(Alliance News) - The following is a summary of top news stories Thursday.
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COMPANIES
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Walt Disney was up 7.4% in pre-market share trading in New York, after reporting over 220 million streaming subscribers and increased quarterly profit. The stock already had risen by 4.0% in the main session on Wednesday. Revenue in the third quarter, ended July 2, rose 26% year-on-year to USD21.50 billion from USD17.02 billion a year before. Revenue from Parks, Experiences & Products jumped 70% to USD7.39 billion, while Media & Entertainment Distribution notched 11% growth to USD14.11 billion. The company's net income from continuing operations for the quarter jumped 53% to USD1.41 billion from USD923 million, while diluted earnings per share rose 54% to USD0.77 from UUSD0.50. Chief Executive Bob Chapek said streaming service Disney+ added 14.4 million subscribers in the quarter. This took total Disney+ subscribers to 152.1 million and total subscriptions across its all streaming offerings - which includes ESPN+ and Hulu - to 221 million.
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Melbourne-based telecommunications firm Telstra upped its payout for the first time in seven years as it rounded off its T22 growth strategy. For the year ended June 30, total income fell 4.7% to AUD22.05 billion, about USD15.60 billion, from AUD23.13 billion. Pretax profit inched up 1.6% to AUD2.48 billion from AUD2.44 billion. Telstra raised its payout by 3.1% to 16.5 cents from 16.0 cents. "When we launched our T22 strategy four years ago, we were in part responding to the operational and financial headwinds created by the rollout of the [national broadband network]," Chief Executive Andy Penn said. "While we are by no means immune, the transformational changes we made through T22 have prepared us well to manage through the uncertainty – we are a much simpler, more agile, more efficient, leaner, more customer-focussed and more digitally-enabled business."
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Siemens said it has swung to a net loss in third quarter of its financial year, as it continues to face a difficult trading environment. Siemens is a Munich-based industrial conglomerate covering infrastructure, transport and healthcare. For the three months that ended June 30 - the company's third quarter - Siemens swung to a net loss of EUR1.53 billion from a EUR1.48 billion profit a year prior. It also swung to a loss per share of EUR1.85 from EUR1.89 earnings per share. However, revenue climbed 11% to EUR17.87 billion from EUR16.09 billion the year before, and orders rose 7.4% to EUR22.01 billion from EUR20.49 billion. Siemens explained that the quarterly loss was primarily due to a EUR2.7 billion previously disclosed impairment of its stake in Siemens Energy. Also Thursday, Siemens said it plans to sell its low-voltage NEMA motor business to Zurich-based industrial conglomerate ABB for an undisclosed amount.
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Daimler Truck posted double-digit earnings growth and largely backed annual guidance. The commercial vehicle manufacturer late last year was officially spun-out of former parent Daimler, now named Mercedes-Benz Group. It is based near the Mercedes headquarters in Stuttgart. Daimler Truck posted revenue of EUR12.10 billion for the second quarter of 2022, up 18% from EUR10.24 billion a year earlier. Pretax profit rose by 25% year-on-year to EUR1.05 billion from EUR841 million. Unit sales were 5.5% higher at 230,247 vehicles, from 218,209 a year earlier.
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Zurich Insurance announced a share buyback, as it reported a 25% rise in half-year profit. In the six months that ended June 30, the Swiss insurer booked a business operating profit of USD3.39 billion, up 25% from USD2.71 billion a year previous. Diluted earnings per share rose 4.7% to CHF13.91 from CHF13.28. Growth was driven by an underlying improvement across all businesses, the firm explained, and is the highest since 2008. It was also the second highest ever reported. The company announced a share buyback of CHF1.8 billion, about USD1.9 billion. Zurich said it is doing this to offset expected earnings dilution from the sale of its German life back book.
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Deutsche Telekom posted a quarterly revenue hike, performing well in its core German market and reporting "best-ever customer growth" in the US. Revenue in the second quarter of 2022 rose 5.9% year-on-year to EUR28.17 billion from EUR26.59 billion. Service revenue alone jumped 11% to EUR22.89 billion. Service revenue is a key metric for telecommunications companies. It includes airtime usage, roaming and monthly access charges. Pretax profit, however, declined 46% to EUR1.72 billion from EUR3.19 billion. Goods and services purchase costs rose 8.1% to EUR12.67 billion, personnel costs were 4.8% higher at EUR4.93 billion and "other operating expenses" surged 75% to EUR1.67 billion. However, Deutsche Telekom raised guidance for 2022 earnings.
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Entain left annual guidance unchanged and declared a dividend for the first time since the onset of Covid-19, with the bookmaker promising a "progressive" payout going forward. It has also announced the acquisition of a gaming and sportsbook operator in Croatia through a newly established joint venture. The Ladbrokes and Coral owner posted revenue of GBP2.09 billion for the six months ended June 30, up 19% year-on-year from GBP1.77 billion. Underlying earnings before interest, tax, depreciation and amortisation climbed 17% to GBP471 million from GBP401.1 million. Pretax profit, however, tumbled by 70% to GBP39.5 million from GBP130.6 million. Entain's bottom-line was hit by a GBP55.0 million foreign exchange hit, swinging from a GBP77.1 million tailwind a year earlier. Entain declared an interim dividend of 8.5 pence per share, its first payout since the onset of the pandemic.
