Wal-Mart profit misses Street as US sales down
Wal-Mart Stores’ quarterly profit just missed Wall Street expectations yesterday, with sales down 1.4% at its Walmart US stores open at least a year.
The world’s largest retailer said US sales suffered from a delay in income tax refund checks, cool weather, less grocery inflation than expected, and the payroll tax increase.
Wal-Mart earned $3.78bn, or $1.14 per share, in the first quarter ended on April 30, up from $3.74bn, or $1.09 per share, a year earlier.
The analysts’ average forecast was $1.15 per share, according to Thomson Reuters I/B/E/S. In February, Wal-Mart had forecast a profit of $1.11 to $1.16 per share.
First-quarter revenue rose 1% to $114.19bn.
Same-store sales at Walmart US fell 1.4%, while the company had earlier expected such sales to be about flat. Visits to Walmart US stores open at least a year fell 1.8%, while the average amount spent per visit rose 0.4%.
Wal-Mart forecast earnings of $1.22 to $1.27 per share for the current second quarter, up from $1.18 a year earlier.
The company said it expected second-quarter same-store sales, excluding those of fuel, to be flat to up 2% at Walmart US and up 1% to 3% at its Sam’s Club warehouse store chain.
Subsea 7
Offshore oil industry services firm Subsea 7 is facing a plethora of challenges, including project award delays, weaker pricing, supply chain bottlenecks and cost pressures, it said yesterday.
Subsea 7, which provides surface and subsea engineering and construction services for oil firms around the world, said its order backlog continued to surge and it would remain disciplined in bidding for new work, but it was facing many of the same challenges that are slowing the global oil service business.
“Delays in project awards to the market and some project postponements will temper the rate of progress in 2013,” it said in a statement. “In addition, supply chain bottlenecks and cost pressures within the oil services industry persist, and the availability of experienced personnel remains a constraint. Although the firm said it was positive about its medium and long-term prospects it failed to repeat its previous forecast that it expected “some progress” in both revenue and profit this year.
In the first quarter the Oslo-listed company said it earnings before interest, taxes, depreciation and amortisation rose 7% to $241mn, exactly in line with market forecasts.
Rival Technip last month reported disappointing earnings but maintained its forecast while Aker Solutions warned of lower profits due to cost overruns and project delays.
Subsea 7 shares trade at 11 times forecast earnings for 2014, which analysts say is a 20 to 25% discount to its long term trend, reflecting uncertainty in the industry.
Cisco Systems
Network equipment maker Cisco Systems posted a higher than expected quarterly profit and said current-quarter revenue could increase, giving some relief to investors who had worried it was being hurt by weak technology spending.
Cisco shares rose about 8% after chief executive John Chambers said the company was seeing some good signs in the US and that other parts of the world are “encouraging.”
“We are managing the business to account for a continued slow steady recovery on a global basis,” Chambers said.
Chambers’ commentary is closely watched by investors as Cisco is seen as a strong indicator for the general health of the technology industry because of its broad customer base.
Cisco forecast current-quarter earnings per share of 50¢ to 52¢, excluding unusual items, in line with Wall Street expectations. It said revenue would grow in a range of 4 to 7% from the year-ago quarter.
This implies revenue of about $12.16bn to $12.5bn, compared with analysts’ expectations for $12.47bn according to Thomson Reuters I/B/E/S.
While Chambers said revenue from the US federal government was down 3% in the quarter due to spending cutbacks, this was offset by increased state and local government spending which boosted overall US public sector revenue by 5%.
About 20% of Cisco’s revenue comes from public sector clients around the world, chief financial officer Frank Calderoni said in an interview.
Calderoni said Cisco is seeing “a slow and steady recovery” in its global business with signs of economic strength in places such as the US and weakness in areas including Southern Europe and some Asian countries.
Profit for the fiscal third quarter ended on April 27 grew to $2.5bn, or 46¢ per share, from $2.17bn, or 40¢ per share, in the year-ago quarter.
Excluding unusual items, earnings per share came in at 51 cents compared with Wall Street expectations for 49 cents according to Thomson Reuters I/B/E/S.
Revenue rose more than 5% to $12.2bn from $11.6bn and compared with Wall Street expectations for $12.18bn according to Thomson Reuters I/B/E/S.
Cisco forecast fourth-quarter gross margins of 61 to 62%, matching the prior quarter’s estimate.
Aviva
British insurer Aviva yesterday said that the value of new business rallied 18% in the first quarter, helped by stronger contributions from Britain, as well as from Asia, France and Turkey.
Aviva said in a statement that the value of new business rose to £191mn ($290mn, €226mn) in the three months to March compared with £162mn a year earlier.
The figure is a measure of profits expected to emerge from new business, net of costs.
In reaction, the price of shares in Aviva — Britain’s second-biggest insurer after Prudential — surged to the top of the London stock market.
“Our key measure of growth has increased by 18%, driven by actions to improve profitability in UK Life and growth in our Asian business,” said chief executive Mark Wilson in the trading update.
Aviva added that operating expenses fell 10% to £769mn in the reporting period, while restructuring costs stood at £54mn.
The group had announced last month that it would axe about 2,000 jobs worldwide as part of its previously-announced plans to axe costs by £400mn.
“Our operating expenses are now ten% lower and we are on track to deliver our cost savings target of £400mn,” Wilson added.
