Financial Results - Livemint.com

Sony slips to 4-month low on strategy failure

Reuters — Fri, 20 Nov 2009 05:13:00 GMT

Tokyo/Seoul: Shares of Sony Corp fell to their lowest in nearly four months on Friday after the electronics maker’s new business strategy failed to convince investors it could deliver strong profit growth.

Sony, which is heading for its second straight annual loss, said on Thursday it would launch 3D TVs and networked products and services as part of a plan to boost its operating profit margin to 5% in the year to March 2013.

The 5% target had originally been set by CEO Howard Stringer in 2005 for the business year to March 2008. It narrowly missed the target that year before falling into the red on the economic slowdown and tough competition.

Market players remain sceptical whether Sony can achieve its goal of turning its video game and TV operations profitable next year as it struggles to compete with overseas rivals such as South Korea’s Samsung Electronics Co Ltd.

“The strong yen makes it difficult for the Japanese to compete on prices, while the Korean’s strength in volume and mass production technologies keeps them ahead,” said John Park, an analyst at Daishin Securities in Seoul.

“Japanese TV makers like Sony will try hard to expand in LED-backlit TVs next year, but are likely to have an uphill battle with Korean leaders,” he said.

Sony’s TV business is in its sixth-consecutive year of losses as it grapples with a firmer yen and intensified competition from Samsung and LG Electronics Inc.

Shares in Sony were down 2.8% at 2,400 yen after earlier hitting 2,375 yen, their lowest since July 29. The benchmark Nikkei average was down 1.3%.

The maker of Cyber-shot cameras and PlayStation games shed jobs, closed plants and sold non-core assets following the global downturn to cut costs, and investors were awaiting a convincing growth strategy from management ahead of Thursday’s announcement.

“It’s good the direction of the company’s network strategy has become clearer and that it now has some products with growth potential, such as its electronic readers,” Daiwa Securities SMBC analyst Kazuharu Miura said.

“But it’s still unclear if network-compatible products will boost its market share substantially or if content distribution and other network services will markedly raise its profitability.” Sony plans to launch a new online service to distribute movies, music, books and games to network-capable TVs, Blu-ray players, ebooks and other devices, in a move to capitalise on its strong presence both in hardware and entertainment industries.

The company pioneered the mobile music market 30 years ago with its Walkman and once ruled the global television industry in the era of box TVs, but it is now struggling to keep pace with nimbler South Korean rivals and innovative US IT companies.

“What we’re seeing is a weakening of Sony’s brand power. That’s especially clear in North America where its market share has fallen sharply. The situation is so bad it almost makes me want to cover my eyes,” said Chibagin Asset Management’s advisor Fujio Ando.

“They no longer have products that are unique and can control the market,” he said.

Its portable music players have been in the shadow of Apple Inc’s iPod in recent years, while, in the LCD TV market, its Bravia models have lagged a long way behind Samsung, and now LG is threatening Sony’s No.2 position.

Samsung accounted for 22.5% of global LCD TV revenues in July-September, followed by Sony’s 12.1% and LG’s 11%, according to data from research firm DisplaySearch.

In an effort to improve profits at its TV operations, Sony plans to have 40% of its LCD TVs assembled by outside manufacturers in the next business year starting April 2010, up from 20% this year.

GM posts loss, vows to repay US debt early

Reuters — Mon, 16 Nov 2009 12:43:00 GMT

Detroit: General Motors Co posted a third-quarter operating loss on Monday but said stabilizing sales and lower costs since its July bankruptcy would allow it to begin paying down $6.7 billion in US government debt ahead of schedule.

The automaker said it would begin making $1 billion quarterly instalment payments on its US government loan in December. At the same time, the automaker will start repaying a $1.4 billion loan to Canada, making a payment of almost US$200 million.

GM had not been required to make any payments on the US loan before it matured in July 2015.

For the third quarter, GM posted a loss of $888 million before special items, interest payments and taxes.

GM, which slashed almost 70% of its debt in a bankruptcy funded and directed by the US government, posted third-quarter sales of $28.0 billion in preliminary financial results released on Monday.

