News Archive


Chevron quarterly profit drops 64 percent on low oil prices


Chevron Corp (CVX.N), the second-largest U.S.-based oil producer, posted a 64 percent drop in quarterly profit on Friday as cost cuts failed to offset tumbling crude CLc1 and natural gas NGc1 prices.

The company reported net income of $2.04 billion, or $1.09 per share, compared with $5.59 billion, or $2.95 per share, in the year-ago period.

Production fell 1 percent to 2.5 million barrels of oil equivalent per day (boe/d).

(Reporting by Ernest Scheyder; Editing by Chizu Nomiyama)

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Exxon third-quarter profit falls 47 percent but beats expectations


Exxon Mobil Corp (XOM.N) said on Friday its third-quarter profit fell 47 percent hit by low crude prices, but results were better than expected, helped by higher profits in the oil company’s refining business.

Crude prices have fallen more than 50 percent from last year’s high over $100 a barrel. While the crude decline hurt Exxon’s largest oil and gas business, it also boosted profit margins in refining by lowering feedstock costs.

“Quarterly results reflect the continued strength of our downstream and chemical businesses and underscore the benefits of our integrated business model,” Exxon Chief Executive Officer Rex Tillerson said in a statement.

The Irving, Texas, company posted profit of $4.24 billion, or $1.01 per share, compared with $8.07 billion, or $1.89 per share in the same quarter a year earlier.

Analysts on average had expected a profit of 89 cents per share, according to Thomson Reuters I/B/E/S.

Refining profits nearly doubled from a year-earlier to $2 billion in the third quarter, while earnings at Exxon’s exploration and production business fell $5.1 billion to $1.4 billion.

Oil and gas output increased 2.3 percent from a year earlier to 3.9 million oil-equivalent barrels per day (mboed).

(Reporting by Anna Driver; Editing by Jeffrey Benkoe and W Simon)

Article source: http://feeds.reuters.com/~r/reuters/businessNews/~3/kt-EtBe1tR0/story01.htm

CVS profit misses estimates on lower reimbursements, new generics


CVS Health Corp’s (CVS.N) profit missed analysts’ estimates for the first time in six quarters as its $10-billion Omnicare acquisition failed to offset pressure from lower reimbursement rates and new low-margin generic drugs.

The second-largest U.S. drugstore chain by store count also forecast 2016 adjusted profit that also fell short of analysts’ estimates, sending CVS’s shares down 3 percent in premarket trading on Friday.

CVS’s results come in the same week that larger rival Walgreens Boots Alliance Inc (WBA.O) said it would buy Rite Aid Corp (RAD.N) for $9.4 billion in a deal which would combine two of the three largest U.S. drugstore operators.

CVS said pharmacy same-store sales rose 4.6 percent in the third quarter ended Sept. 30, but were hurt due to the introduction of low-margin generic drugs and lower reimbursement rates.

Rising generic drug prices are hurting drugstore operators as insurers and pharmacy benefit managers have been slow in raising reimbursement rates for those drugs.

CVS’s front-end same-store sales fell 5.8 percent, mainly due to its decision to stop selling tobacco products in September last year.

The company expanded its specialty pharmacy business, which provides drugs for expensive chronic conditions, with its $10.1 billion acquisition of Omnicare in August.

Omnicare also provides assisted living and other healthcare facilities, which accounted for half of the 6.9 percent rise in CVS’s pharmacy revenue to $17.9 billion in the quarter.

Net income attributable to CVS rose to $1.25 billion, or $1.11 per share, from $948 million, or 81 cents per share. Excluding items, it earned $1.28 per share.

Net revenue rose 10.3 percent to $38.64 billion.

Analysts on average had expected earnings of $1.29 per share on revenue of $37.89 billion, according to Thomson Reuters I/B/E/S.

The company forecast 2016 adjusted earnings of $5.68-$5.88 per share, below the $6.02 analysts on average were expecting.

CVS’s shares were trading down 3 percent at $100.70 premarket.

