Boeing reports 18% jump in profit on booming demand

Boeing Co reported an 18% increase in quarterly profit and raised its full-year core earnings forecast for the third time, reflecting booming commercial aircraft demand and increasing profitability in its defence business.

But shares of the Chicago-based aerospace and defence giant slipped 1.5% in early trading, as analysts viewed the profit gain as a given and raised concern about signs that the costs of the 787 Dreamliner were creeping higher.

The company earned $1.36bn, or $1.86 per share, for the third quarter ended September 30, up from $1.16bn, or $1.51 per share, a year earlier.

Core earnings, which exclude some pension and other costs, rose to $2.14 per share from $1.80, easily topping analyst forecasts of $1.97, according to Thomson Reuters I/B/E/S. Revenue rose 7% to $23.78bn.

Commercial aircraft deliveries rose 9% to 186, but the operating margin in the division narrowed to 11.2% from 11.6%, reflecting the effect of deliveries of lower-margin 787 and 747 aircraft in the quarter, Boeing said.

The margin decline and cash losses on the 787 that exceeded his forecast “could dampen the stock reaction,” Joseph Nadol, an analyst at JPMorgan, said in a note.

A relatively small increase in the company’s full-year cash flow outlook and higher deferred production costs for the 787 “will increase the bear calls,” Peter Arment, analyst at Sterne Agee, said in a note. But he expects Boeing to improve cash flow and margins in 2015, which should help the share price rise.

Boeing shares were down 1.5% at $125.16 in early trading on the New York Stock Exchange.

For 2014, the company said it expects core earnings between $8.10 and $8.30 per share, up from its earlier forecast of $7.90 to $8.10.

Boeing’s full-year revenue forecast remained unchanged at $87.5 to $90.5bn. Boeing trimmed its sales forecast for military aircraft for the full year to $13.7bn from $14.2bn, but raised its outlook for its global services and support business to $9.1bn from $8.6bn.

Polaris

Polaris Industries reported a higher-than-expected quarterly profit yesterday, lifted by strong demand for its snowmobiles, motorcycles and other off-road and specialty vehicles in every region outside Europe.

The Minneapolis-based company also raised its forecast for full-year earnings, the third time it has done so this year.

Like Harley-Davidson, which reported results on Tuesday, and a number of other US companies that have opened their books in recent days, Polaris said the strengthening US dollar continues to pose a significant challenge to its financial results.

During the third quarter, the US dollar rose an average of 7.74% against the currencies of its major trading partners.

But in a measure of Polaris’s operating efficiency and pricing power, the company reported it was still able to post double-digit percentage sales growth in every region outside Europe.

As a result, the company now expects to report a profit of $6.55 to $6.65 a share from continuing operations in 2014, up from a previous forecast

Polaris said third-quarter net income from continuing operations rose to $140.8mn, or $2.06 a share, from $116.9mn, or $1.64 a share, a year earlier.

On that basis, analysts on average expected a profit of $2.02 a share, according to Thomson Reuters I/B/E/S.

Boston Scientific

Boston Scientific Corp yesterday posted a third-quarter profit on increased sales of its implantable heart devices and raised its full-year revenue outlook, sending its shares up nearly 4%.

The company also expressed confidence about an upcoming trial on a long-running legal dispute with Johnson & Johnson .

Revenue climbed 6% in the quarter as new products gained momentum and sales of cardiac rhythm devices to manage irregular heartbeats and stents to treat clogged arteries helped the company take market share.

“It was generally a very strong quarter,” said Jefferies analyst Raj Denhoy. “Revenue growth as well as margin improvements were good.”

Sales of cardiac rhythm management devices, including implantable defibrillators and pacemakers, rose 3% to $480mn from a year earlier. Interventional cardiology sales, including stents, increased 8% to $508mn.

Net income totaled $43mn, or 3 cents per share, compared with a year-earlier net loss of $5mn, or nil per share.

The company has cut jobs and reduced other expenses over the past several years as the economic downturn hurt global demand for medical services, and clinical studies suggested stents and some cardiac rhythm devices were being overused.

Handelsbanken

Sweden’s second-largest bank, Handelsbanken, yesterday reported a rise in third-quarter profits boosted by higher income from its loan book as it continues its expansion overseas.

The Swedish group’s net profit grew by 8% from a year ago to 3.9bn kronor (€424mn, $537bn), helped by higher revenues from Britain and the Netherlands.

The bank—which makes the bulk of its profits in Sweden but has been bulking up its business abroad—reported strong growth in private banking customers as well as increased lending from January to September.