The sales results were down 26% from a year earlier but up 21% from the second quarter when the automaker was struggling to conserve in the run-up to its June bankruptcy filing.

The financial results were not prepared according to generally accepted accounting principles and were not directly comparable to past results for the automaker, which has lost $88 billion since 2005.

The US government extended almost $50 billion in financing to GM but agreed to convert most of that balance into a 61% equity stake in the automaker.

A congressional oversight panel said the US government was unlikely to recover all of the financing it provided GM.

The automaker ended the third quarter with $42.6 billion in cash and $17.4 billion in a special account created with the bankruptcy financing provided by the US government.

It said it had allocated $8.1 billion from the bankruptcy escrow account to pay down the government debt.

Goodyear Q3 net jumps over 3 fold to Rs23.59 cr

PTI — Fri, 13 Nov 2009 09:09:00 GMT

Mumbai: Tyre manufacturer Goodyear India on Friday said that its net profit jumped more than three-fold to Rs23.59 crore for the quarter ended 30 September, from the same period last year.

Total income rose to Rs271.34 crore in the September quarter from Rs241.37 crore in the same period previous fiscal, Goodyear India said in a filing to the Bombay Stock Exchange (BSE).

Simbhaoli Sugars net profit surge to Rs72 cr in FY09

PTI — Thu, 12 Nov 2009 09:43:00 GMT

Mumbai: Simbhaoli Sugars Limited (SSL), one of the country’s largest sugar refiners reported profit of Rs71.9 crore for the year ended September 2009.

The company has made a loss of Rs29.1 crore in the corresponding period last year.

“On account of better realization and off season refining of raw sugar at its sugar plants, the company has witnessed a robust improvement in the operating earnings and net profit,” Simbhaoli Sugars director, finance Sanjay Tapriya said.

The company’s net sales rose by 62.2% at Rs706.5 crore compared to Rs435.5 crore during the same period last year. The company’s cash profit stood at Rs105 crore.

The performance for the fourth quarter also remained buoyant. In Q4 FY09 the company reported an increase of 104.4% in its net sales to Rs238.3 crore as compared to Rs116.6 crore during the same quarter last year.

The net profit during the quarter stood at Rs23.6 crore as against net loss of Rs7.4 crore in the same period last year.

During Q4 FY 09, the other income stood at Rs11.10 crore, which includes a gain of Rs10.33 crore on account of buy back of foreign currency convertible bonds (FCCB) of $29.61 million, out of aggregate FCCB liability of $33 million.

“Going by the current trend we expect margins to improve further. With the seamless operations of producing sugar throughout, the year going ahead we would like to further strengthen our financial position by improving the production of refined sugar,” Tapriya said.

The cane purchases for sugar season 2007-08 were accounted for at Rs110 per quintal, the rate at which payment was made to the cane growers as per the interim order of the Allahabad High Court and Supreme Court, against the state advised price of Rs125 per quintal, the company said.

Air India FY09 loss doubles on higher fuel prices, interest costs

Tarun Shukla — Wed, 11 Nov 2009 17:04:00 GMT

New Delhi: Air India, the flag carrier run by National Aviation Co. of India Ltd (Nacil), said on Wednesday that its net loss had more than doubled to Rs5,548 crore in the year ended March, sinking deeper into the red because of higher fuel prices and interest costs on aircraft loans.

The airline, which two Air India officials said has decided to stop paying all performance-linked incentives to its top 36 directors, had posted a net loss of Rs2,226.16 crore in 2007-08. The airline released its financial results after a board meeting in Chennai.

Ground reality: A group of ministers is expected to take a call on Thursday on granting funds to bail out the Air India, which says its working would improve this fiscal with more passengers and cost-cutting measures. Abhijit Bhatlekar / Mint

Revenue fell to Rs13,479 crore in the fiscal gone by, from Rs15,252 crore, “due to global recession, fall in load factors and passenger yields”, Air India said in a statement. The number of passengers travelling on Air India flights fell to 10.36 million from 13.21 million in the previous year.

