Archive for July, 2010

Stronger sales, weaker euro good news for VW (AFP)

Thursday, July 29th, 2010 | Finance News

FRANKFURT (AFP) – Volkswagen, Europe's biggest automaker, benefited from strong sales and favourable exchange rates as it posted Thursday a second quarter profit more than four times the previous year's figure.

VW's net profit of 1.25 billion euros (1.6 billion dollars) towered over the 283 million euros earned in the second quarter of 2009 and easily beat analyst forecasts for 733 million euros compiled by Dow Jones Newswires.

The results sent VW shares soaring on the Frankfurt stock exchange.

Although weak earnings in the second quarter of 2009 helped the comparison, those in the period from April to June were also more than double that of the first three months of this year.

Second-quarter sales jumped by an annualised 21.9 percent to 33.16 billion euros, while operating profit in the three months came to almost two billion euros, helped by a weak euro which boosts exports.

This favourable foreign exchange effect was worth 400 million euros over the first six months of the year and should continue in the second half, finance director Hans Dieter Poetsch told a press briefing.

VW is "heavily hedged" against swings in the euro's value against major currencies like the dollar for the next two years, he added.

VW maintained its full-year sales target, that of surpassing the record 6.3 million vehicles sold last year, and its operating profit target of more than 1.9 billion euros, a level it has already exceeded.

The group -- which aims to become the world's leading automaker by 2018 -- warned however that second-half sales would not be as strong as those in the first six months of the year.

Several automakers, including French group PSA and Nissan of Japan, have also posted strong second quarter results as markets in Europe and the United States recover and growth continues in China, the world's biggest car market.

VW's second quarter sales of 1.86 million vehicles put it neck-and-neck with Toyota, currently number one worldwide, which sold 1.9 million according to the Japanese economic daily Nikkei.

For the six months to June, VW's operating profit climbed to 2.8 billion euros from 1.2 billion euros in first half 2009 as sales gained 20.7 percent to 61.8 billion euros.

A breakdown of the first half showed that VW's luxury brand Audi is still its main breadwinner, with operating profit of 1.3 billion euros.

The VW brand contributed 1.02 billion euros, with heavy truck maker Scania on 577 million euros and lower-priced Skoda providing 227 million euros.

Losses were reported by the Spanish brand SEAT, with 157 million euros, and the limousine maker Bentley, at 109 million euros.

The operating profit and loss numbers do not take Chinese earnings into account, even though it is now VW's main market, because like western rivals, VW operates there via partnerships with Chinese companies.

The Chinese operations alone earned a profit of 804 million euros in the first half of the year, a gain of 173 percent, VW said.

Demand in China was still strong even though the economy appears to be cooling a bit and "profit development is quite convincing" there, Poetsch said.

"I don't see any systematic reason that this would disappear in the future," he said, though second-half growth rates were not expected to match those of the first six months.

Shares in the automaker shot up 2.99 percent to 80.94 euros in afternoon trading on the Frankfurt stock exchange which was 0.58 percent higher overall.

"First-half earnings were clearly in excess of our expectations," chairman Martin Winterkorn was quoted as saying.

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Exxon, Shell growth now led by natural gas (Reuters)

Thursday, July 29th, 2010 | Finance News

LONDON/HOUSTON (Reuters) – Exxon Mobil (XOM.N) and Royal Dutch Shell Plc (RDSa.L) reported strong growth in production on Thursday after years of largely falling output, helping to send second-quarter profits soaring.

But the two biggest non-government controlled oil companies in the world relied on natural gas -- traditionally less profitable than crude -- to help halt the output slide.

Texas-based Exxon said second quarter production was 4.0 million barrels of oil equivalent per day (boepd), up 8 percent on the same period a year earlier, while smaller rival Shell said output was up 5 percent at 3.1 million boepd.

After strong showings in the first quarter for both, the results raised hopes both companies could start to offer investors meaningful growth again.

"The production turnaround is now well under way and should only strengthen as the big projects come on stream in the next six months," analysts at Petercam said in a research note on Shell.

Shell has suffered seven years of falling output and Exxon's performance has also been anemic over the period. Phil Weiss, oil analyst with Argus Research, noted the impressive headline output numbers were driven by gas, with Shell's crude production up only rose 1 percent and Exxon's dropping 1 percent.

Oil accounted for only 58 percent of Exxon's output, compared to 64 percent in the same period last year and Shell's oil weighting dropped to 53 percent from 59 percent.

A global gas glut due to the economic crisis and a big increase in U.S. shale gas production, means the outlook for gas prices is uncertain, which could put pressure on future earnings.

Shell Chief Financial Officer Simon Henry said the gap between gas and oil prices grew in the past year as oil prices rose faster than gas prices.

Across the sector on Thursday, companies echoed the industry leaders' experience.

Spain's Repsol, the international oil group with one of the worst production records in recent years, reported a 4.9 percent jump in output in the first half of the year compared to 2009.

Norway's largest company, Statoil (STL.OL), said on Thursday its production rose 2 percent to 1.77 million boepd in the quarter compared to the same period a year ago.

Exxon, Shell and Repsol reported better than expected earnings. Exxon said second quarter net income excluding one-offs rose 85 percent compared to the same period in 2009, to $7.56 billion.

Shell said second quarter profits, calculated on a similar basis, rose 34 percent to $4.21 billion.

London-based BP, which is still battling to permanently seal a blown out well in the Gulf of Mexico that has caused the U.S.'s worst oil spill, said on Tuesday its underlying result rose 77 percent.

High oil and gas prices were the main driver of the gains, although the higher output and a recovery in refinery margins also helped.

Shell's London-listed "B" shares traded up 1.0 percent at 1407 GMT against a 0.5 percent rise in the STOXX Europe 600 Oil and Gas index. Exxon shares rose 0.9 percent to $61.47.

U.S. crude prices were 30 percent higher in the quarter than a year before, averaging $77.81 a barrel, while global refining margins rose 10 percent, according to BP data.

Shell's results included a $56 million charge related to the U.S. moratorium on deepwater drilling, imposed after the BP oil spill three months ago.

Chief Executive Peter Voser told analysts on a conference call he would think about reclaiming the money from BP.

BP declined to comment on the potential for a Shell claim but pointed out the compensation they agreed to fund did not cover such items.

Shell added it had exceeded restructuring targets, achieving annual cost savings of $3.5 billion and cutting 7,000 jobs, allowing it to wrap up its overhaul six months quicker than planned.

(Editing by Andrew Callus)

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Glance: A closer look at Avon Products 2Q revenue (AP)

Thursday, July 29th, 2010 | Finance News

Avon Products Inc. reported second-quarter income jumped as revenue rose in most categories and regions. Here's a breakdown of the beauty product seller's revenue by region and category.

TOTAL REVENUE: Up 8 percent to $2.64 billion

BY REGION:

• Latin America: Up 16 percent to $1.14 billion

• North America: Down 6 percent to $546.4 million

• Central and Eastern Europe: Up 10 percent to $355.9 million

• Western Europe, Middle East & Africa: Up 18 percent to $352.7 million

• Asia Pacific: Up 8 percent to $226.4 million

• China: Down 32 percent to $60.7 million

BY CATEGORY:

• Beauty (makeup, perfume, skin care, personal care): Up 9 percent to $1.92 billion

• Fashion (jewelry, watches, clothes, shoes): Up 5 percent to $448.3 million

• Home (gifts and decorative products, housewares): Up 8 percent to $277.1 million

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