BP is digging in for a long legal battle over the Gulf of Mexico oil spill, chief executive Bob Dudley said yesterday after compensation costs soared for a second straight quarter.

The payouts, the scale of which BP is disputing even though they are one part of the case that was settled last year, have been the focus of attention in recent months in a wider legal process that has saddled BP with a $42.4bn clean-up, fines and compensation burden and could yet cost billions more.

BP has said some of claims being paid are “absurd” and “fictitious” and that the terms are being misinterpreted to allow businesses which had no spill-associated loss receive payment. It has so far failed in all its attempts to stop them.

The second quarter saw BP take another $1.4bn in provisions on claims against a $20bn fund that finances them, leaving the fund with just $300mn left unaccounted for, even though the deadline to claim by Gulf coast businesses is not until April next year.

Adjusted net profit for the quarter fell to $2.71bn compared with expectations of $3.41bn and with $3.6bn a year ago. Profit was also hit by lower prices and by lower production - partly the result of asset sales to pay for the costs of the spill.

The extra $1.4bn of spill compensation costs come on top of a $500mn addition in the first quarter and bring BP’s estimate of the cost of claims so far to $9.6bn.

Some $900mn is for extra claims, while about $500mn is for the costs of the claims administrator, BP said.

 

Thomson Reuters

Thomson Reuters yesterday posted a 2% rise in second-quarter revenue on the strength of its legal and tax and accounting businesses and reaffirmed its forecast for 2013.

The global news and information company expects revenue to grow in the low single digits for the year, and sees underlying operating profit margin between 16.5 and 17.5%.

Total revenue from ongoing business rose 2% before currency changes to $3.1bn, which is in line with analysts’ expectations.

Adjusted earnings for the quarter were roughly flat from the year ago at $569mn, or 48¢ per share, ahead of analysts expectations of 44¢, according to Thomson Reuters I/B/E/S.

Revenue at Financial & Risk, which accounts for 53% of total revenue at Thomson Reuters, fell 1% to $1.6bn because of lower revenue mainly in Europe.

 

Merck

Merck & Co Inc’s quarterly revenue fell short of expectations on disappointing results for the company’s consumer and animal health products and weak overseas sales of prescription drugs that were slammed by the stronger dollar.

Excluding special items such as costs of $1.77bn from acquisitions and $278mn for restructuring, Merck earned 84¢ per share. Analysts, on average, expected 83¢ per share.

Revenue fell 11% to $11.01bn, while Wall Street expected $11.22bn. The results suffered from generic competition for Merck’s Singulair asthma drug, which lost US patent protection a year ago.

Merck said it expected full-year sales to be about 5% to 6% below last year’s levels, worse than the 3% to 4% decline it had previously forecast, largely due to the stronger dollar.

 

Santander

Earnings from Santander SA’s flagship Latin American businesses fell in the first half of 2013 as lending income from Brazil faltered, taking the shine off improved group profits.

A shaky economic recovery in Brazil - Santander’s biggest Latin American market - has been a top concern for investors and analysts tracking the bank in recent months.

Santander’s Brazil operation posted a 17.5% fall in net interest income - a measure of interest earned on loans minus what is paid out on liabilities such as deposits - to €5.5bn ($7.3bn).

Santander’s €2.25bn net profit in the first half of 2013 was almost as much as what the bank made for the whole of last year.

 

Dr Reddy’s

India’s second-largest drugmaker Dr Reddy’s Laboratories yesterday reported a 7.45% rise in quarterly net profit, lower than expected due to a fall in European revenues.

Dr Reddy’s consolidated net profit rose to Rs3.61bn ($60mn) for the three months to June from Rs3.36bn a year earlier.

Analysts had expected the firm to show a profit for the financial first quarter of Rs4.2bn.

 

Discovery

Discovery Communications Inc’s second-quarter profit missed analyst estimates yesterday as it recorded higher operating expenses at its US cable unit. The media company, which owns cable networks such as Animal Planet and TLC, said net income rose to $300mn, or 82¢ per share, compared with $293mn or 77¢ per share a year earlier.

