News Archive

U.S. jobless claims increase, but still near cycle lows

WASHINGTON The number of Americans filing new applications for unemployment benefits increased last

week, but remained near cycle lows in a sign that the jobs

market was gaining steam.

Initial claims for state unemployment benefits increased 12,000 to a seasonally adjusted 267,000 for the week ended July 25, the Labor Department said on Thursday. Claims for the prior week were unrevised at 255,000, which was the lowest level since

November 1973.

A Labor Department analyst said there were no special factors influencing the data and that only claims for

Puerto Rico had been estimated.

The four-week moving average of claims, considered a better measure of labor market trends as it irons out week-to-week volatility, fell 3,750 to 274,750 last week.

Thursday’s claims report showed the number of people still receiving benefits after an initial week of aid rose 46,000 to 2.26 million in the week ended July 18. The so-called continuing claims covered the week during which the government surveyed households for July’s unemployment rate.

(Reporting by Lucia Mutikani; Editing by Andrea Ricci)

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Teva’s MS drug Copaxone has strong second-quarter sales

JERUSALEM Teva Pharmaceutical Industries (TEVA.N), which this week revealed plans to buy Allergan’s (AGN.N) generics drugs business in a $40.5 billion deal, said on Thursday sales of its branded multiple sclerosis drug Copaxone rose 12 percent in the second quarter even though it faces new competition.

Teva, the world’s biggest generic drug maker, said that global Copaxone sales rose to $1.1 billion in the April-June quarter and it held a 31.2 percent shares of total MS prescriptions in the United States.

Sales of the best-selling drug, had dropped 14 percent in the first quarter.

Sandoz, part of Swiss drugmaker Novartis AG NOVM.VX, and Momenta Pharmaceuticals (MNTA.O) in June launched a once daily 20 mg version of Copaxone called Glatopa.

To stem the tide of generic competition, Teva has been moving patients to a three times a week 40 mg version of Copaxone, which the company said accounted for 68.5 percent of total Copaxone prescriptions in the United States.

Pressure had been growing on Teva Chief Executive Erez Vigodman to find new revenue sources to combat generic competition for Copaxone, which accounts for about half of Teva’s profit and 20 percent of revenue.

Teva has already published some details of its results on Monday when it unveiled its proposed purchase of Allergan’s generics business. This is the largest deal in Israel’s corporate history and aims to give Teva greater economies of scale, crucial in the low-margin generic drugs business.

Teva on Thursday reiterated that it recorded quarterly earnings of $1.43 per diluted share excluding one-off items, up from $1.25 a year earlier and well above analysts’ estimates of $1.31 according to Thomson Reuters I/B/E/S.

Revenue in the quarter slipped 2 percent to $4.97 billion but rose 6 percent excluding the impact of foreign exchange fluctuations and the sale of U.S. over-the-counter plants.

Teva declared a quarterly dividend of 34 cents a share.

It raised its 2015 earnings per share estimate to $5.15-$5.40 from $5.00-$5.30 but maintained a revenue forecast of $19.0-$19.4 billion.

Teva’s shares were down 1.8 percent late trading in Tel Aviv on Thursday after hitting an historic closing high of 271.10 shekels ($71.66) on Wednesday. In premarket trading in New York, the stock was down 0.7 percent at $70.37.

($1 = 3.7830 shekels)

(Reporting by Steven Scheer. Editing by Jane Merriman)

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Virgin America net profit jumps on higher U.S. travel, lower costs

Virgin America Inc (VA.O), a low-cost airline partly owned by Richard Branson, reported a 76 percent jump in quarterly profit, helped by higher U.S. travel and lower fuel costs.

The company’s net income rose to $65 million in the second quarter ended June 30, from $37 million a year earlier.

However, earnings per share fell to $1.47 from $11.92 due to a higher number of shares outstanding in the latest quarter.

Total operating revenue rose 0.5 percent to $400.9 million.

(Reporting by Sagarika Jaisinghani in Bengaluru; Editing by Maju Samuel)

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Procter & Gamble sales fall for sixth straight quarter

Procter Gamble Co (PG.N), the world’s largest consumer products maker, reported the sixth straight fall in its quarterly sales, hurt by a stronger dollar.

Shares of the maker of Pampers diapers and Tide detergent fell as much as 4 percent on Thursday.