The cash-strapped and debt-burdened airline, which has sought Rs5,000 crore from the government in equity and loans, set its results against the backdrop of the global economic meltdown that resulted in fewer passengers travelling. The International Air Transport Association (Iata) forecast a combined loss of $16.8 billion (Rs78,288 crore) for the aviation industry in 2008 followed by a loss of $11 billion in 2009.

Air India, which cited increased depreciation costs and foreign exchange losses because of the rupee’s depreciation besides interest costs and fuel prices, said its performance would improve in 2009-10 as a result of increased passenger demand and cost-cutting measures, including withdrawal of loss-making routes and return of leased aircraft and wage cuts.

“A lot of macroeconomists are suggesting that the bottom is near, so things may be looking up for Air India,” said Vikram Krishnan, associate partner at Oliver Wyman, a San Francisco-based aviation consultancy, in an email. “Carriers that are less reliant on higher yield (business traveller) demand are performing relatively well right now.”

Air India’s nearest rivals Jet Airways (India) Ltd and Kingfisher Airlines Ltd had losses of Rs961.41 crore and Rs1,608 crore, respectively, for the year ended March.

Air India is in the midst of a cost-cutting drive in return for a cash injection from the government. On Thursday, a group of ministers is expected to take a call on granting funds to bail out the carrier.

In the context of its huge losses, Air India has mandated Booz and Co. to look at its costs across the board. The consultant “will review the cost-saving programme of Air India and will suggest more effective measures,” an Air India spokesperson said.

The civil aviation ministry had late last month asked Air India to review the performance-linked incentives given to the airline’s top 36 officials, who include 30 executive directors and six functional directors, as part of the cost-cutting drive.

On Wednesday, the move met stiff resistance from board members who said a cut was not justified. The directors argued that they were paid much less than their counterparts in private companies, said a senior Air India official who asked not to be named.

The board decided not to change the salary structure, but won’t pay the directors the incentives until an agreement is reached on the issue. Such incentives make up at least half the salary of an executive director. “Their (directors’) PAs (personal assistants) will get a better salary now,” the AI official said.

A second Air India official confirmed the move, also on condition of anonymity. Asked about the move, an Air India spokesman said the airline would send its response to the aviation ministry. It wasn’t immediately clear when the airline would stop paying the incentive salary.

A cut in performance-linked incentives for pilots in September had led to a strike at the carrier, forcing the airline to roll back the order. The Indian Commercial Pilots’ Association has given another notice for a strike beginning 24 November on pay-related issues.

tarun.s@livemint.com

ING returns to profit in Q3 on cost-cutting

Toby Sterling / AP — Wed, 11 Nov 2009 10:11:00 GMT

Amsterdam: ING Groep NV, the bailed-out Dutch financial services company, said on Wednesday it made a profit in the third quarter, ending a year of heavy losses, as financial market conditions recovered.

Net profit was €499 million ($748 million), compared with a loss of €478 million in the same period a year ago, when the financial crisis became most acute.

“Negative market impacts were less severe than in previous quarters as equity markets improved,” said chief executive Jan Hommen. Banking profits were helped by better interest margins and lower costs.

“However, the company’s results continued to be impacted by impairments on mortgage-backed securities and negative revaluations on real estate investments,” he said.

Shares rose 4.2% to €9.95 in Amsterdam.

The current quarter included €1.54 billion in market-related losses and provisions for bad loans, less than both the €2.40 billion booked in the year-ago period and €2.27 billion in the second quarter this year.

ING was forced to seek two bailout packages from the Dutch state as a result of the financial crisis.

Last month it announced plans to split its banking and insurance arms by 2013 in order to simplify its structure and appease the complaints of European regulators about the state assistance. ING said it would also issue €7.5 billion worth of new shares to begin repaying some of the assistance it has received.

At that time, it indicated its third quarter “underlying” earnings, a nonstandard measure that strips out gains or losses on divestments and one-time charges, would be about €750 million. ING reported underlying profit of €778 million on Wednesday, up from an underlying loss of €568 million in the same period a year earlier.

SNS Securities analyst Maarten Altena said the earnings were in line with expectations, though loan losses were slightly better.

Hommen, the CEO, said the separation of ING’s insurance arm and share issue is proceeding as planned.