(Reporting by Sruthi Ramakrishnan in Bengaluru; Editing by Savio D’Souza)

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World stocks on course for best month in four years


LONDON World shares rose on Friday and were on course for their best month in four years, as global central banks kept stimulus policies intact and many hinted at further steps to re-energize their economies.

That has helped soothe concern over higher borrowing costs in the United States as the Federal Reserve prepares to tighten rates, possibly by the end of the year.

The dollar slipped for a second day, notably against the yen after the Bank of Japan left policy unchanged. Government bond yields also slipped back after two days of Fed-fueled increases.

European stocks got an early boost from corporate earnings, with results from France’s Renault (RENA.PA), BNP Paribas (BNPP.PA) and Airbus (AIR.PA) in particular getting the thumbs up from investors.

The pan-European index of leading 300 shares was last down 0.3 percent on the day at 1,480 points .FTEU3, Germany’s DAX .GDAXI and Britain’s FTSE 100 .FTSE were down 0.4 percent and France’s CAC 40 .FCHI was down 0.2 percent.

U.S. stock futures pointed to a slightly higher open on Wall Street, which is poised for its best monthly performance in four years. [.N] ESc1

Despite having slipped into red by midday the FTSEurofirst index .FTEU3 was set for its best monthly performance since mid-2009, rising around 8 percent in October.

“Continued expectation of easier central bank policy has helped underpin equity markets after a turbulent few months,” said Michael Hewson, chief market analyst at CMC Markets in London.

“Investors are veering between confidence that the U.S. economy is still performing well enough to withstand a rate rise, to an expectation that if it’s not, the Fed will remain on hold,” he said.

MSCI’s broadest index of Asia-Pacific shares outside Japan .MIAPJ0000PUS was down 0.1 percent but poised to gain more than 7 percent for October, its best showing since January 2012.

MSCI’s leading global equity index .MIWD00000PUS was up 0.15 percent on Friday, bringing its monthly gain up to around 8 percent, its biggest since October 2011.

Japan’s Nikkei stock index .N225 ended up 0.8 percent, its highest in more than two months, buoyed by a media report that the government is considering a supplementary budget of over $25 billion.

EURO ZONE NOFLATION

The BOJ’s decision to keep monetary policy steady was in line with most expectations, but some investors had speculated the central bank would deliver some additional steps to support Japan’s economy.

The BOJ also trimmed its price and growth forecasts on Friday, and many still expect it to eventually deliver more easing.

U.S. data released overnight showed gross domestic product in July-September increased at a 1.5 percent annual rate. That was just shy of the consensus forecast for 1.6 percent growth and slowing from a 3.9 percent rise in the second quarter.

But solid consumer spending kept alive the possibility that the Fed could deliver an interest rate increase in December.

Although the Fed held policy steady on Wednesday, it left the door open to raise interest rates for the first time since 2006 when it meets Dec. 15-16.

In currencies, the dollar fell against the yen after the BOJ policy decision, slipping to an intraday low of 120.29, and was last down about 0.6 percent at 120.45 yen JPY=.

The euro also regained ground from the dollar, rising 0.3 percent to $1.1005 EUR= after euro zone inflation edged up to 0 percent in October from -0.1 percent the month before.

“Absent any negative commodity price shock going forward, September likely marked a trough for headline inflation,” JP Morgan’s Raphael Brun-Aguerre wrote in a note to clients.

The euro is still down about 1.5 percent for the month, after European Central Bank chief Mario Draghi took a surprisingly dovish stance that suggested further monetary easing steps were possible in December.

China’s yuan chalked up its biggest daily rise against the dollar since its one-off revaluation in July 2005, after suspected intervention by the Chinese central bank through state banks. It rose around 0.6 percent, pushing the dollar down to 6.3172 yuan CNY=CFXS.

Benchmark U.S. Treasury yields also slipped back from this week’s highs.

The 10-year yield was down two basis points at 2.15 percent US10YT=RR, having climbed 15 basis points on Wednesday and Thursday. The two-year yield was down a basis point at 0.72 percent US2YT=RR.