In response to yesterday’s trading update, Aviva shares rallied 4.77% to 338.5 pence on London’s FTSE 100 index of top companies, topping the risers board. The FTSE was 0.10% higher at 6,700 points.
In July 2012, Aviva said it would withdraw from 16 non-core business areas following a major strategic review that was aimed at strengthening its capital base and share price.
Richemont
Swiss luxury goods giant Richemont boosted 2012-2013 net profit by 30% as expected, with strong performances in its jewellery and watch divisions and by favourable exchange rates, the group said yesterday.
The firm, the world’s second-biggest luxury goods group, which owns the Cartier, Piaget, Jaeger-LeCoultre and Montblanc brands among others, said its net profit for the financial year ending at the end of March had ticked in at €2.0bn ($2.6bn).
The group, which had already forecast the surge last month, citing favourable exchange rates, also announced yesterday that its chairman Johann Rupert soon planned to take a leave of absence.
Richemont meanwhile said its operating profit had jumped by 18.0% to €2.4bn during the financial year, on sales up 14% at €10.1bn.
The results were especially sweetened by a 13-percent rise in jewellery sales to €5.2bn, and an 18% rise in watch sales to €2.7bn.
“The Jewellery Maisons and the Specialist Watchmakers have reported remarkable growth in sales and profits, despite the continuing strength of the Swiss franc and historically high cost of precious metals and stones,” chairman Rupert said in the earnings report.
On a region-by-region basis, the company meanwhile said sales in the Americas soared 18.0% to €1.2bn, sales in Europe grew 17% to €3.1bn, and sales in Asia Pacific rose 13% to €4.1bn.
In light of the strong results, the board nearly doubled dividends for the financial year, proposing 1.0 Swiss franc per share up from 0.55 francs last year. Rupert also said yesterday that he planned to take a year off after the next general assembly meeting in September, although he stressed that he planned to take back the reins the following year.
“After 25 years, I think I have the right to take a break,” he told a conference call with reporters, adding that he planned to use his year off to visit the Antarctic and that he wanted to read about 50 books.
Stobart Group
British freight company Stobart Group reported a 12% rise in full-year operating profit, helped by cost cutting in its transport and distribution business and strong growth in its fledgling biomass unit.
Stobart’s shares rose as much as 7% on the London Stock Exchange yesterday.
The haulier, whose Eddie Stobart lorries deliver goods to retailers such as Tesco, said underlying operating profit rose to £44.9mn ($68.36mn) in the year ended February 28, from £40.1mn a year earlier. Revenue rose 16% to £572.4mn.
Underlying operating profit in the transport and distribution business rose 7% to £29.7mn.
Operating profit more than doubled to £4mn in the relatively new biomass business, which supplies timber and softwood used for electricity generation.
The transport and distribution business, which has been hit by a downturn in the British retail sector, underwent severe restructuring over the past year.
Stobart sold off the unit’s vehicle services business, rebranded the distribution business and shuttered the chilled pallet storage business.
“The transport business has weathered the storm over the last few years very well ... if the economy moves the right way we’ll see some volume growth,” Chief Financial Officer Ben Whawell told Reuters.
It has been an uncertain year so far for Stobart, whose non-executive chairman left the company a week after a profit warning in January. The company then said in April full-year results would be ahead of market forecasts.
Stobart lost its FTSE-250 index membership earlier this year, following a 27% fall in its share price last year.
Dixons Retail
Dixons Retail, Europe’s second-biggest electrical goods retailer, said year profit would be at the top end of market expectations after it posted a 7% rise in fourth quarter underlying sales.
Dixons, home to the Currys and PC World chains in Britain, Elkjop in Nordic countries, UniEuro in Italy and Kotsovolos in Greece, said yesterday underlying profit before tax for the year to April 30 was expected to be at the top end of analysts’ forecast range of £75-85mn ($114-129mn).
It pointed out that non-cash defined benefit pension financing costs of £7.4mn will be reclassified as “non-underlying” meaning that the consensus range of expectations will rise to £83-93mn.
Fourth quarter like-for-like sales rose 13% in the UK and Ireland and were up 14% in northern Europe.
But they fell 5% in the southern Europe division, made up of Italy, Greece and Turkey.
Singapore Airlines
Singapore Airlines said yesterday its net profit in the year ending March rose 12.8%, boosted by surplus from the sale of aircraft, spares and spare engines, but warned the outlook remained bleak.
Net profit was S$379mn ($302.6mn) on revenue of S$15.10bn, up 1.62%, the carrier said in a statement.
For the fourth quarter, net profit was at S$68.3mn, swinging back from a S$38.2mn loss in the same period last year.
SIA attributed the rise in full-year and fourth quarter net profit mainly to “surplus on the sale of aircraft, spares and spare engines”.
Fuel costs, which accounted for nearly 40% of expenditures, remained a drag on profits.
SIA said passenger numbers rose 7.3% boosting revenues, but promotional schemes to fend off intense competition and the depreciation of revenue-generating currencies against the Singapore dollar dented yields.
“The global economic outlook remains uncertain with the ongoing weakness in the eurozone and the sluggish recovery in the US,” the airline said.
“Forward passenger bookings for the next few months are almost flat compared to the same period last year,” it added.
It also warned about overcapacity in the cargo market that it said would pressure loads and yields, as well as the impact of continued high fuel prices.
The airline however said its strong financial position “will enable it to weather the many challenges and allow for continued investment in product and service enhancement.”