Operating profit in Britain rose by more than half to 1.196mn kronor, “chiefly due to higher net interest income and improved net fee and commission income,” it said in a statement.

Mortgage loans to private clients in Sweden also increased by 6% to 588bn kronor.

Handelsbanken is one of the best capitalised banks in Europe with a steadily rising funding level and “Tier 1” capital—a measure of a bank’s financial strength—which grew to 20.7% from 18.8% a year ago.

But its higher lending has also exposed it to higher risks, and losses from bad loans rocketed by 75% to 497mn kronor “due to higher provisions made on a few customer exposures,” the bank said in a statement.

It did not specify which customers were responsible for the losses but its loan-loss ratio remained low, increasing to 0.11%, from 0.06% in the previous quarter.

Biogen

Biogen has reported a higher-than-expected quarterly profit and raised its full-year earnings forecast, primarily on lower business development spending expectations and decreased research and development costs.

It now expects 2014 earnings of between $13.45 and $13.55 per share, up from its previous forecast of $12.90 to $13.10 per share, excluding items.

Biogen Idec yesterday reported sales of its big-selling new multiple sclerosis drug, Tecfidera, that fell short of Wall Street’s lofty expectations, and the company confirmed a serious brain infection in a patient who took the oral medication, sending its shares about 8% lower.

“We’ve always expected that Tecfidera’s growth rate would moderate over time,” Tony Kingsley, Biogen’s head of commercial operations, said on a conference call.

Shares of the US biotechnology firm fell $24.29 to $302.48 on the New York Stock Exchange.

Revenue rose 37% to $2.5bn, roughly in line with estimates of $2.48bn.

Biogen’s older injectable multiple sclerosis drug, Tysabri, which was once pulled from the market over PML concerns, had sales of $501mn, beating analyst expectations of about $485mn.

GlaxoSmithKline

GlaxoSmithKline will slash its costs by £1.0bn after posting slumping quarterly profits because of poor US sales, the British pharmaceutical giant said yesterday.

Costs will be cut by the equivalent of $1.6bn or €1.3bn after GSK posted profit after tax of £401mn in the third quarter.

That was down 59% compared with the outcome for the July-September period in 2013.

GSK added in its earnings statement that the group continued to work on an Ebola vaccine.

However it repeated that this would not be ready for commercial use until late 2016 and should therefore not be seen as the answer to the current outbreak in West Africa.

The company announced also that it intends to launch a partial stock market flotation of its ViiV Healthcare division, which develops treatments for HIV.

GSK is meanwhile looking to move on from a damaging scandal, which resulted last month in a Chinese court fining the company about $490mn over alleged bribery.

The firm’s former head of China operations, Mark Reilly, and four other ex-officials were given suspended sentences of between two and four years in prison.

Dow Chemical

Dow Chemical Co reported a better-than-expected profit as margins rose for the ninth straight quarter in its plastics business, its biggest, due to low raw material costs.

Shares of the No 1 US chemical maker by sales rose 3% to $49.55 before the bell.

Dow’s performance plastics unit has benefited as the shale boom in the US has kept prices of raw materials such as ethane and naphtha low, giving it an edge over the oil-dependent European petrochemicals industry.

However, the company’s petrochemical business in Europe is now poised to benefit from a recent slide in oil prices.

“What used to be a negative becomes a positive,” Chief Executive Andrew Liveris told Reuters. “Our naphtha crackers (in Europe) will be making money they weren’t a few months ago.”

Global benchmark Brent crude is down about 25% since June.

Liveris, however, said there could be some “short-term pressure” because of excess supply. Naphtha crackers in Europe account for a third of the company’s total capacity.

Earnings before interest, taxes, depreciation, and amortization (EBITDA) in the performance plastics unit rose 31% to $1.27bn in the third quarter ended September.

The unit makes products used by toy manufacturers, carmakers and the packaging industry.

Nordea

Nordea, the biggest bank in the Nordic region, announced yesterday a sharp rise in third quarter profits despite the economic slowdown and major outlays for an IT overhaul.

“In the third quarter we continued to welcome more new customers and were trusted with more savings, thereby passing the milestone of €250bn ($318bn) in assets under management,” the Swedish lender’s chief executive Christian Clausen said in a statement.

“Nordea once again was confirmed as one of the safest banks globally,” he added, referring to the low interest rate the bank secured for borrowing on the dollar market.

The Nordic banking giant’s net profit shot up by more than a fifth (21%) to €938mn, compared to the same quarter last year. It would have been higher if it were not for a 344mn euro bill for a future IT overhaul to improve banking and payment systems.

Nordea said it has increased its activity despite slow growth in the region and a worsening global economic outlook. Turnover from loans grew by 1% compared to a year ago.