Crude oil futures clawed back earlier losses and were last in the black. U.S. crude CLc1 was up 0.2 percent at $46.14 a barrel, while Brent LCOc1 was up 0.5 percent at $49.05.

(Reporting by Jamie McGeever; Editing by Alison Williams; To read Reuters Global Investing Blog click here; for the MacroScope Blog click on blogs.reuters.com/macroscope; for Hedge Fund Blog Hub click on blogs.reuters.com/hedgehub)

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Colgate sales hit by strong dollar, weakness in Latin America


Colgate-Palmolive Co (CL.N) reported a steeper-than-expected drop in quarterly sales, mainly due to a strong dollar, and the world’s biggest toothpaste maker said full-year earnings would likely be lower than anticipated.

Colgate has been trying to cushion the impact of the dollar’s strength by raising prices, mainly in Latin America, but the move has hit both revenue and volumes in the region.

Sales in Latin America fell 11 percent in the third quarter ended Sept. 30, while volumes fell 1 percent. The region accounts for 27 percent of the company’s sales.

Overall, foreign exchange had a 13 percent negative impact on total sales in the quarter, Colgate said on Friday.

The company said it now expected full-year earnings per share to decline by a “low to mid-single digit”, excluding items, based on current exchange rates.

The earlier forecast was for a “low single-digit” decline.

Colgate’s total sales fell 8.7 percent to $4 billion in the latest quarter – the fifth straight decline, and slightly below the average analyst estimate.

Net income attributable to Colgate rose to $726 million, or 80 cents per share, from $542 million, or 59 cents per share, a year earlier.

Excluding items, the company earned 72 cents per share, matching the average analyst estimate, according to Thomson Reuters I/B/E/S.

(Reporting by Yashaswini Swamynathan in Bengaluru; Editing by Ted Kerr)

Article source: http://feeds.reuters.com/~r/reuters/businessNews/~3/sH41HChWfLQ/story01.htm

Stock futures higher as Exxon, Chevron results awaited


U.S. stock index futures were slightly higher on Friday ahead of earnings reports from energy giants Exxon (XOM.N) and Chevron (CVX.N) and data on consumer spending.

* Global markets rose as central banks kept stimulus programs intact. U.S. stocks closed slightly lower on Thursday, weighed by interest-rate sensitive utilities stocks.

* Brent crude held firm at around $49 per barrel, despite worries about a supply glut. [O/R]

* U.S. consumer spending data, due at 8:30 a.m. ET, is forecast to have risen 0.2 percent in September from a 0.4 increase in August.

* Also scheduled is the University of Michigan’s final index on consumer sentiment, which is expected to rise to 92.5 in October from 92.1 in September. The data is due at 10:00 a.m.

* While the Federal Reserve’s comments on interest rates have been in investors’ minds, the focus has largely been on quarterly earnings reports for a reading on the impact of the global economic slowdown on corporate health.

* Strong results from blue-chips have helped improve analyst sentiment, with profits at SP 500 companies now expected to fall 1.7 percent, far less than the 4.9 percent drop forecast at the start of earnings season, according to Thomson Reuters data.

* Abbvie’s (ABBV.N) shares were up 5.1 percent at $56.88 while CVS Health (CVS.N) fell 0.8 percent after results.

* LinkedIn’s (LNKD.N) shares shot up 12.8 percent to $244.67 premarket after the company’s quarterly results beat estimates.

* Valeant Pharmaceuticals (VRX.N) was down 6.7 percent at $104.01 after it said it is cutting all ties with specialty pharmacy Philidor.

* Starbucks (SBUX.O) was down 1.5 percent at $61.55 after a disappointing profit forecast for the crucial holiday quarter.

* AB InBev’s U.S.-listed shares (BUD.N) were up 2.2 percent after the brewer gave positive view on revenue this year.

* The Fed’s Board of Governors will hold an open meeting in Washington on policies regarding large banking organizations.

* San Francisco Fed President John Williams is slated to take part in a discussion on interest rates.

