The primary driver for this performance was a very strong underwriting result,” the company said in its earnings statement, stressing that “lower than expected claims due to the absence of major man-made or natural catastrophes (also) contributed to the result.”
The world’s second largest re-insurance company said it had pocketed $6.8bn in premiums during the quarter, up nine% from the same period a year earlier.
Lufthansa
German airline Lufthansa vowed to deliver on profit-boosting initiatives this year, saying painful cost cuts would pay off and forecasting a rise in revenue. The airline said it expects higher operating profit and revenue in 2013, driven by a restructuring programme dubbed SCORE that had helped offset soft demand in January to March as Europe’s debt problems weighed on consumer sentiment.
“2013 is the year in which we want to show that we are capable of implementing our ambitious plans,” Europe’s biggest airline by sales said yesterday.
Chief financial officer Simone Menne told reporters details on revamping the passenger division would be announced in May, raising the prospect of a wider restructuring.
The passenger business managed to eke out a 0.6% growth in quarterly revenue to €5.07bn, mainly through tightened seating capacity growth.
The airline’s first-quarter operating loss remained at €359mn ($474mn), a bigger loss than the €299mn expected and hit by €64mn in restructuring costs, strikes and a long winter.
Revenue grew only 0.1% to €6.63bn versus a forecast €6.65bn.
Analysts said while the quarterly results were somewhat disappointing, SCORE should bear fruit later this year.
HTC
Taiwanese smartphone maker HTC said yesterday it expects a sharp rise in second-quarter revenue thanks to a new model, following record quarterly low sales in January-March.
First-quarter revenue was Tw$42.8bn ($1.45bn) and net profit slumped 98.1% year-on-year to a record low of Tw$85mn.
But chief executive officer Peter Chou forecast that second-quarter revenue would surge more than 60% compared to the first quarter, to Tw$70bn.
“This was a pivotal quarter for HTC,” he told an investor conference.
“In February our teams set a new standard for smartphones, launching the new HTC One. The reviews of fans and critics alike have been overwhelmingly positive and we look forward to delivering on the promise of this device.”
The Android-based model, sporting a 4.7-inch (12 cm) touchscreen and front-facing speakers, was unveiled in London and New York in February.
Chou had hailed it as a “technological breakthrough” as he battles fierce competition from the Apple iPhone and Samsung’s newly released Galaxy S4.
Metro
German retailer Metro AG managed to scrape a profit in the first quarter thanks to improved business at its consumer electronic stores and supermarkets in Germany, making up for weak spending elsewhere in Europe.
Europe’s weak economy has especially hurt sales at Metro’s cash and carry stores, its biggest division and which sells to trade customers such as hotels and restaurants.
But while much of Europe remains in the doldrums, Germany has proved more resilient, with consumer sentiment more upbeat going into May than at any point in the past 5-1/2 years due to a robust jobs market and expectations of wage rises.
German sales of textiles, clothes, shoes and leather goods dropped a real 12.7% in March, the steepest fall since May 2009, according to data out this week.
Overall, Metro swung to a profit before interest, tax and special items (EBIT) in the first three months of its shortened business year of €14mn ($18.5mn), against analyst forecasts for a loss of €13.7mn.
The group maintained an outlook for operating profit, not including special items, to fall in its shortened financial year to end-September and for sales to increase moderately.
BSkyB
BSkyB said it would create 550 new jobs to meet strong demand for its television and broadband products, as it reported third quarter results showing profits racing ahead.
Britain’s dominant pay-TV group, which is 39%-owned by Rupert Murdoch’s News Corp, provides fixed-line telephony, TV and broadband. It said it had signed up an extra 70,000 new households, in line with forecasts, taking the total retail subscriber base to 10.8mn.
Within that, its customers had signed up for an extra 715,000 new subscription products in the three months to the end of March, taking the average revenue paid per user up by 30 pounds in the year to 576 pounds.
The strong performance in customer growth helped the group to post nine month operating profit up 9% to £994mn ($1.55bn), compared to a forecast of £979mn.
Revenue was up 6% to £5.4bn, in line with consensus, and the adjusted basic earnings per share was up 16%.
Bharti Airtel
Top Indian mobile carrier Bharti Airtel Ltd’s subscriber growth and usage trends along with easing competition suggest the worst may be over for the industry, even as the firm recorded its thirteenth consecutive quarter of falling profits.
