Indian conglomerate Reliance Industries yesterday reported an 18.3% rise in consolidated net profit due to a better-than-expected refining margin and growth in its consumer-facing business.
The Mumbai-based company owned by Asia’s richest man Mukesh Ambani said its consolidated net profit for the three months through September rose to Rs113bn ($1.59bn) from Rs95bn reported for the same quarter a year earlier.
“The Company has reported record net profit for the quarter.
These excellent results reflect benefits of our integrated Oil to Chemicals value chain and the rapid scale-up of our consumer businesses,” Reliance chairman Mukesh Ambani said in a statement. Reliance said its gross refining margin, the profit earned from each barrel of crude, was up at $9.4 in the September quarter from $8.1 in the previous quarter. Refining margins are a key profitability gauge for the company, which operates the world’s biggest refining complex in Gujarat state.
The oil-to-telecoms giant said profits for its telecom arm Jio were up by 45.4% at Rs9.90bn for the quarter, with a total 355.2mn subscribers.
Ambani launched Reliance Jio with much fanfare in September 2016 offering free services up to March 2017, sparking intense price wars that saw consolidation in the Indian telecom sector.
Credit card issuer American Express Co reported a higher-than-expected quarterly profit that highlighted the health of the US consumer even as fears mount that a manufacturing-led weakness could spread to the broader economy.
US retail sales fell for the first time in seven months in September, adding to concerns after data showed a moderation in job growth and services sector activity in the last month.
New York-based AmEx, for long the preferred choice of affluent Americans for credit cards, however, quelled investor concerns with its ninth straight quarter of foreign exchange adjusted revenue growth of at least 8%.
“The trends we saw in the business this quarter continue to be consistent with an economy that continues to grow, albeit at a more modest pace than last year,” chief executive officer Steve Squeri said. US big banks’ quarterly results also showed that American consumers are helping to prop up the economy, even as recession fears have led businesses to pull back on spending and borrowing.
Net income rose to $1.76bn, or $2.08 per share, in the quarter ended September 30, from $1.65bn, or $1.88 per share, a year earlier, the company said.
Analysts had expected a profit of $2.03 per share, according to IBES data from Refinitiv.
The company beat profit estimates for the seventh time in the last nine quarters, according to Refinitiv data. Shares in AmEx, however, were 1.3% lower as investors were disappointed that the company did not raise its guidance.
Kansas City Southern
Railroad operator Kansas City Southern yesterday reported a better-than-expected quarterly profit, helped by an increase in refined fuel shipments to Mexico and ongoing cost cuts.
Shares of the company, which derives one-third of its revenue from Mexico, jumped 5.2% to $142.41.
“We have a positive outlook for the rest of the year,” chief executive Patrick Ottensmeyer said on a conference call with analysts.
The results come as the railroad industry is seeing volumes fall because of competition from low-priced, long-haul truckers and US President Donald Trump’s bruising tariff disputes with key trade partners like China and Mexico.
Third-quarter net income available to common stockholders rose to $180.1mn, or $1.81 per share, from $173.5mn, or $1.70 per share, a year earlier.
Revenue rose 7% to $747.7mn.
Analysts, on average, had expected quarterly earnings of $1.79 per share and revenue of $734.9mn, according to IBES data from Refinitiv. Refined fuel products and liquid petroleum gas shipments to Mexico rose sharply.
Those were partly offset by lower revenue from frac sand, crude oil and automotive shipments.
Efficiency improved during the quarter, when operating ratio, a measure of operating expenses as a percentage of revenue and a key metric for Wall Street, fell 2.7 points to 60.7% from a year ago.
Executives, who are revising the railroad’s forecasts on the heels of the strong results, signaled caution on roughly 30% of the railroad’s overall revenue.
The company’s intermodal business, which handles cargo that travels by ship, road and rail, is bearing the weight of tariff-weakened international trade and truck competition. “We’ll continue monitor the overall economic environment,” Naatz said.
Coca-Cola reported higher third-quarter profits yesterday, citing solid sales of soda and innovative products like smaller drink cans that offset the hit from a strong dollar. The beverage giant lifted full year profit and sales targets, and chief executive James Quincey said strategies “are taking hold with our consumers, customers and system.”
Profits rose 38% to $2.6bn, off of an 8.3% increase in revenues to $9.5bn.
The company scored higher sales of its flagship Coca-Cola and notched another quarter of double-digit growth in Coca-Cola Zero Sugar diet soda.
