News Archive

GE signs $5.58 billion in power, aviation deals in Vietnam

SEATTLE General Electric (GE.N) said on Wednesday it had signed deals in Vietnam worth about $5.58 billion for power generation, aircraft engines and services, its largest single combined sale with the country in GE’s history.

An agreement with Vietjet Aviation JSC VJC.HM includes 20 jet engines made by CFM International, a joint venture of GE and Safran SA (SAF.PA) of France. It also includes a 12-year engine service contract. The deals also include two 750-megawatt gas fired turbine power plants and a wind farm, GE said.

(Reporting by Alwyn Scott; Editing by David Gregorio)

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JPMorgan second quarter market revenue down 15 percent vs year earlier

NEW YORK Markets revenue at JPMorgan Chase Co (JPM.N) has been down about 15 percent so far in the second quarter from a year earlier, Chief Financial Officer Marianne Lake said on Wednesday.

Speaking at an investor conference, Lake said the decline stemmed from lower volatility compared with a year ago when the United Kingdom was preparing to vote on Brexit.

Lake added that U.S. economic growth this year is “solid, not stellar,” as optimism continues for pro-growth policies in Washington despite the lack of significant changes in regulations and taxes.

(Reporting by David Henry in New York; Editing by Chizu Nomiyama)

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Bank of America CEO talks down second-quarter expectations

Bank of America Corp (BAC.N) second-quarter earnings will be hurt by a drop in trading revenue, lower-than-expected interest rates and the sale or shuttering of certain assets, according to comments from Chief Executive Brian Moynihan on Wednesday.

Speaking at an industry conference, Moynihan said trading revenues are on track to be some 10 percent to 12 percent lower than the second quarter of 2016 because last year’s quarter was especially strong. He said first-half trading revenues will still be up by roughly 3 percent to 4 percent versus a year ago.

Revenues will also be hurt by lower-than-anticipated interest rates and the fact that the bank closed the sale of its UK credit card business a month ahead of schedule, reducing net interest income for the quarter. The two factors together should lower net interest income by $100 million to $110 million, Moynihan said.

Bank of America shares were down 2.4 percent in mid-morning trading.

The bank will also take a $300 million charge as it sells or shutters data centers, Moynihan said. Bank of America is moving much of its data to the cloud. The switch will save the bank money over time, Moynihan said.

(Reporting by Dan Freed in New York; Editing by Meredith Mazzilli)

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Michael Kors slumps on weak forecast; to shut over 100 stores

Michael Kors (KORS.N), the once-popular retailer that has been trying to turn itself around, said it expected same-store sales to continue to fall in 2018, and that it would shut more than 100 full-price retail stores in the next two years.

Shares of the company slumped nearly 11 percent to $32.38, their lowest in more than five years.

Michael Kors Holdings Ltd, once the hottest name in affordable luxury, has been grappling with declining same-store sales for the past seven quarters as fewer people visit its stores, flocking instead to rival Coach Inc (COH.N) and shopping online.

Kors said on Wednesday sales at stores established for more than a year fell 14.1 percent in the fourth-quarter ended April 1. Analysts had estimated a fall of 13.4 percent, according to research firm Consensus Metrix.

To deal with the lull in sales, the retailer has been expanding into dresses and menswear, investing in its online business, and reducing supplies to department stores, which have been discounting heavily to bring back shoppers.

These efforts, however, are yet to show the results that investors are looking for.

Kors said it expected revenue of $4.25 billion for fiscal year 2018 and also forecast a high single-digit drop in same-store sales.

Analysts on average had estimated revenue of $4.37 billion, according to Thomson Reuters I/B/E/S.

“If you walk into a Michael Kors store, they basically have the same handbags over and over again,” said Gabriella Santaniello, founder at research firm A-Line Partners.

“It is basically an entire wall of the Mercer handbags -small and large – and another wall of Hamilton bags,” she said, referring to Kors’ flagship handbag lines.

The company said on Wednesday it would close 100-125 full-price stores over the next two years due to intense price competition from other retailers. It expects to take $100 million-$125 million in related one-time costs.