The company, which gets about two-thirds of its sales from markets outside the United States, has been hurt by a 20 percent rise in the dollar in the past year.

PG has been raising prices to offset the impact of a strong dollar, but this has resulted in customers turning to cheaper local alternatives.

The company has also been streamlining its business, nearly halving the number of its brands from over 100 as it focuses on faster-growing brands. It named David Taylor as its new chief executive this week.

However, analysts have raised concerns that the company’s focus brands are yet to show any significant improvement.

Quarterly sales volumes fell 1-4 percent in grooming products, baby, feminine and family care products and health care products business – three of the four product segments the company is focusing on.

Volumes in the fourth focus segment – fabric and home care – rose just 1 percent in the fourth quarter.

This was not the “finish” investors expected, UBS analysts said in a note.

Peer Colgate-Palmolive Co (CL.N) reported its fourth straight quarter of falling sales on Thursday and said the strong dollar was the main reason for the decline.

Net income attributable to PG fell 80 percent to $521 million, or 18 cents per share, in the quarter ended June 30 as it took a $2.03 billion charge related to an accounting method change in Venezuelan operations.

Excluding items, PG earned $1 per share.

Total revenue fell 9.2 percent to $17.79 billion.

Analysts on average had expected a profit of 95 cents per share and revenue of $17.98 billion, according to Thomson Reuters I/B/E/S.

PG shares were down 3.5 percent at $77.78 in noon trading on the New York Stock Exchange.

(Editing by Simon Jennings and Kirti Pandey)

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Conoco results beat estimates, cuts capex amid low oil price

ConocoPhillips (COP.N), the largest U.S. independent oil and gas company, reported quarterly results that beat analysts’ expectations Thursday and said it would cut capital expenditure as low crude oil prices persist.

The Houston-based company said it would cut 2015 capital spending to $11 billion from $11.5 billion, and also lowered its forecast for operating expenses.

Chief Executive Officer Ryan Lance said Conoco was preparing for “lower, more volatile prices.”

Crude prices have tumbled about 20 percent since June 23 on expectations of new supply from Iran following its recent nuclear deal with world powers, as well as on slowing Chinese demand and growing inventories.

Conoco lost $179 million, or 15 cents per share, in the second quarter, after earning a profit of $2.1 billion, or $1.67 a share, in the same quarter a year earlier.

Excluding one-time items related to tax and impairment charges, Conoco had a profit of 7 cents a share. Analysts, on average, had expected a profit of 4 cents per share, according to Thomson Reuters I/B/E/S.

Second-quarter output from continuing operations, excluding Libya, was 1.595 million barrels oil equivalent per day (boed), an increase of 39,000 boed compared from a year ago.

Conoco said it was on track to achieve the higher end of its 2015 production growth target of 2 percent to 3 percent, helped by higher output from U.S. shale fields.

(Reporting by Anna Driver; Editing by Alden Bentley and Bernadette Baum)

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Blackstone sells stake in Indian auto parts maker to consortium

A fund run by U.S. private equity firm Blackstone Group (BX.N) has sold its 97.9 percent stake in Indian auto components maker Agile Electric Sub Assembly to a group of buyers, including Japan’s Igarashi Electric Works, for an undisclosed amount.

The other buyers are Indian investment bank MAPE Securities and two funds run by financial firm Tata Capital, according to a statement from Tata Capital.

(Reporting by Karen Rebelo in Mumbai; Editing by Subhranshu Sahu)

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Greek PM suggests party referendum to overcome split in Syriza

ATHENS Greek Prime Minister Alexis Tsipras on Thursday called for his Syriza party to hold an emergency congress next month to overcome divisions but said a snap party referendum would be acceptable if leftist dissenters wanted a quicker solution.

In a speech to Syriza’s central committee, Tsipras said a decision on the party’s strategy should not be made in a hurry but proposed a referendum on Sunday if needed.

“I propose to the central committee to hold an emergency congress to discuss being in power as leftists, our strategy in the face of bailout conditions,” he told the party.

“But there is another view, which is respected, that doesn’t accept the government’s analysis and believes there was an alternative available in the early morning hours of July 13,” Tsipras said, referring to the day he accepted the bailout agreement to avoid a Greek euro zone exit.

“If this is the case….then I suggest the party hold a referendum on this crucial question.”