Bharti, Vodafone Group and Idea Cellular Ltd have gained market share in recent months as smaller rivals either shut or scaled back operations after a court order revoking permits, giving the big carriers greater pricing power in a country with some of the world’s cheapest call rates.
Bharti, the world’s fourth-biggest cellular carrier by customers, posted a worse-than-expected 50% year-on-year drop in net profit to Rs5.09bn ($94mn) for its fiscal fourth quarter to end-March, capping a third straight year of declining profit for the New Delhi-based company.
Analysts had expected the firm, controlled by billionaire Sunil Mittal, to report net profit of Rs7.41bn, according to Thomson Reuters I/B/E/S.
For the full year ended March, Bharti made Rs22.76bn, its smallest annual profit in seven years.
“The fact is that pricing is becoming more stable, that’s a positive going forward,” Gopal Vittal, Bharti’s India chief executive, told reporters yesterday.
Bharti, which operates in 20 countries in Asia and Africa, plans to spend up to $2.3bn this fiscal year on its networks, including about $600mn in Africa.
Infineon
German chipmaker Infineon yesterday reported a better-than-expected second-quarter operating profit on improvement at its automotive unit, which accounts for about half of its revenues.
Adjusted operating profit in the three months to March fell 53% to €68mn ($90mn), beating the average expectation of €51.3mn in a Reuters poll.
Infineon said it expected its 2013 revenue to come in at the high end of its previous target range of €3.56bn-€3.71bn. Analysts polled by Reuters expected Infineon to reach 2013 sales of €3.7bn.
The shares were 2.6% higher in pre-market indications provided by brokerage Lang & Schwarz, while the blue-chip index DAX was seen 0.1% lower.
The company also said its 2013 core operating profit margin would reach the upper end of a 5-9% range given previously.
The global chip market has suffered post-financial crisis as demand collapsed across all sectors, from industry and cars to consumer electronics like phones and tablets.
Facebook’s profit in the first quarter of this year climbed as it used its grip on people’s online social lives to challenge Google and Apple for revenue from mobile ads and apps.
Mobile advertising helped Facebook boost its first-quarter profit 58% from a year ago to $217mn, and to lift revenues past market forecasts, according to earnings results released on Wednesday.
Facebook said its monthly active users rose 23% from a year ago to 1.11bn, including 751mn who accessed the network on mobile devices.
Mobile ads accounted for 30% of advertising revenue for the quarter.
The profit was just below market forecasts, but revenues were better than expected, rising 38% from a year ago to $1.46bn.
“We’ve made a lot of progress in the first few months of the year,” said Facebook chief executive and co-founder Mark Zuckerberg. “We have seen strong growth and engagement across our community and launched several exciting products.”
BMW
BMW’s operating profits from its core car business fell more than expected in the first quarter, weighed on by discounting in some European markets and technology costs.
Earnings before interest and tax (EBIT) plunged 15.9% to €1.58bn ($2.1bn), BMW said yesterday, short of the average forecast given by analysts of €1.6bn, while the operating margin dropped to 9.9% from 11.6% as car sales slipped 1.6% to €15.91bn.
“The business environment we’re operating in is becoming ever more uncertain and volatile,” chief executive Norbert Reithofer said on a conference call, ruling out a recovery in the short term in European demand.
However, the Munich-based company reaffirmed its aim of pushing total vehicle sales this year to a new record. It also still aims to match last year’s record group pretax profit and achieve an operating margin of between 8% and 10% in automotive operations.
German luxury brands such as BMW, Volkswagen’s Audi and Mercedes have fared better in the economic downturn than their European mass-market rivals such as Peugeot.
BMW said net prices for its cars in the first three months of the year fell by more than the 0.5 to 1.0 percentage points projected for 2013, as manufacturers in Europe battle the slump with ever deeper discounts.
DBS
DBS Group Holdings, Singapore’s biggest bank, posted a record quarterly profit, beating expectations, as higher fee and commission income offset a slight drop in income from its key lending business.
DBS earned S$950mn ($770.32mn) in the three months ended March, compared with the previous record profit of S$933mn a year earlier. Its profit was far above the S$836mn average forecast of eight analysts polled by Reuters.
Singapore’s No 2 lender Oversea-Chinese Banking Corp (OCBC) on Tuesday posted a 16% fall in first quarter profit, hurt by lower contributions from its insurance unit and weak interest rate margins.