For the fourth quarter ended April 1, total sales fell 11.2 percent to $1.06 billion. Analysts had expected $1.05 billion.

Excluding certain items, Kors earned 73 cents per share, while analysts had expected 70 cents per share.

Kors, whose shares have fallen nearly 16 percent this year, also said it would buy back $1 billion worth shares.

(Reporting by Gayathree Ganesan in Bengaluru; Editing by Anil D’Silva and Sayantani Ghosh)

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German court dismisses General Atomics suit over Heron drone order

DUESSELDORF, Germany A German court on Wednesday dismissed a legal challenge from U.S. weapons maker General Atomics to Germany’s plans to lease armed drones from Israel Aerospace Industries, clearing the way for the drone program to go ahead.

Early last year Defence Minister Ursula von der Leyen announced the army would lease Heron TP drones for about 580 million euros ($652 million) instead of buying Predator B drones from General Atomics or Switzerland’s RUAG, prompting protests by both firms.

General Atomics took its fight to Germany’s anti-trust regulator and then to court.

It said at the time it filed the legal challenge “to ensure that this procurement is conducted as a fair and open competition; thereby ensuring that the German Ministry of Defense procures the most technologically superior and cost efficient solution.”

The higher court in Duesseldorf that dismissed the complaint on Wednesday was the final arbiter in the case.

Judge Heinz-Peter Dicks said the ruling was effective immediately and meant that Germany can now procure drones as it had planned.

Von der Leyen took office in late 2013 vowing to rebuild the military after 25 years of spending cuts, but her three biggest arms programs – a 5 billion euro missile defense program, a new drone and the multi-role MKS 180 warship – have all been delayed in recent months.

The drone leasing plan has been intended as an interim measure until the EU has developed its own drone. Germany, France, Italy and Spain plan to jointly develop a drone by 2025.

($1 = 0.8898 euros)

(Reporting by Matthias Inverardi; Writing by Maria Sheahan; Edting by Stephen Powell)

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Wall Street falls as bank stocks weigh

U.S. stocks were down on Wednesday as financial stocks fell after JPMorgan and Bank of America hinted at revenue weakness in the current quarter.

JPMorgan (JPM.N) Chief Financial Officer Marianne Lake said the decline stemmed from lower volatility compared with a year ago when the United Kingdom was preparing to vote on Brexit.

Bank of America (BAC.N) Chief Executive Brian Moynihan said second-quarter earnings would be hurt by a drop in trading revenue, lower-than-expected interest rates and the sale or shuttering of certain assets.

“There is a choppy sideways market due to the fact that fundamentals are largely unchanged and expectations of market friendly policies in the U.S. are being pushed to 2018,” said Stephen Wood, chief market strategist, North America, Russell Investments.

Seven of the 11 major SP sectors were lower, with the financial index’s .SPSY 1.3 percent fall leading the decliners.

Financials, which have largely outperformed the broader market on bets of fiscal stimulus and simpler banking regulations under President Trump, are on track to decline 0.7 percent so far this year.

JPMorgan (JPM.N) was down 2 percent on Wednesday. Goldman Sachs (GS.N) fell 3 percent and was the biggest drag on the Dow. Bank of America (BAC.N) was down 2.2 percent.

At 10:40 a.m. EDT, the Dow Jones Industrial Average .DJI was down 46.17 points, or 0.22 percent, at 20,983.3, the SP 500 .SPX was down 5.15 points, or 0.21 percent, at 2,407.76 and the Nasdaq Composite .IXIC was down 27.40 points, or 0.44 percent, at 6,175.79.

The Federal Reserve issues its Beige Book at 2 p.m. ET (1800 GMT), a compendium of anecdotes on the health of the economy, that will likely provide further evidence that the economy continues to strengthen giving the Federal Reserve impetus to raise rate next month.

Traders currently see an 86.6-percent chance of a quarter-point rate hike at the Fed’s June meeting, according to Thomson Reuters data.

