Archive for August, 2011

Diageo beats forecasts despite fragile economies

Wednesday, August 24th, 2011 | Finance News

LONDON (Reuters) – Diageo Plc (DGE.L), the world's biggest spirits group, beat forecasts with a 16 percent rise in annual earnings and despite a fragile global economy set targets for 10-percent plus earnings growth going forward.

The British maker of Smirnoff vodka and Johnnie Walker whisky said on Thursday that emerging markets in Latin America, Africa and Asia grew strongly, but European markets in debt-hit Greece, Ireland and Spain continued to be difficult.

Chief Executive Paul Walsh said the group was looking to grow underlying sales by 6 percent, improve margins and see double digit percentage earning growth in the medium term.

"While Diageo is not immune from a fragile global economy, this is a strong platform... Achievement of these aims would underpin even stronger dividend growth," Walsh said in a full year results statement.

European brewer Heineken (HEIN.AS) warned on Wednesday that weak consumer sentiment and a damp summer would wipe out its profits growth in 2011, but analysts said spirit maker were less dependent on weather and gained from strong emerging markets.

The London-based group which also sells Captain Morgan rum and Guinness beer posted underlying earnings of 83.6 pence a share beating a Reuters SmartEstimate of 78.9p and a company-compiled consensus of 79.1p for the year to end-June.

The full year dividend rose 6 percent to 40.4 pence.

Diageo shares have outperformed the FTSE 100 index (.FTSE) so far this year by 10 percent and arch rival and world No 2 spirits maker Pernod Ricard (PERP.PA) by 12 percent. Diageo shares closed on Wednesday at 11.18 pounds.

Pernod reports its annual results on Sept 1.

(Reporting by David Jones)


Glencore H1 profit up 50 percent, meets forecasts

Wednesday, August 24th, 2011 | Finance News

LONDON (Reuters) – Commodities trader Glencore (GLEN.L) met forecasts with a 50 percent rise in first-half profit thanks to rising commodity prices and rosy oil trading conditions in the first months of the year, and said it remained optimistic on global growth.

"The short term volatility caused by renewed bearishness on sovereign debt in developed markets is of course a concern to us," Chief Executive Ivan Glasenberg said.

"We are focused on seeking to minimize its adverse impact on our business while remaining alert to the potential opportunities that such an environment uncovers in our end markets."

Glencore has said that the ability to seize acquisition opportunities thrown up by market conditions was a key reason for its listing earlier this year, when it ended almost four decades of life out of the public eye.

Glencore, the world's largest diversified commodities trader, reported an adjusted earnings before interest and tax of $3.3 billion, while income before attribution rose 58 percent.

Operating profit for Glencore's whole trading, or marketing division rose 45 percent year-on-year in the first half, but dipped in second quarter against the first, as improved metals struggled to make up for a dip in energy products where volatility had boosted arbitrage opportunities in the first three months of the year.

Rival trader Noble (NOBG.SI), seen by many as one of the closest models to Glencore's on the trading side, saw earnings from its metals, minerals and ores division recover in the second quarter after a dip in the first three months.

On the industrial side, which includes Glencore's metals, energy and agricultural production, operating profit rose 54 percent, boosted by higher commodity prices.

(Reporting by Clara Ferreira-Marques; Editing by Kate Holton)


German consumers downbeat on global recession worries: GfK

Wednesday, August 24th, 2011 | Finance News

BERLIN (Reuters) – German consumer sentiment fell slightly going into September, a survey showed on Thursday, hitting a 10-month low as the euro zone debt crisis and fears of another recession in Europe and the United States weighed on consumer expectations.

The figure added to signs that growth in Europe's largest economy is moderating. The GfK survey's sub-index tracking consumer expectations for the economy plummeted to 13.4 from 44.6 in the previous month. However, a sub-index tracking consumers' willingness to buy rose marginally on the back of a strong labor market.

The forward-looking index of consumer morale by market research group GfK fell for a third month in a row to 5.2 going into September from a downwardly revised 5.3 in the prior month. The August reading had been originally reported as 5.4.

"The worsening of the debt crisis as well as the sharp tumble in stock markets worldwide is only impacting consumer morale slightly at the moment," GfK said in a statement.

"The extremely positive domestic framework, such as falling unemployment and rising incomes, are compensating for these negative factors."

The September figure matched a Reuters poll forecast.

Germany's economy has been a star performer in the industrialized world since the end of the 2008 financial crisis and has supported euro zone growth.

The unemployment rate has fallen to its lowest since German unification two decades ago, at 7 percent, boosting usually cautious consumer sentiment.

"The extremely positive signals from the labor market with the prospect of rising income is the considerable driver for Germans' consumer mood at the moment," GfK said, noting the euro zone debt crisis was also encouraging Germans to spend rather than save.

"Many citizens are worried about the stability of their currency and therefore invest their money in purchases that will keep their value rather than saving it up for a rainy day," GfK said.

Yet recent data and forward-looking indicators have raised questions over how much longer Germany can sustain its economic growth in the light of global developments.

The economy grew just 0.1 percent in the second quarter on a quarterly basis after a 1.3 percent expansion in the first quarter.

Business morale fell in August at its fastest rate since the aftermath of the Lehman Brothers collapse in late 2008, data showed on Wednesday. That suggested the slowdown could be more precipitous than many economists had originally thought.

"Citizens fear that the Germany economy will be infected by the worldwide weakness if the outlook for exports darkens considerably," GfK said.

"In addition to falling economic optimism, citizens fear that they will be asked to cough up ever more money in the framework of the solution to the debt crisis," it added.

As the euro zone's biggest economy, Germany foots more than a quarter of the bloc's bill for bailouts. As further aid schemes are drawn up and as the German economy seems to be slowing, more Germans are worried about financing rescues.

Earlier this week, a purchasing managers' survey showed new orders in the German services sector dropped for the first time since June 2010. Service providers were downbeat about the outlook for the year ahead for the first time since April 2009, Markit's PMI survey showed.

(Editing by Susan Fenton)