“We have had a lot of interest expressed” in purchasing parts of ING insurance, but the company is not in negotiations yet, Hommen said on a conference call with analysts. “With markets recovering this is not the time to be extremely quick” with a sale.

He said ING would aim to float the insurance arm on the stock exchange, weighing the benefits of any purchase offers against that plan.

ING will pay off half of €10 billion it received from the Dutch state after carrying out the share issue, and Hommen said the disposal of the insurance arm would raise enough to pay off the rest.

The company will pay the Dutch state €1.3 billion in the fourth quarter to resolve regulators’ complaints about its other bailout package, under which the state assumed the risks for most of ING’s derivatives.

ING’s banking arm reported third quarter profit of €274 million, up from a loss of €216 million. This year’s figure includes €664 million in charges on debt derivatives and €423 million in losses on real estate.

Provisions for bad loans rose to €662 million from €373 million a year ago.

ING said its core Tier 1 ratio _ a key measure of a bank’s solvency _ was 7.6%, up from 7.3% at the end of June.

ING’s insurance arm reported profit of €587 million, from a loss of €496 million. This year’s figures include gains on investments as the stock market recovered, and a higher appraisal of the value of its insurance policies.

The company said earnings were helped by cost-cutting. ING has slashed some 10,400 jobs so far this year, about 8.3% of its total.

Allianz Q3 earnings beat fcasts, demand weak

Jonathan Gould / Reuters — Mon, 09 Nov 2009 11:43:00 GMT

Frankfurt: Allianz unveiled forecast-beating quarterly earnings, boosted by life insurance and asset management, though it warned economic weakness was still hitting demand in the broader insurance market.

“Property-casualty as well as life insurance face markedly weaker demand due to the economic downturn with rising business insolvencies and rising unemployment,” Europe’s biggest insurer said on Monday in its third-quarter report.

Prices are moving upward only slowly-if at all-and only in specific areas of business, it added.

Allianz said that it was well-positioned to take advantage of improvements in the economy, after its life and health insurance and asset management businesses helped it post a 23% rise in operating profit in the third quarter.

Allianz rival AXA, Europe’s second biggest insurer, on 29 October posted slightly weaker than expected quarterly sales, but said that the outlook for its business had improved. “Allianz more than fulfilled the forecasts, both bottom line and at the operating level,” said UniCredit analyst Andreas Weese in a client note.

“While property-casualty insurance was largely in line with expectations, life and health insurance and financial services exceeded the forecasts,” Weese said.

Allianz’s shares were trading up 3.8% at €82.35 a share at 1:43pm, outpacing a 1.86% gain in the DJ Stoxx European insurance index.

The company’s main business of property and casualty insurance posted an 18% decline in operating profit from the year-earlier quarter.

“While pricing is on an upward trend, our volumes remain challenged due to weaker demand, the effects of our portfolio cleaning measures and selective underwriting,” Allianz said of the segment, which normally accounts for some 60% of group operating profit but in the third quarter contributed little more than half.

Allianz reported quarterly operating profit of €1.929 billion ($2.9 billion), above the average forecast of €1.804 billion in a Reuters poll of 18 analysts.

It also swung to a quarterly net profit of €1.3 billion, above the €1.2 billion expected in the poll, from a €2 billion loss in the third quarter of 2008, when it sold its unprofitable Dresdner Bank unit to Commerzbank.

Allianz’s shares have risen by 5.8% since the start of the year, lagging a gain of nearly 10% in the DJ Stoxx European insurance index.

Data from Thomson Reuters StarMine, which weights analysts’ forecasts according to their track record, Allianz trades at 7.7 times 12-month forward earnings, making it cheaper than French rival AXA, which trades at a multiple of 8.4.

Security group G4S eyes expansion, sales grow

Rhys Jones / Reuters — Mon, 09 Nov 2009 10:52:00 GMT

London: G4S, the world’s biggest security firm, said nine-month sales were boosted by demand in emerging economies and increased government spend, and it planned to boost operations in both China and Brazil.

The company, formed from the 2004 merger between Denmark’s Group 4 and Britain’s Securicor, said operating profit was up 12% on sales up 9% for the nine months to the end of September, without giving specific figures.