Futures snapshot at 7:06 a.m. ET:

* SP 500 e-minis ESc1 were up 2 points, or 0.1 percent, with 149,494 contracts traded.

* Nasdaq 100 e-minis NQc1 were up 4 points, or 0.09 percent, on volume of 23,073 contracts.

* Dow e-minis 1YMc1 were up 12 points, or 0.07 percent, with 18,040 contracts changing hands.

(Reporting by Abhiram Nandakumar in Bengaluru; Editing by Saumyadeb Chakrabarty)

Article source: http://feeds.reuters.com/~r/reuters/businessNews/~3/cdE10hCcIjQ/story01.htm

Chinese court orders ConocoPhillips to pay $266,000 over 2011 oil spills


BEIJING A Chinese court has ordered ConocoPhillips (COP.N) to pay compensation to nearly two dozen aquaculture farmers who said their livelihoods were hurt by oil spills off China’s northeastern coast in 2011.

The U.S. oil company was told to pay 1.68 million yuan ($266,000) to the 21 farmers, who did not participate in a previous settlement reached in 2012 with ConocoPhillips and its partner, Chinese state-owned oil major China National Offshore Oil Corporation (CNOOC), the Tianjin Maritime Court said in a statement on its website.

The farmers were seeking more than 141 million yuan ($22 million) from the two oil companies over leaks that were first discovered in June 2011 at the Penglai 19-3 oilfield, a joint exploration project by the two.

The leaked oil spread across as much as 6,200 sq km of water in Bohai Bay, according to court documents. The spills were sealed in October 2011, and the field, with daily production of about 160,000 barrels, was restarted in February 2013.

ConocoPhillips has a 49-percent stake in the field, which is 51-percent owned by CNOOC Ltd (0883.HK), the Hong Kong-listed flagship of CNOOC.

The court laid responsibility for compensation solely with ConocoPhillips, the operator of the oilfield.

The two companies previously agreed to give one billion yuan in compensation for losses in the fishing industry, and 1.68 billion yuan for ecological damages in a settlement with Chinese authorities. Roughly 4,500 affected households signed onto the settlement, the court said.

ConocoPhillips could not immediately be reached for comment.

Another maritime court, in the coastal city of Qingdao, said in July that it will hear a landmark case brought by a nonprofit organization against ConocoPhillips and CNOOC over the spills.

($1 = 6.3180 Chinese yuan)

(Reporting By Adam Rose; Editing by Tom Hogue)

Article source: http://feeds.reuters.com/~r/reuters/businessNews/~3/0YqJjoQHx3E/story01.htm

Airbus wins China deal for 100 helicopters


HEFEI, China Airbus Helicopters won a commitment from China on Friday to buy 100 H135 helicopters as part of a deal to set up a final assembly line in the country, a fast-growing market for helicopters.

The letter of intent was signed during a visit to China by German Chancellor Angela Merkel and is worth about 1 billion euros ($1.1 billion), according to a source with direct knowledge of the matter.

Airbus Helicopters said the agreement would help it achieve a goal of increasing its civil market share from 40 percent currently in a country which “is becoming the world’s largest market for helicopters”.

The Chinese market will need between 3,000 and 5,000 helicopters in the next 20 years, the division of European aerospace and defense company Airbus Group (AIR.PA) said.

The 100 H135 helicopters will be put together at the future Chinese final assembly line over the next 10 years.

The H135 is a light, twin-engine helicopter used in China mainly for emergency medical services and police missions.

($1 = 0.9099 euros)

(Reporting by Andreas Rinke, Writing by Fang Yan and Matthew Miller; Editing by Michael Perry, James Regan)

Article source: http://feeds.reuters.com/~r/reuters/businessNews/~3/CYO2QUbY0q8/story01.htm

Exclusive: AirAsia founder began buyout talks as share fall put loans at risk


SINGAPORE AirAsia founder Tony Fernandes began talks with bankers to take Asia’s No.1 budget airline private after a plunge in its stock price put $200 million worth of loans borrowed against AirAsia’s shares at risk, people familiar with the situation told Reuters.

