Gazprom Neft nine-month net profit rises 3.2% to $3bn

Russia’s Gazprom Neft, the oil arm of gas producer Gazprom, said yesterday net profit rose 3.2% in the nine months of 2014, year-on-year, but its growth had been capped by weaker rouble.

Profit for the period reached 139.5bn roubles ($3bn) and 51.9bn roubles in the third quarter, down from 57.5bn roubles in the same period last year, the company said in a statement.

Gazprom Neft, Russia’s fourth biggest by oil production, said that losses from foreign exchange for the nine-month period stood at 14.6bn roubles, largely from the revaluation of its loan portfolio denominated in foreign currencies.

The Russian rouble has lost almost 30% against the dollar since the beginning of the year, weakened in part by sanctions over Moscow’s role in the Ukraine crisis.

Gazprom Neft said hydrocarbon production, mostly crude oil and gas condensate, increased by 5.7% in the nine-month period, year-on-year, to stay at 1.31mn barrels per day.

In September, Gazprom Neft was included on the list of Russian companies under Western sanctions. The measures limit the company’s ability to raise funds on Western markets and prevent Western firms from helping it on certain projects, including in shale oil.

Tencent

Tencent Holdings, China’s biggest social network and gaming firm, missed third-quarter net income forecasts as revenue grew at its slowest rate in seven years and sales from its lucrative mobile gaming business dropped off.

Mobile gaming sales, the biggest driver of revenue growth in the previous quarter, fell to 2.6bn yuan in the three months ended September from 3bn in the second quarter.

Tencent’s results were worse than management had forecast, confirming investor worries that cooling sales from mobile gaming would be a drag on the $154bn company’s results.

Tencent’s stock lost as much as 13% of its value after company executives warned in August that mobile gaming revenue growth could be flat during the second half of the year.

Net income rose 46.4% to 5.66bn yuan ($923.98mn) in the third quarter, well below estimates of 6.173bn yuan, according to a Thomson Reuters SmartEstimate poll of 10 analysts.

Earnings were held back by the slowest revenue growth in seven years. Revenue was up 27.5% to 19.81bn yuan, versus forecasts of 20.57bn based on a poll of 12 analysts, it said in a filing to the Hong Kong stock exchange.

Global monthly active users of Tencent’s WeChat, China’s biggest mobile app, rose 6.8% from the previous quarter to 468mn monthly active users, its slowest rate of quarterly growth since Tencent started releasing figures.

Burberry

British luxury brand Burberry said the impact of foreign exchange rates would fade after weighing on profit and sales in the first half of its financial year.

The fashion company, which has launched a high-profile Christmas campaign featuring 12-year-old Romeo Beckham, son of soccer star David and designer Victoria, said trading remained tough, “with pockets of weakness in Europe.”

Burberry reported a 12% drop in profit before tax for the six months to September 30 to £142mn ($225mn), which was broadly in line with market forecasts.

Foreign exchange rates shaved off £75mn in revenue and £31mn in profit in the company’s fiscal first half but should become less of a factor in the months to come, the company said.

“At current rates, we do not expect foreign exchange to have a material impact on underlying profits for the second half,” Burberry Finance Director Carol Fairweather told a conference call with journalists.

Burberry shares were down just over 1% at 1510 pence by 1146 GMT. Burberry said demand from the Chinese, which fell significantly in recent months, had not really improved while spending by the Russians, which have seen the value of the rouble collapse in the past week, also remained lower.

However, the company said it continued to trade better than many of its peers in China, where it bought out franchise partners three years ago and where sales were up more than 10% in comparable terms.

Encana

Encana Corp, Canada’s largest natural-gas producer, said its quarterly operating profit jumped 87% due to higher production of oil and natural gas liquids.

The company, under Chief Executive Doug Suttles, has been focusing on boosting production of oil and natural gas liquids (NGL) after years of weak profits caused by its reliance on natural gas production. The company is paying for its oil acquisitions by selling gas fields as it concentrates its operations on seven oil and NGL-rich regions, including Eagle Ford in Texas.

The company agreed to buy Athlon Energy in September to gain access to a premier oil position in the Permian Basin in Texas.

The $5.93bn deal put Encana on track to achieve 75% of operating cash flow from liquids in 2015.

Oil and NGL production jumped 79% to average 104,000 barrels per day in the third quarter ended Sept. 30, driven in part by volumes from recently acquired properties in the booming Eagle Ford shale field.