G4S, which supplies security guards and other safety-related services to firms in over 100 countries, added that margins rose 0.2% in the period.

Looking ahead, chief executive Nick Buckles said that the company planned to expand further both organically and through acquisitions. The company also said it was confident of winning work at the 2012 Olympic games in London.

“We’re looking to enter Brazil and invest more in China in 2010 after regulations changed there, meaning we can now, as a foreign company, own security businesses in China,” Buckles said.

“We expect to spend £100 million ($166 million) a year on acquisitions and have only spent around £55 million so far and have couple of medium-sized deals in the pipeline,” he said.

Shares in G4S, which have risen a quarter in 2009, were 0.6% lower at 251 pence by 2:50pm, valuing the group at around £3.5 billion.

“This represents a slight slowdown on the first half performance which saw organic growth of 4.8% but is still in-line with our 2009 forecast of 4.5%. However, we expect further growth in 2010,” said Seymour Pierce analyst Kevin Lapwood.

The company is expected to report an average pretax profit of £364.5 million in 2009, according to a Thomson Reuters I/B/E/S poll of 13 analysts.

HTC expects quiet Q4 as competition intensifies

Reuters — Mon, 09 Nov 2009 10:39:00 GMT

Taipei: HTC, the world’s No. 4 smartphone brand, expects fourth-quarter revenue to be almost 15% lower than the same period a year earlier, as competition intensifies and prices decline in the fast-growing sector.

Revenue in the October-December quarter could clock in at between T$40-42 million ($1.3 million), the company said in a statement on Monday, lower than the T$47 million recorded a year ago.

Average selling prices are also expected to fall about 10% from a year ago, as bigger rivals such as Nokia and Apple look to muscle out smaller players, while upstarts such as Acer depress prices.

“Things are sounding a little subdued for them,” said Vincent Chen, an analyst at Yuanta Securities. “I’m hearing that HTC doesn’t have visibility beyond the next couple of months, and the first quarter could be very weak.”

HTC announced worse-than-reported third-quarter results in October, hit by rapidly intensifying competition in the smartphone sector from rivals such as Blackberry maker Research in Motion.

Gross profit margins in the fourth quarter will likely come in at about 32.5%, the company said in a statement, while operating expenses are likely to take up 17% of its total revenue.

HTC shipped some 2.4 million smartphones in the third quarter, research firm IDC said on 5 November, keeping its fourth place on the charts behind Nokia, RIM and Apple.

Its shares have remained largely flat this year, lagging a roughly two-thirds advance on the benchmark TAIEX share index.

Audi, BMW report Chinese sales boost in October

AFP — Mon, 09 Nov 2009 10:25:00 GMT

Frankfurt: The German luxury car maker BMW said on Monday that its sales rose further in October, with a leap in China, news echoed by German rival Audi.

Deliveries of BMW, Mini and Rolls-Royce autos rose by 2% from the level in October last year to 113,011 units, after showing a 12-month increase in September for the first time for a year.

Chinese sales leapt by 81% in October to 9,558 units, a statement said, and emerging markets in general have already reported more sales than in all of 2008, it added.

Audi, a premium brand of the Volkswagen group, said that October sales gained 0.4% to 82,750 units, also aided by soaring demand in China.

For the rest of the world, “we expect more solid progression in November and December,” BMW sales director Ian Robertson was quoted as saying.

Audi forecast overall 2009 sales of 925,000 cars, well above its initial target of 900,000.

“Our sales figures worldwide have developed much better than expected,” Audi sales chief Peter Schwarzenbauer was quoted by a statement as saying.

“The Audi Q5 is emerging as one of our most successful models,” he added.

Meanwhile, BMW’s own brand turned in last month its first sales increase in a year, edging up by 0.4% to 95,859 units.

On a 10-month basis however, overall group sales still showed a decline of 14 % from the same period in 2008, and the company expects full-year sales to be 10-15% lower than in 2008.

But luxury cars are nonetheless beginning to move off of dealers’ lots after missing out on government car-scrapping schemes that mainly boosted sales of small cars.