At DBS, which gets about 80% of its earnings from Singapore and Hong Kong, net fee and commission income rose 25% to S$507mn. That overcame a 1% drop in net interest income.
“After a slower second half in 2012, we started the year on a very solid note,” chief executive Piyush Gupta said in a statement. “Business momentum is strong, and growth has been broad-based, showing the impact of our investments across all lines of business.”
Visa
Visa Inc, the world’s largest credit and debit card network reported strong quarterly results as its customers spent more on its cards, but smaller rival MasterCard Inc reported a tougher quarter and warned of a difficult outlook.
Visa reported rising growth in the key US market in contrast to MasterCard, which has suffered as some of its biggest issuers, including Citigroup Inc, struggle.
Visa raised its fiscal 2013 earnings forecast to around 20% in earnings per share from a previous outlook for gains in the high-teens.
Consumer sentiment across the globe has remained muted, given the uncertainty in Europe and China’s slowing growth. US consumer spending has taken a hit from higher payroll taxes.
Both MasterCard and Visa are trying to capture new business as consumers turn increasingly to cards and digital payments instead of cash.
Visa’s net profit fell to $1.27bn from $1.29bn a year earlier. But, on a per-share basis, profit rose to $1.92 per Class A share from $1.91, after share buybacks. Total operating revenue rose 15% to $2.96bn.
Analysts on average had expected a profit of $1.81 per share on revenue of $2.85bn, according to Thomson Reuters I/B/E/S.
BG
Better than expected results encouraged hopes British oil and gas company BG had turned the corner yesterday after a rocky period due to failures to meet production goals.
Consecutive surprise downgrades to output forecasts over the last nine months have hammered shares in the company, damaging its reputation as a growth stock and alternative to big oil companies which are struggling to raise output.
BG shares showed the first positive reaction to quarterly results in more than a year, rising 2.3%, after it posted earnings of $1.183bn in the first three months of 2013 were ahead of a consensus forecast of $1.098bn.
Profits were still 3% lower on the year but the numbers left some analysts upbeat ahead of a keenly-awaited strategy update scheduled for two weeks time and helped relieve some of the pressure on a battered London stock market.
Seagate
Hard disk drive maker Seagate Technology reported better-than-expected quarterly results on higher sales of its Internet storage devices, and said it expects demand and pricing in the business to rise in the second half.
“The cloud continues to build out...we are going to see a fairly dramatic acceleration exiting this year and going into the next calendar year...,” chief executive Steve Luczo said on a conference call with analysts. “We think there’s going to be some pretty tight supply situations in the back half of the year.”
Seagate forecast current-quarter revenue between $3.3bn and $3.45bn, largely above analysts’ expectations of $3.35bn.
Seagate’s net income fell to $416mn, or $1.13 per share in the third quarter, from $1.15bn, or $2.48 per share, a year earlier.
Excluding items, the company earned $1.26 per share. Revenue fell about 21% to $3.53bn. Analysts on average expected earnings of $1.15 per share on revenue of $3.37bn, according to Thomson Reuters I/B/E/S.
GM profit tops view
General Motors Co posted stronger-than-expected quarterly profit yesterday as the US automaker kept a tight grip on costs in its North American and European businesses.
GM chief financial officer Dan Ammann said the company still expects to return to breakeven by mid-decade in Europe, where it has reported 13 straight years of losses. RBC Capital Markets analyst Joseph Spak welcomed the results, pointing to the company’s ability to cut costs.
“Better-than-expected results (in Europe) will be well received, giving investors confidence that progress is being made and breakeven by mid-decade is possible,” he said in a research note.
Net income attributable to common stockholders fell 13.5% to $865mn, or 58¢ a share, in the first quarter, from $1bn, or 60 cents a share, in the year-earlier period. The company took a $400mn hit to earnings due to falling prices for its vehicles and weaker volume.
The latest quarter included a $162mn noncash charge for the devaluation of the Venezuelan currency. Excluding one-time items,
GM earned 67¢, topping the analysts’ estimate of 54 cents, according to a poll by Thomson Reuters I/B/E/S.
Revenue fell 2.4% from last year to $36.9bn, and was just above the Wall Street target of $36.6bn.
GM’s North American unit reported operating profit of $1.41bn, better than the Wall Street estimate of $1.21bn, according to FactSet StreetAccount.