Natural gas production fell 19% to 2.2bn cubic feet per day. Encana’s cash flow, a key indicator of its ability to pay for new projects and drilling, rose 22% to $807mn, or $1.09 per share.

The company’s operating profit, excluding most one-time items, rose to $281mn, or 38 cents per share, in the quarter from $150mn, or 20 cents per share, a year earlier.

Flybe

British budget airline Flybe Group swung to a pretax loss in the first half, hurt by one-off costs and a charge related to its exit from its Finland joint venture.

Flybe’s stock fell as much as 23% to 102 pence, making it one of the top percentage losers on the London Stock Exchange.

The carrier posted a pretax loss of £15.3mn ($24mn) in the six months ended September 30, compared with a profit of £13.8mn a year earlier.

Flybe was hurt by an increased flight delay claims provision, external costs related to surplus capacity and revaluation of US dollar aircraft loans.

The company booked an impairment charge related to the sale of its 60% stake in loss-making Flybe Finland to partner Finnair.

Citing slower capacity growth and higher market costs, Liberum analyst Gerald Khoo cut his full-year forecast to a “small pre-tax loss”.

The embattled carrier had only just returned to profitability last year, helped by brutal cost-cutting that involved giving up airport slots, slashing jobs, exiting unprofitable flight routes and grounding surplus fleet.

However, new EU 261 flight delay compensation regulations that dictate procedure in events of denied boarding, flight cancellations, or long delays of flights, forced the company to record a 6mn pound provision in the first half.

Telefonica

Spain’s Telefonica pointed to a rise in customers signing up for its mobile, broadband and pay-TV deals as evidence of a turnaround from its three-year slump after posting falling revenue and profit in the first nine months of the year.

The trend echoed that at British and Dutch rivals Vodafone and KPN, which have started to benefit from their investments in faster networks, though Telefonica’s trading improvement may need a few more months to feed into the bottom line.

Telefonica, which has lost more than a third of its revenue and core profit in Spain as cash-strapped consumers reduce their telecoms spending, is betting on the take-up of bundled packages that combine mobile and fixed-line phones, high-speed Internet and TV and on its heavy investment in fibre-optic networks.

Europe’s biggest telecoms group by revenue reported net profit down 9.4% during the period to €2.85bn ($3.56bn), beating the €2.84bn expected by analysts. Operating income before depreciation and amortisation (OIBDA) dropped 12.6%, to €12.33bn and revenue shrank 10.9% to €37.98bn.

E.ON

Germany’s largest utility E.ON posted a 7% profit drop in the first nine months of the year, blaming low wholesale prices as well as a weak rouble that hit business in Russia, its most important foreign market.

Earnings before interest, tax, depreciation and amortisation (EBITDA) fell to €6.64bn ($8.29bn) in the January-September period. In Russia, EBITDA was down by nearly a fifth at €401mn.

Russia, has been hit by a weakening rouble - down more than a quarter against the euro so far this year - due to Western economic sanctions over Ukraine. “The political crisis in Ukraine could have an impact on the gas supply and our activities in Russia,” the company said on Wednesday, adding its Russian business was currently operating “largely according to plan”.

Last year, the Russian market accounted for 1.5% of E.ON’s sales and 7.4% of the group’s EBITDA.

Germany, Europe’s biggest gas market, relies on supplies from Russia, which accounted for about 39% of German natural gas imports last year, while E.ON itself gets as much as half the gas it needs from Gazprom.

Rusal

Rusal, the world’s largest aluminium producer, said it had swung to a profit in the third quarter from a loss a year ago thanks to rising metal prices and cost reductions.

The Hong Kong-listed company said it saw a net profit of $220mn in the three months ending September 30, compared with a $172mn loss for the same period last year.

In a statement the Moscow-based firm said the reversal came on the back of procurement savings and cost cutting, with chief executive Oleg Deripaska adding that increasing demand was spurring the sector. “Healthy consumption growth coupled with production curtailments have led to a deficit in the global market,” excluding China, he said.

Cost controls and increasing margins had also helped produce “significantly improved third-quarter results” he added.

Rusal’s results were the second consecutive quarterly profit jump after it posted a $116mn profit in June which bounced it back into the black for the first time since early 2013.

Over nine months, the company saw a 0.2% growth in profits, compared with an eight% loss for the same period in 2013. Adjusted earnings before interest, tax, depreciation and amortisation in the third quarter rose to $470mn from $220mn in previous three months.