On Friday, BMW’s German rival Daimler said sales of its Mercedes-Benz and Smart cars had gained 4.1% on an annual basis.

HMT H1 net loss widens to Rs30.90 cr

PTI — Mon, 09 Nov 2009 10:02:00 GMT

Mumbai: Government-run company HMT Ltd on Monday reported a net loss of Rs30.90 crore for the half year ended 30 September.

The same was at Rs28.50 crore in the year ago period.

The company’s net sales stood at Rs86.50 crore for the six-month period ended 30 September, 2009, against Rs78.30 crore during the corresponding period a year ago, HMT said in a filing to the Bombay Stock Exchange (BSE).

The diversified firm, in which the government holds a 98.88% stake, has presence in the business of watches, tractors, printing machinery and metal forming presses among others.

Shares of HMT were trading at Rs64.75, up 1.97% in late afternoon trade on the BSE.

AIG posts 2nd straight profit, insurance weak

Lilla Zuill / Reuters — Fri, 06 Nov 2009 15:27:00 GMT

New York: AIG, the giant insurer bailed out by the US government, posted its second straight quarterly profit on Friday, helped by recovery in the value of its investments, but its underlying business remained weak, and shares fell.

“It is clearly still a troubled company,” said Rob Haines, an analyst with CreditSights in New York. “Its operations are clearly weaker than some of its higher quality competitors. AIG used to be one of those companies.”

AIG’s shares, which rallied more than 8% on Thursday, fell more than 9% Friday morning.

The insurer’s latest results included $1.95 billion in special gains, sending AIG into the black once more, offsetting declines in operating revenue at its insurance businesses.

Net income was $455 million, or 68 cents a share, compared with a loss of $24.47 billion, or $181.02 a share, in the year-earlier quarter. Its profit in the second quarter was $1.8 billion.

While insurers widely reported a drop in business in the third quarter, as the effects of rising unemployment and a contraction in spending reduced demand for coverage, the situation at AIG may be especially acute since it had already lost business in the wake of its taxpayer bailout.

Chief executive Robert Benmosche, not yet three months into the job, said AIG employees were working hard to “preserve the strength of our insurance businesses in a challenging market.” The comments were made in the company’s earnings statement.

AIG has received up to $180 billion of federal aid, including more than $80 billion in loans, and is now 80% owned by US taxpayers. It got the aid after soured mortgage investments nearly drove it into bankruptcy last year.

The gains in the latest quarter included improvement in the value of securities held by AIG Financial Products, basically a reversal of some of the losses that were largely responsible for AIG’s massive losses in 2008.

CreditSights’ Haines said it was a positive that AIG did not have any “bombshell” investment losses in the latest quarter, but that it would need to make real strides in repaying its taxpayer debts, and show several quarters of growth within its insurance operations, before anyone could take it seriously again.

AIG’s general insurance operations reported a 13% decline in net policy sales. Life insurance and retirement services had a 16 percent drop in premium income.

However, the general insurance and life insurance divisions both had operating profit in the quarter, driven by higher net investment income, compared with losses a year earlier.

Excluding realized gains and losses, AIG’s adjusted third-quarter profit was $1.9 billion, or $2.85 a share. On that basis, four analysts on average expected $1.98 a share, according to Thomson Reuters I/B/E/S.

AIG said it continued to make strides in winding down AIG Financial Products. The unit’s derivative portfolio was cut by 13 percent in the quarter to about $1.1 trillion.

Benmosche warned the company could continue to see earnings volatility in future quarters, including as a result of charges related to its ongoing restructuring.

The company had been trying to sell off major assets to raise funds to repay the United States. But it has struggled to find buyers willing to pay its asking price for assets.

In the fourth quarter it expects to significantly reduce its federal loan balance as it consummates a $25 billion pact to give the Federal Reserve a preferred stake in two of its largest life insurance units, AIA and Alico.

However, it will record a charge of about $5 billion related to that deal, and another $1.4 billion charge from its $2.15 billion October sale of Taiwan life insurance unit Nan Shan.

AIG shares, after rising more than 8% on Thursday, were down more than 9% at $35.52.