Results were also boosted by increased sales of smaller 7.5 ounce mini-cans that enjoy higher profit margins, and by initiatives such as distributing more than 100,000 coolers in Brazil to take advantage of strong demand for immediate consumption drinks. The company undertook an international launch of a new coffee product in more than 20 markets and said it plans to introduce new energy drinks in the United States next year.
Coca-Cola raised its full-year targets for revenues and operating income, but maintained the projection for earnings per shares.
Holiday Inn-owner InterContinental Hotels Group blamed lower business bookings in China and Hong Kong protests for a 0.8% fall in third-quarter revenue per room yesterday, the latest company to be pinched by weaker global travel.
The hotel industry in general is feeling the impact of slowing global growth, which is denting business travel. Rival Hilton Worldwide Holdings Inc warned that lagging growth in China and the China-US trade war would hurt revenue.
Raffles owner AccorHotels narrowed its full-year profit guidance, citing uncertainty on China-related issues. Four months of protests in Hong Kong have taken a toll on tourism, while weak economic data from China has been discouraging.
IHG reported a 6.1% fall in revenue per available room (RevPAR) in Greater China during the quarter, with a 36% drop in Hong Kong.
“While we are certainly not at the stage where business travel has been scaled back on a large scale, the cracks are certainly showing,” AJ Bell’s Investment Director Russ Mould said.
Shares in IHG, which has nearly 5,800 hotels including the Crowne Plaza and Regent Hotels & Resorts brands, fell nearly 2% in early trade yesterday.
The company has been putting more money into China, its fastest-growing market, using new loyalty programmes, digital payment options and revamping rooms at Holiday Inn to woo local business travellers.
Assa Abloy, the world’s biggest lock maker, said yesterday that market conditions had become more challenging and uncertain after reporting higher third-quarter earnings in line with analysts’ forecasts and resilient sales growth.
The company said savings, price increases and lower raw material costs boosted profits, while new construction had continued to trend down in some important markets and geopolitical challenges remained.
Assa Abloy said organic sales grew 4% in the quarter, despite negative growth in China.
JP Morgan analysts said in a note they had expected organic growth of 3.2%. The company, whose rivals include Allegion and Stanley Black & Decker, said it had reached its acquisition target of 5% for 2020. “Nevertheless, we will continue to work actively on our acquisition pipeline,” chief executive officer Nico Delvaux said in the earnings report.
Operating profit was 3.89bn ($400.9mn) crowns against 3.42bn a year-ago.
Analysts had on average estimated a profit of 3.87bn crowns, according to Refinitiv data.
Shares in Assa Abloy, which also makes security doors, access control systems and hotel room locks, are up around 40% so far this year.
Sweden’s AB Volvo yesterday reported a sharp fall in order intake of its trucks in the third quarter and forecast slumping market demand on both sides of the North Atlantic next year, taking the shine off forecast-beating earnings.
After years of strong demand, signs of a slowdown in commercial vehicles markets that have always been prone to violent cyclical swings have multiplied in recent months, amid worries over global trade wars and slumping economies.
The world’s second largest truckmaker behind Daimler said order intake of its trucks, which include brands such as Mack and Renault, fell 45% in the third quarter. Several analysts were forecasting declines of just over 30% in research notes ahead of the report. “EBIT and sales are good, but what one will focus on here is the order intake,” Handelsbanken analyst Hampus Engellau said.
“I would guess that the stock will come down 4% to 5% on this, in any case.” Volvo forecast the heavy truck market falling about 14% in Europe and 29% in North America next year, and said that with freight volumes having levelled off, economic uncertainty was prompting customers to hold back investment.
Schlumberger NV beat Wall Street estimates for profit yesterday, in the first quarter under Olivier Le Peuch, as higher international drilling activity boosted demand for its equipment and services and helped counter weakness in North America.
The international business has been a bright spot for the world’s largest oilfield services provider since last year as investor pressure to improve returns has forced North American oil and gas producers to rein in drilling new wells in a volatile price environment.
Le Peuch, who took charge in July, has outlined plans to accelerate digital investments, restructure his predecessor Paal Kibsgaard’s major initiatives and resize the company’s North American onshore operations. As part of the strategy, the company recorded a goodwill impairment charge of $12.7bn in the third quarter, largely related to its purchase of Smith International Inc and Cameron International Corp The charge also included $1.58bn linked to the company’s pressure pumping business in North America.
“That’s a sizeable write-down from pressure pumping business. That just tells you the state of the North American onshore market being pretty poor,” said Anish Kapadia, founder of London-based oil and gas consultancy firm AKap Energy.
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