(Reporting by Renee Maltezou, Writing by Deepa Babington)

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Shell to axe 6,500 jobs and cut spending to cope with lower oil prices

LONDON Royal Dutch Shell is to axe 6,500 jobs this year and step up spending cuts as it seeks to reassure investors it can withstand an extended period of lower oil prices, even through its planned $70 billion acquisition of BG Group.

The Anglo-Dutch company also announced plans to raise $50 billion from asset sales between 2014 and 2018 after its second-quarter profit dropped by 37 percent.

“Perhaps we left the impression that we will wait for the cavalry to arrive in the form of higher oil prices and that we were going to be lazy in terms of cost takeout,” Chief Executive Officer Ben van Beurden said on Thursday.

“But what we also said at the time (of the BG deal announcement), perhaps not skilfully enough and not loud enough, is judge us on what we do and that is what today’s message is all about.”

Shell said it anticipated 6,500 staff and direct contractor reductions globally in 2015 from a total of nearly 100,000 employees, as it grapples with a halving in oil prices to around $55 per barrel in a year.

Like rivals BP, Statoil and Total it announced reductions in capital investments for a second time this year, shaving another $3 billion off its 2015 budget to bring it to $30 billion.

Around 20 to 30 percent of the $30 billion of asset sales expected between 2016 and 2018 will come from the downstream and midstream businesses, Shell said, leaving the expanded Shell-BG group to focus on fewer but larger and more competitive assets.

Shell will only make two major investment decisions this year, with many projects scaled back, delayed or canceled, van Beurden said. He hinted at further spending cuts if economic conditions worsened, including a steeper drop in oil prices.

The company said it was selling a 33 percent stake in the Showa Shell refinery in Japan to Idemitsu for about $1.4 billion.


Shell also reassured wary investors its bumper BG purchase would not break the bank. If the deal goes through in early 2016 as planned, capital investments in 2016 will be $35 billion, Shell said, lower than the $42 to $40 billion analysts expected.

“This should be well received as Shell has suffered from a perception that its capital discipline has been poor relative to peers and that the BG deal was struck assuming higher oil prices, while synergies were limited,” investment bank Tudor, Pickering, Holt Co said.

Shell is still awaiting regulatory approvals for the deal from the European Union, China and Australia, after Brazil, the United States and South Korea cleared it.

The deal is expected to generate pretax benefits of around $2.5 billion per year starting 2018. The tie-up will turn Shell into the world’s leading liquefied natural gas company and one of the largest deepwater oil producers with a focus on Brazil.

Shell’s second-quarter “cost of supplies” earnings excluding identified items — the company’s definition of net income — came in at $3.84 billion, down from $6.13 billion a year earlier and $3.25 billion in the previous quarter. That beat expectations of $3.18 billion, according to an analyst consensus provided by the company.

Shell shares, which fell earlier this week to their lowest this year, were trading up 4.7 percent at 1300 GMT, while the European oil and gas sector was up 2.9 percent.

A sharp decline of around 75 percent in revenue from oil production was once again offset by refining and trading, where earnings more than doubled from a year earlier.

Shell maintained its quarterly dividend at 47 cents per share and committed to rewarding shareholders with at least the same payout in 2016.

(Editing by Jane Merriman, David Holmes and Mark Potter)

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Failed FT bid shows Axel Springer caught between tradition and ambition

FRANKFURT/BERLIN Axel Springer’s (SPRGn.DE) failure to clinch a deal to buy the Financial Times lengthens a line of setbacks in a decade-old quest by Germany’s biggest news publisher to expand abroad.

Once again, cautious bidding practices cost it the prize, revealing a complex dynamic within the family-controlled company, which is best known for its Bild tabloid but which calls itself a digital powerhouse with international potential.

The last-minute loss to Japan’s Nikkei of a newspaper Axel Springer had coveted for years was clearly a blow to its management, but for some investors it was a relief, and not just in hindsight.

“Worse than not expanding internationally would be Springer overpaying for an asset,” one top 10 investor told Reuters. “In that respect, shareholders gave a clear signal last week.”

Axel Springer shares dropped two percent on reports it was bidding for the FT, but recovered that loss and ended the day higher after the company said it would not buy it last Thursday.

Japan’s Nikkei bought the premier business newspaper for $1.3 billion (1.18 billion euros) from Pearson (PSON.L), just 100 million euros more than Springer was prepared to spend, according to a person familiar with the talks. The company declined to comment.