Discovery’s revenue rose 30% to $1.47bn. Analysts had expected $1.48bn, according to Thomson Reuters I/B/E/S. Net income rose to $300mn, or 82¢ per share, compared with $293mn or 77¢ per share a year earlier.

 

HTC

Taiwan HTC’s Q2 profits pummelled amid grim Q3 outlook Taiwan’s leading smartphone maker HTC said yesterday it may swing to a loss in the third quarter after reporting an 83% fall in net profits in the three months to June due to higher costs and inventories.

Its net profit totalled Tw$1.25bn ($41.67mn), compared with Tw$7.4bn recorded the previous year, while revenue fell 22% year-on-year to Tw$70.7bn, the company said in a statement.

But the worst is yet over as the company forecasted that its quarterly sales in the third quarter will slow to a range of Tw$50bn-Tw$60bn and operating margin to a range of 0% to negative 8%.

 

SoftBank

Japanese mobile operator SoftBank yesterday said its net profit for the April-June quarter more than doubled from a year earlier thanks to rosy results at a mobile game subsidiary.

The company, which recently completed its $21.6bn purchase of US wireless carrier Sprint Nextel, said it earned ¥238.3bn ($2.4bn) in the fiscal first quarter, up from ¥105.6bn in the same period last year. It added that a change in the way it reports, to international standards, also hiked its results.

Revenue jumped 21.4% to ¥881.1bn in the three months, it said. Sprint is not yet included in the firm’s results.

 

Alcatel

Struggling telecom equipment maker Alcatel-Lucent surfed on strong growth in its key US market to beat analysts’ estimates and said mobile chip maker Qualcomm would buy a minority stake as part of a research partnership.

In the first full quarter under a new chief executive Michel Combes, the smaller competitor to Sweden’s Ericsson and China’s Huawei posted a quarterly sales rise of 1.9% to €3.61bn ($4.78bn).

The group’s second-quarter results were marked by a net loss of €871mn caused by a writedown of its sub-scale wireless business.

And Alcatel-Lucent consumed more cash - €248mn - in its operations than it generated, a perennial problem for the group.

 

Infineon

German chipmaker Infineon raised its full-year outlook as demand from industrial customers improved and its major automotive customers continued to buy up chips.

The company, whose chips activate airbags, enable cruise control and cut emissions, has been riding a global trend to make cars safer, cleaner and more energy efficient.

The Neubiberg, southern Germany-based company said it now expected full-year revenue of €3.85bn ($5.09bn), a drop of about 1.5%.

Operating profit, excluding special items, for the three months to June fell 7% to €117mn ($155.07mn) compared with the year-earlier period, beating the most optimistic forecast for €109mn in a Reuters poll.

 

Pfizer

Pfizer Inc reported second-quarter earnings slightly ahead of estimates yesterday as the largest US drugmaker lines up a business split that could lead to the spinoff of its generics division.

The company, hit by falling sales of its now off-patent cholesterol fighter Lipitor, reaffirmed its financial outlook for the year.

For the second quarter, adjusted income fell 10% to $4.00bn, or 56¢ a share, from $4.45bn, or 59¢ a share, a year earlier. Revenue dropped 7% to $12.97bn.

Analysts, on average, expected second-quarter income of 55¢ a share, on revenue of $13.01bn, according to Thomson Reuters I/B/E/S.

Pfizer reiterated that it expected full-year earnings of $2.10 to $2.20 per share.

It reported global sales of $12.97bn, slightly lower than Wall Street estimates of $13.02bn.

 

Occidental

Occidental Petroleum Corp posted a smaller-than-expected quarterly profit yesterday, hurt by lower oil prices in the Middle East and North Africa, where the fourth-largest US oil company is considering an exit.

Occidental said oil and gas production volumes rose nearly 1% in the second quarter, to 772,000 barrels of oil equivalent per day, due to surging output in Texas’ Permian Basin and California.

Occidental gets about two-thirds of its oil and gas output in the US, and Chazen said second-half US production would be 2% to 3% higher than the first-half’s 262,000 boe per day.

The company’s second-quarter net profit was $1.32bn, or $1.64 per share, little changed from a year earlier. Adjusted profit was $1.58 per share, 2¢ below analysts’ average estimate, according to Thomson Reuters I/B/E/S.