“As in the previous quarters, the third quarter was characterised by macro headwinds with low growth, low volatility and even lower interest rates,” the bank said.

“The hope for a global recovery has been reduced due to geopolitical tensions, which also affect the export-oriented Nordic economies.”

Nordea, which employs 29,500 worldwide, also announced that it had cut costs by 2% compared to the last quarter.

Interpublic

Advertising company Interpublic Group of Cos reported quarterly revenue above analysts’ expectations, helped by higher ad spending by US businesses.

The world’s No 4 ad firm also said it could exceed its organic revenue growth target of 4% for the full year ending December.

US companies such as toymaker Mattel and Kraft Foods Group have been increasing their marketing and advertising budgets to encourage consumers to spend more.

Interpublic, whose clients include General Motors Co, Unilever and Johnson & Johnson, reported organic revenue growth of 6.3% in the third quarter ended September 30.

Organic revenue from the US, Interpublic’s biggest market, rose 7.9%, while international organic revenue increased 4.2%.

Interpublic, home to agencies such as McCann Erickson and FCB, said overall revenue rose to $1.84bn in the quarter, from $1.70bn a year earlier.

Net income available to common stockholders rose to $89.7mn, or 21 cents per share, from $45.4mn, or 11 cents per share.

Yara

Shares in Norwegian fertiliser firm Yara - still reeling from failed merger talks with CF Industries - fell more than 4% yesterday after it reported quarterly profit below market expectations.

The global fertiliser industry has been expanding quickly this year as farmers’ margins have remained high, keeping demand strong. The sector has also benefited from lower prices for natural gas, the main ingredient in nitrate fertilisers.

Yara’s core profit rose 24% in the third quarter but slightly missed analysts’ forecasts. The world’s biggest nitrogen fertiliser producer said gas prices had not declined as steeply as projected in the period and that profit had also been hit by unexpected maintenance work at an Australian plant.

The Yara stock was among the worst performers on Europe’s Stoxx 600 index on Wednesday, dropping 4.3% and trailing a 0.10% rise in the index. Yara is still up 18.7% over the past year, however, above the 0.9% gain in the index.

The company said the outlook for the sector remained positive. It said it would spend $350mn to expand its production capacity in Norway and expects prices for its products to stay high on strong demand and fertiliser production capacity cuts in places like Ukraine and China.

It also expects its European energy costs to fall by 1.15bn crowns ($174mn) over the next two quarters.

CF and Yara ended merger talks this month that would have created a firm on a par with industry leader Potash in terms of market capitalisation.

PSA Peugeot Citroen

Booming Chinese sales helped to boost quarterly revenue for PSA Peugeot Citroen, winning the French carmaker some breathing space as it seeks to revive its fortunes.

Peugeot, bailed out in a state-backed share issue earlier this year, yesterday posted a 1.6% revenue increase to €12.3bn ($15.6bn) for July-September—powered by a 55% surge in Chinese deliveries, while other regions struggled.

Under new Chief Executive Carlos Tavares, Peugeot is seeking to cut costs, streamline its model lineup and raise pricing in pursuit of a 2% operating profit margin in 2018.

Its €3bn capital increase saw the French state and Chinese partner Dongfeng Motor Group acquire matching 14% stakes, effectively rescuing the troubled carmaker.

Peugeot raised its full-year market forecast for Europe, an area that still accounts for 60% of its sales volume, but downgraded estimates for Latin America and Russia.

Revenue at the core manufacturing arm—which excludes Chinese production—slipped 0.8% to €8bn as a push to boost pricing “only partially offset the negative volume and currency effects”, the company said.

When combined with sales proceeds from its Chinese joint ventures with Dongfeng and Changan Automobile Group, the quarterly auto division revenue rose 2.7% year-on-year.

The company’s shares rallied as much as 3% in early trading before giving up most of their gains amid broader market jitters over stress tests underway at European banks. Peugeot stock was up 0.7% at 1055 GMT.

ABB

Swiss engineering group ABB yesterday reported a surge in orders from the energy industry in the third quarter, but warned of headwinds from the slowing global economy.

The volume of new orders surged almost a quarter over the period, helped by large contracts in the energy infrastructure, oil and gas industries.

But net profit dropped 12% to $734mn (€576.9mn) between July and September from the level a year earlier, dragged down by a weak performance in its Power Systems unit.

Revenue dropped 7% to $9.8bn, the company said in a statement, warning that weak growth in Europe and the Ebola crisis could offset positive signs in the world’s top economies, China and the US.

“In the short term, macroeconomic and geopolitical developments are signalling a mixed picture with increased uncertainty,” it said in a statement.