Shares of Michael Kors (KORS.N) fell 9.4 percent to $32.88 after the luxury fashion retailer gave a bleak full-year forecast and said it would shut more than 100 full-price retail stores in the next two years.

Mallinckrodt (MNK.N) was down 1.1 percent at $43.12, after sources said the drugmaker is exploring a sale of its generic drug unit, in a deal that could fetch as much as $2 billion.

Analog Devices (ADI.O) rose 3.9 percent to $88.06 after the chipmaker’s quarterly results came in above expectations.

Declining issues outnumbered advancers on the NYSE by 1,816 to 928, for a 1.96-to-1 ratio on the downside. On the Nasdaq, 1,842 issues fell and 771 advanced for a 2.39-to-1 ratio favoring decliners.

The SP 500 index showed 28 new 52-week highs and 11 new lows, while the Nasdaq recorded 82 new highs and 70 new lows.

(Reporting by Tanya Agrawal; Additional reporting by Sweta Singh; Editing by Saumyadeb Chakrabarty)

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Coal, solar stocks fall as U.S. set to ditch Paris climate deal

NEW YORK Coal stocks continued to underperform the broader U.S. market on Wednesday and renewable energy stocks also fell after media reported the United States will withdraw from a global pact to fight climate change.

President Donald Trump will follow through on a campaign pledge to pull the United States out of the Paris climate accord, a source briefed on the decision told Reuters. Trump did not confirm the decision in a post on Twitter.

Solar energy shares got hit, with First Solar Inc down 2.5 percent and SunPower Corp off 2.8 percent.

Peabody Energy, the largest publicly-traded U.S. coal company, and Arch Coal each dropped 2.8 percent.

The United States is set to join Syria and Nicaragua as the world’s only non-participants in the Paris Climate Agreement.

A U.S. decision to withdraw from the accord could further alienate American allies in Europe already wary of Trump and call into question U.S. leadership and trustworthiness on one of the world’s leading issues.

Traders, so far, are not betting on a market change-of-heart.

The VanEck Vectors Coal exchange-traded fund fell 1.5 percent on Wednesday to $12.68 and is not far from a five-month low hit earlier in May.

The ETF is on track to fall 7.2 percent this month after rising in the first three months of the year as part of the so-called Trump trade.

Its renewable counterpart, the thinly-traded VanEck Vectors Solar Energy ETF, fell 1.6 percent on Wednesday, on track for a gain of about 1 percent in May.

“Regardless of what the President decides on the accord, we expect America‚Äôs solar industry to continue to thrive and create jobs, boost the economy and reduce greenhouse gas emissions,” the Solar Energy Industries Association said in a statement.

Shares of Tesla Inc, which recently acquired SolarCity, were up 1.3 percent at $339.44.

Several big coal companies had urged Trump to stay in the Paris deal in order to protect the coal industry’s interests overseas, including by ensuring continued financing for foreign coal-burning power plant projects.

(Reporting by Rodrigo Campos, additional reporting by Nichola Groom, Richard Valdmanis; Editing by Nick Zieminski)

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Oil prices at three-week low as rising output risks OPEC-led deal

LONDON Oil prices fell to a three-week low on Wednesday on news that Libyan output was recovering from an oilfield technical issue, fuelling concerns that OPEC-led output cuts to reduce global inventories were being undermined by producers outside the deal.

Benchmark Brent oil LCOc1 was down $1.63, or 3.1 percent, at $50.21 a barrel by 1341 GMT, after earlier touching $50.12 a barrel, the weakest since May 10. U.S. light crude CLc1 traded at $48.31, down $1.35, or 2.7 percent.

Both contracts were on track for their third straight monthly loss.

“Unless some bullish news stops this, prices will fall further in particular now with Brent trading below the post-OPEC low and approaching $50 a barrel,” said Carsten Fritsch, commodity analyst at Commerzbank.

The Organization of the Petroleum Exporting Countries and other producers, including Russia, agreed last week to extend a deal to cut production by about 1.8 million barrels per day (bpd) until the end of March 2018.

