CORPORATE RESULTS

US investment bank Goldman Sachs yesterday reported earnings that doubled last year’s level due to a big jump in revenues from its own investments and lending.

Goldman reported net income of $1.9bn on revenues of $8.6bn for the second quarter, more than twice the year-ago profit of $927mn on revenues of $6.6bn.

Goldman reported per-share earnings of $3.70, well above the $2.82 forecast by analysts.

Compared with the year-ago quarter, Goldman reported giant growth in its investing and lending segment, primarily investments in private equities and debt.

Net revenues in this area grew from $203mn in the year-ago quarter to $1.4bn. It also included Goldman’s divestment of its remaining shares in the Industrial and Commercial Bank of China during the quarter.

Goldman also scored large gains in its investment banking division. Net revenues from equity and debt underwriting grew 45.2% to $1.1bn.

In the previous quarter, Goldman chief executive Lloyd Blankfein spoke cautiously about the global economic outlook. His tone was somewhat more upbeat yesterday.

“Improving economic conditions in the US drove client activity and the strength of our global client franchise allowed us to deliver positive performance across a number of our businesses,” Blankfein said.

“While the operating environment has shown noticeable signs of improvement, we continue to put a premium on disciplined risk management, particularly in regard to the firm’s strong capital and liquidity levels.”

Goldman said its fixed income, currency and commodities business for clients operated in a “generally favourable environment” in the first half of the quarter, but encountered “more challenging” time later in the quarter due to greater interest rate and market volatility.

Revenues in this segment grew 12% from the year-ago period to $2.5bn.

Goldman said total staff decreased 1% compared with the end of the first quarter. Compensation and benefits rose 27% compared with the year-ago quarter.

 

Coca-Cola

 

Coca-Cola Co reported weaker-than-expected sales volumes yesterday due to ongoing economic malaise and unusually poor weather, sending its shares down nearly 3%.

Coca-Cola said overall volume rose 1%, which was below its expectations, and cited slow economies in Europe, Asia and Latin America. It also said historically wet and cold weather across various regions curbed sales of soft drinks and overall consumer spending.

Coke chief executive Muhtar Kent said he believes the company’s performance will improve in the second half of the year.

Quarterly net income dipped to $2.68bn, or 59¢ per share, from $2.79bn, or 61¢ per share, a year earlier.

Excluding items, earnings were 63¢ per share, in line with the average analyst estimate, according to Thomson Reuters I/B/E/S.

Revenue dropped 3% to $12.75bn.

By region, sales volume fell 1% in North America and 4% in Europe, but rose 2% in Latin America, 9% in Eurasia and Africa, and 2% in the Pacific region.

In China, volume was flat due in part to poor weather and an economic slowdown, which is expected to continue to hurt results throughout the year. Still, Coke expects growth to return in the second half as it “evolves” its strategy in China. It did not elaborate.

 

Johnson & Johnson

 

Johnson & Johnson reported higher-than-expected second-quarter earnings as strong sales of prescription drugs and medical devices more than offset anemic growth of its consumer products.

The diversified healthcare company said yesterday that it earned $3.8bn, or $1.33 per share. That compared with $1.41bn, or 50¢ per share, in the year-earlier period, when J&J took $2.2bn in charges for the write-down of research assets, litigation expenses and merger-related costs.

J&J earned $1.48 per share, excluding special items such as expenses from litigation and an acquisition. Analysts on average expected $1.39, according to Thomson Reuters I/B/E/S.

Revenue rose 8.5% to $17.88bn, while Wall Street had been expecting $17.71bn.

J&J raised its full-year earnings forecast to between $5.40 and $5.47 per share from an earlier range of $5.35 to $5.45. It earned $5.10 per share last year.

 

SKF

 

SKF, the world’s biggest maker of bearings and a bellwether of the manufacturing sector, reported a tentative improvement in demand, driven by a surprise pick-up in sales to Europe’s car industry as well as energy and aerospace customers.

However the Swedish group, whose bearings are used in products ranging from dishwashers to wind turbines, struck a cautious tone about the months ahead, saying demand would probably consolidate at second-quarter levels for now.

Manufacturers across the world are struggling with a protracted recession in parts of Europe, a tepid US economic recovery and slowing growth in China. The International Monetary Fund cut its global growth forecast last week, underscoring the uncertain outlook for the world economy.

“Demand was somewhat higher than we expected and that was driven by the automotive business,” SKF’s long-time Chief Executive Tom Johnstone said of the second quarter.

“For the coming quarter I see the risk is more on the upside than the downside. But I’ve got to say it’s still a difficult market environment to judge.”

SKF, which competes with US group Timken and Germany’s Schaeffler AG, said yesterday its quarterly operating profit fell to 1.84bn Swedish crowns ($275mn) from 2.05bn in the same period last year.

That beat analysts’ average forecast of 1.7bn crowns in a Reuters poll, helped by cost cuts.

Nomura analysts said they expected earnings per share estimates to rise 3-6% for 2013 and 2014 on the back of the results, and SKF shares were up 3.2% to 171.9 crowns at 1135 GMT in a flat European industrials index.

While SKF did not see a major pickup in demand in its main industrial markets, its automotive business saw a surprise improvement in the second quarter with sales up 2.6% against the 6.4% fall seen by analysts.

“From the car business, we saw very good growth,” Johnstone said. “And that was mainly due to Europe. Europe’s car production has not gone (down) as expected in the quarter.”

Data yesterday showed European car sales fell to their lowest level for 20 years in the first half of this year, though the rate of decline has slowed recently.

While steadier car production played a part, SKF said it also benefited from better output of car models using its products, as well as a stronger service market.

An upturn for the long-suffering truck industry provided a boost as well, a reassuring sign ahead of reports by truck makers such as Daimler, Volvo and Scania over the coming week.

Though demand was up slightly on the second quarter from the first, SKF has had six straight quarters of falling sales volumes on an annual basis.

Johnstone, a Scotsman and a rare non-Swedish executive at the country’s blue-chip companies, predicted a return to slight growth year-on-year in the third quarter.

The Gothenburg-based group, which earlier this year unveiled plans to cut 2,500 jobs due to weak demand, said that among major regions only Latin America was expected to show firmer demand in the third quarter from the second, while Europe, Asia and North America were all seen flat.

The company raised its production slightly in the second quarter and would remain at that level in the third, it added.