Springer CEO Mathias Doepfner, a former journalist at Frankfurter Allgemeine Zeitung and editor-in-chief at Die Welt, had long expressed the wish to buy a big English-language title.

Two people familiar with the talks said ultimately, the price was too high for a company with a market capitalization of 5 billion euros, a conservative bidding strategy and aversion to debt.

Financial prudence has been key ever since Doepfner was appointed in 2002 by Friede Springer, widow of founder Axel who built the company in West Berlin soon after World War Two.

“Doepfner doesn’t do anything he has not first calculated, so he was reluctant to counter the higher bid,” one person familiar with the talks said.


The 72-year-old Friede is a hands-on shareholder and vice-chair of the supervisory board, who sees it as her task to protect the legacy of her late husband, according to German media, and is very close to Doepfner. Their relationship is described by some Axel Springer insiders as like mother and son.

In 2012, she gave Springer shares worth almost 74 million euros ($82 million) to Doepfner, at the time 2 percent of all outstanding shares. Doepfner now owns 3.1 percent of the firm.

Friede’s involvement dates back to the 1980s, when she inherited about a quarter of Axel Springer shares. The Springer family’s former nanny who had become the publisher’s fifth wife had to fight her corner with other, German media elite shareholders including mogul Leo Kirch and the Burda family.

After buying out other shareholders and taking control of the publisher, Friede vowed she would never put herself in such a position again, a former Axel Springer worker said.

When Doepfner took over, he had three key strategies: first bring the company back on track after years of internal unrest and operational setbacks, then make the transition from print to digital and after that expand internationally.

But flirtations with global media brands have so far remained just that.

Last year, Springer walked away from buying U.S. publisher Forbes, which was sold to an Asian investor consortium in a deal that valued the prestigious company at $475 million.

A decade ago, it looked at British titles the Daily Telegraph or the Daily Express but soon backed out.

Earlier this month Springer was reported to be discussing

a possible tie-up with German broadcaster ProSiebenSat.1 (PSMGn.DE), which is about twice the size of Axel Springer.

    But a day later Springer issued a statement saying Friede would not give up control, and on Wednesday, ProSiebenSat.1 and Axel Springer announced a project for digital start-ups but said they had no further tie-up plans.

Springer shares rose 1.5 percent and those of ProSiebenSat.1 were up 1.9 percent, outperforming a 0.2 percent weaker German midcap index .MDAXI and very close to the high they hit when news of the tie-up broke.


Instead of buying a trophy title, Axel Springer has taken stakes in financial blog Business Insider and U.S. youth news site, and is a co-owner of the European edition of Politico.

In the first quarter, such digital products, especially classified ads, accounted for more than 60 percent of company sales and almost three-quarters of core profit.

Investors have rewarded the digital push with a 75 percent rise in the share price over the past five years, making Friede one of the richest people in Germany.

In May, news website Re/code reported Axel Springer was in advanced discussions with AOL to spin off its flagship Huffington Post content unit, citing numerous sources.

AOL’s new owner Verizon (VZ.N) has since said it will not sell.

Axel Springer declined specific comment on its acquisition strategy but the statement on Friede’s plans to retain control referred to a plan to transform into a so-called KGaA or partnership limited by shares, which would allow Springer to raise more capital and grow while protecting Friede’s position.

To proceed, it would need approval at next April’s AGM.

An Axel Springer manager, who declined to be identified, said the price for the FT was too high but added such an asset only comes to market once in a few decades. For Nikkei it represented a chance to move beyond a flagging domestic market.

The $1.3 billion FT price tag represented roughly a 35 times multiple for its core earnings. That is three times more than the value of Axel Springer shares, which trade at 11 times earnings, broadly in line with publishing peers.

“Why on earth was Axel Springer management preparing to buy a trophy asset for a silly price… when it touts itself as investing in fast-growing digital assets?” brokerage Berenberg asked after Nikkei’s winning bid was announced.

A person familiar with Springer management’s thinking said Doepfner would continue to focus on journalism and not make material change to its strategy.

“If it was up to the financial markets, Springer would have to sell off anything that is journalism and focus on classified ads,” the person said. “But the soul of the company is journalism and without journalism there won’t be Axel Springer.”

(Additional reporting by Alexander Huebner in Frankfurt and Kate Holton in London; editing by Sonya Hepinstall and Philippa Fletcher)

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