“The market remains impacted by slow growth in Europe, political tensions in various parts of the world as well as the health situation in Africa.”

On a positive note, orders jumped 24% from a year earlier to $11.2bn, helped by a large deal in Britain.

A $2.1bn deal helped boost orders in its Power System division by almost 80% from the level a year earlier, although costly delays to its solar and wind projects dragged down profit by 94%.

Iberdrola

Spanish energy group Iberdrola yesterday said net profit plunged in the third quarter, dragged down by a cut to renewable energy subsidies in its home market.

The world’s largest renewable energy producer earned €328.3mn ($419.4mn) between July and September, down 39.9% from a year earlier.

Net profit during the first nine months of the year fell 19.5% to €1.83bn.

Spain’s cash-strapped government cut direct aid for renewable energy last year in a bid to slash a 26bn-euro electricity deficit after years of paying subsidies.

Iberdrola said it lost €255mn of subsidies over the nine-month period because of the cut to aid to clean power generation.

“The negative impact of regulatory measures in Spain ... are partially offset by a 2.5% increase in production, efficiencies from the production mix,” the company said.

Iberdrola said it was also aided by a better performance from its renewables division in the US, Britain and Latin America, where it has been investing in recent years.

The company said its debt stood at €26bn and predicted this would be reduced to €24.7bn by the end of the year, meeting its reduction targets two years ahead of schedule.

Playtech

Gambling technology company Playtech said it was confident it would beat current market forecasts for the year, a second upgrade in only two months boosting its shares.

Playtech, which provides software used in sports betting and online casino and poker games, said yesterday revenue soared 29% in the third quarter.

It had made a strong start to the fourth quarter, with average daily revenues for the first part of the period up 22% compared to last year.

The company’s software was used in new sport betting products launched in Italy during the third quarter. European deals accounted for 56% of revenue and Asia accounting for 36% of sales, up from 25% this time last year.

Playtech also said in August that profit was likely to come in ahead of expectations. The stock has soared 20% in the last three months, outperforming Britain’s midcap index which has lost about 3%.

Arcadis

Dutch engineering company Arcadis stuck to its full-year targets despite reporting a 1% fall in third-quarter revenue yesterday, saying that a strong order book will put it back on track by year-end.

The decline in quarterly net revenue was down to weak demand in North American water and engineering markets and a slowdown in the Latin American mining sector, the company said. Excluding the 7% fall in the Americas, worldwide organic growth was at 4%.

The company, which carries out engineering, consulting and construction projects, said a rise in order intake, a solid market outlook and the impact of recent acquisitions meant it would meet growth targets, achieving a 5% increase to net revenue and 10% profit growth this year.

“Organic growth (is) moving towards our three-year target of above 5%, with the exception of North America,” Chief Executive Neil McArthur said.

“Tough conditions in that region’s environmental and water markets continue to weigh on revenues, though strong order intake provides confidence for a return to growth in 2015.”

The company recorded growth across the board in its buildings business, which contributes almost a third of revenue, led by high levels of capital expenditure in the Middle East and Continental Europe, with order intake up 7%.

The environment business, which contributes another third, was tougher, particularly in the US, where a shortage of public sector projects had pushed down prices. Market conditions in Britain were also difficult, it said.

Yahoo

Yahoo said its quarterly profit surged with its sale of shares in Chinese Internet powerhouse Alibaba, and that it was seeing signs of life in its mobile Internet initiatives.

Net profit jumped to $6.8bn, which included $6.3bn from its Alibaba shares. But profit was stronger than expected, and pumped up Yahoo shares by 3.1% in after-hours trade.

Revenue from operations inched up a% to $1.15bn, according to third quarter results welcomed by chief executive Marissa Mayer, who is under pressure to show the company can flourish apart from its lucrative investment in Alibaba.

“We had a good, solid third quarter,” Mayer said.

“We achieved this revenue growth through strong growth in our new areas of investment—mobile, social, native and video—despite industry headwinds in some of our large, legacy businesses.”

More than $200mn in revenue came from mobile devices, with gross revenue from ads served up on devices such as smartphones or tablet computers projected to bring in more than $1.2bn for Yahoo this year, according to Mayer.

“We have invested deeply in mobile and we are seeing those investments pay off,” Mayer said.

Making money from Internet users accessing web sites or services online through mobile devices is seen as crucial for Internet firms, as lifestyles increasingly center on smartphones or tablets.

Backed by money from its Alibaba investment, Yahoo reported that it has bought back $7.7bn worth of stock, or about 24% of outstanding shares, since Mayer became chief in the middle of 2012.