“Traders covered short positions ahead of OPEC and some of these have now been re-established,” said Ole Hansen, head of commodities strategy at Saxo Bank.

OPEC members Libya and Nigeria are exempt from the cuts, while U.S. shale oil producers are not part of the agreement and have been ramping up production.

Libya’s oil production has risen to 827,000 bpd, climbing above a three-year peak of 800,000 bpd reached earlier in May, the National Oil Corporation said, after a technical issue that hit Sharara oilfield was resolved.

Shipping data on Thomson Reuters Eikon shows that, excluding pipeline exports, Libya shipped an average of 500,000 bpd of oil so far this year, compared with 300,000 bpd average for 2016.

Official government data showing weekly U.S. crude inventories will be published on Thursday. Analysts polled by Reuters expected U.S. stocks to have fallen by 2.8 million barrels last week, their eighth straight weekly decline.

“Attention will be on U.S. inventory stocks tomorrow, with expectations of a further draw this week, following initial indications of strong demand for gasoline after the AAA said that driving mileage over the holiday weekend was the highest since 2005,” said analysts at Cenkos Securities.

Compliance by those signed up to the OPEC-led deal remained high among OPEC members and industry sources said Russian figures for May showed output in line with its pledge.

Saudi Arabia and Russia said on Wednesday that cooperation between OPEC and non-OPEC producers was seen lasting beyond March. “We want to institutionalise cooperation between OPEC and non-OPEC producers,” Saudi Energy Minister Khalid al-Falih said.

(For a graphic on Libya oil tanker exports, click

(Additional reporting by Henning Gloystein in Singapore; Editing by Edmund Blair and Keith Weir)

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Nestle investing in factories, creating 2,900 jobs in Latin America

SANTIAGO Swiss-based food company Nestle SA (NESN.S) is creating thousands of jobs and investing in new factories in Latin America as it looks to tackle social issues and shore up its position in one of its strongest markets, the regional head said on Tuesday.

The maker of Kit Kat chocolate bars and Nespresso coffee is working with government officials in the four countries that are members of the Pacific Alliance trade group — Chile, Mexico, Peru and Colombia — to create 2,900 jobs for young people over three years and teach job-hunting skills.

“Our view on corporate responsibility is that to make it sustainable we have to do it in a way that is embedded in our business model. Integrating young people can help us shape our company at a time of digital revolution,” the company’s Americas head Laurent Freixe said in an interview with Reuters on Tuesday in Chilean capital Santiago.

“We’re not proposing the jobs just to do good for society. Our business is developing and we have real needs.”

The initiative follows a similar project carried out by Nestle in Europe in recent years, where some countries are just beginning to recover from a youth unemployment crisis.

The company employs some 60,000 people in roles ranging from factory operatives to veterinarians in Latin America.

Although a recession in Brazil and commodities-driven slowdown throughout the region had an impact, Freixe said areas such as pet care and coffee offered potential growth as Latin America’s middle class expands.

“We have investments in many places. We are finalizing investments in pet food and infant nutrition in Mexico. We are discussing new sites (through the region),” he said, adding that the company was finalizing a new factory in southern Chile and that one slated for Cuba should be signed off by the end of the year.

He said the United States, where sales have limped recently, did not yet show signs of recovery, with constrained wage growth crimping consumer spending.

“Consumption in the U.S. is subdued and will remain subdued in the near future,” he said.

Nestle, like many food companies, is working to reduce sugar, salt and saturated fat in its products to meet rising consumer demands for healthier food.

While those demands have been louder in developed countries, emerging markets are also increasingly expressing concerns as obesity rates surge.

Chile, for instance, demands manufacturers add stickers to food deemed high in calories and sugar. Freixe criticized the initiative for using 100 grams (3.5 ounces) as a portion size benchmark.

“There are many products where no one consumes that much,” he said, adding that nutrition education was the key to tackling the obesity problem.

(Reporting by Rosalba O’Brien; Editing by Lisa Shumaker)

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