The Malaysian entrepreneur and his business partner Kamarudin Meranun, respectively Group CEO and Chairman of AirAsia Bhd (AIRA.KL), borrowed the money against their 19 percent indirect holding in AirAsia from Credit Suisse (CSGN.VX) and CIMB (CIMB.KL) to help fund private ventures, people familiar with the situation said.

A fall in AirAsia’s share price though has led to a breach of the loans’ collateral terms, according to two sources, and is one reason why the two businessmen have begun talks for a possible management-led buyout.

Fernandes and Kamarudin did not reply to emails sent by Reuters or phone calls made to them. A Malaysia-based spokeswoman at AirAsia declined comment.

The existence of the loans, which has not been publicly disclosed as the transaction is private, shows how the future of the airline, a key client of Airbus in Asia, is tied to the other investments of its founders.

Two sources with knowledge of the situation said the loans were taken to help finance the 2011 purchase by Fernandes’ holding company, Tune Group, of English soccer club Queens Park Rangers and to build up the Caterham Formula One team, two ventures which have subsequently struggled.

Share-backed loans, common among Asian tycoons, require a large amount of collateral as they are subject to stock market volatility.

It was not clear if Fernandes and his partners had been formally asked by the lenders to immediately provide more cash.

There is no evidence Fernandes and Kamarudin, who have built a business empire with a value that exceeds the worth of the share-backed loans, would be unable to repay the money, although some of their wealth is tied up in sports and other private ventures.

One source familiar with the situation said Fernandes would still be able to have a significant stake in AirAsia even after a privatization and continue to lead it.

A Hong Kong-based spokesman at Credit Suisse declined to comment. A CIMB spokeswoman did not respond to requests for comment.

Fernandes and his businesses are also long-standing clients of Credit Suisse and CIMB, which are both involved in the privatisation talks, several sources said.

SPORTS VENTURES

Fernandes ceased funding the Caterham team last year and later sold it. The team eventually went into administration, while loss-making Queens Park Rangers were relegated from England’s top league in May this year.

In June, research firm GMT Research said AirAsia used transactions with its associate companies to inflate earnings and said it needed to be recapitalized, triggering a sell-off in the carrier’s shares that by late August had shrunk the value of the founders’ stake to around $100 million.

AirAsia has responded by saying it has a strong balance sheet and does not need additional capital.

The fall and its impact on the loans caused Fernandes to discuss a privatisation and restructuring plan of AirAsia, the airline he had built over 10 years from a two-plane operation into a billion-dollar business, two sources said.

All sources interviewed by Reuters declined to be identified because the discussions are private.

AirAsia’s shares have partially regained ground since the summer. Its market value is currently about $1 billion.

The privatisation plan, now under discussion, envisages Fernandes and his partner selling their AirAsia stake, held through holding company Tune, to a special purpose vehicle, to allow them to pay off the loans, said one of the sources.

Sources say AirAsia has also been in talks with lessors, including cash-rich Chinese companies, to sell a stake in its leasing subsidiary.

This comes as AirAsia has been selling portions of its related businesses, including half of its stake in a joint venture with online travel company Expedia Inc (EXPE.O).

Fernandes, the face of the no-frills budget carrier’s rise, has also built, through the Tune Group, a sprawling empire that includes a chain of budget hotels, an insurance firm, a mobile phone group and a school.

GMT Research’s June report came when AirAsia, already under pressure from slowing tourist flows in Asia, was facing challenges from the December 2014 crash of an Airbus Group jet operated by AirAsia’s Indonesian affiliate that killed 162 people.

The report helped push the airline’s shares to their lowest levels since 2008.

Fernandes has steadfastly defended the company’s finances and outlook and said the market was undervaluing AirAsia.

(Additional reporting by Yantoultra Ngui in KUALA LUMPUR and Siva Govindasamy; Editing by Lisa Jucca and Rachel Armstrong)

Article source: http://feeds.reuters.com/~r/reuters/businessNews/~3/o3HJYYZAwWI/story01.htm