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Coca-Cola HBC said its first half was "strong" despite a severe drop in profit, knocked back by the significant costs involved in exiting from Russia. The bottling partner of Coca-Cola Co said net profit was down 34% at EUR152.9 million in the six months ended July 1 from EUR233.1 million a year before. Coca-Cola HBC noted it booked a EUR188 million non-cash charge in the first half due it restructuring its Russia business. The firm stopped taking orders in Russia in March, so seen volumes plunge 46% in the second quarter. It expects further declines in the second half. Coca-Cola HBC expects to incur further charges in the second half, currently estimated at EUR82 million.
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Antofagasta slashed its interim dividend as lower copper prices and operational strife hit the Chilean miner's first-half outturn. For the six months to June 30, revenue dropped 30% to USD2.53 billion from USD3.59 billion a year before, due to lower copper and by-product sales volumes, and lower realised prices. Pretax profit was down 62% to USD679.6 million from USD1.79 billion. Earnings before interest, tax, depreciation and amortisation fell 48% to USD1.24 billion from USD2.36 billion, reflecting "lower revenue and higher cost of sales which increased by 6.9%," the company explained. Anto declared an interim dividend of 9.2 US cents, down 61% from 23.6 cents paid out last year. Looking ahead, it reiterated 2022 copper production is expected to land around 640,000 to 660,000 tonnes.
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Boeing delivered a 787 Dreamliner to American Airlines on Wednesday, the first of that aircraft to be sent to a customer in over a year due to defects discovered in the plane. US air safety regulators on Monday cleared the aviation giant to resume deliveries of the top-selling widebody after Boeing made changes to its production process. "We have resumed 787 deliveries, following our thorough engineering analysis, verification and rework activities to ensure all airplanes conform to Boeing's exacting specifications and regulatory requirements," a company spokesperson confirmed to AFP.
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MARKETS
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The dollar was clawing back ground on Thursday, after a cooler-than-expected US inflation reading for July - 8.5%, down from 9.1% in June - had recalibrated expectations for the path of Federal Reserve interest rate increases and sent the currency lower on Wednesday. The dollar was later supported by the Cleveland Fed pointing out that "inflationary pressures remain broad-based", with the July figure mostly reflecting lower gasoline prices.
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CAC 40: marginally higher, up 0.43 point at 6,523.87
DAX 40: down 0.2% at 13,676.97
FTSE 100: down 0.3% at 7,487.62
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Hang Seng: closed up 2.4% at 20,082.43
Financial markets in Japan closed for Mountain Day holiday
S&P/ASX 200: closed up 1.1% at 7,071.00
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DJIA: called up 0.3%
S&P 500: called up 0.2%
Nasdaq Composite: called up 0.1%
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EUR: soft at USD1.0340 (USD1.0349)
GBP: down at USD1.2240 (USD1.2253)
USD: firm at JPY132.50 (JPY132.41)
GOLD: down at USD1,790.02 per ounce (USD1,799.85)
OIL (Brent): up at USD97.55 a barrel (USD94.77)
(currency and commodities changes since previous London equities close)
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ECONOMICS AND GENERAL
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German Chancellor Olaf Scholz said he is convinced that Germany will get through a natural gas crisis. "We decided early on. We are preparing for the fact that things can get very bad," Scholz told a meeting in his constituency in Michendorf in Brandenburg state, near the capital Berlin. With a view to the possibility that Germany might stop receiving Russian gas shipments, Scholz said: "That's why we made very, very far-reaching decisions." Things might get tough and tight, the chancellor said, but he said Germany had the chance "to get through this difficult situation." The filling level of the German gas storage facilities for winter has almost reached the first target of 75%, in spite of reduced flows from Russia. The fill level was 73.7% as of Tuesday, the European gas storage operators revealed.
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EU member states are no longer allowed to import coal from Russia after the transitional period for the bloc's embargo ended on Wednesday. EU countries had agreed on a transitional period of 120 days to give the industry time to adapt to the import ban. The aim is to weaken the Russian economy amid its invasion of Ukraine. The embargo was part of the fifth sanctions package agreed by the EU in April and will be in full force from Thursday onwards.
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Energy bosses will face pressure from UK government ministers about how they can help customers cope with rising bills at a crunch meeting on Thursday. Chancellor Nadhim Zahawi and Business Secretary Kwasi Kwarteng will press gas and electricity company executives for solutions to the predicted spike in bills over winter. The summit with utilities bosses, expected to take place in Downing Street, comes after Cornwall Insight predicted bills are set to soar to around GBP3,582 in October, from GBP1,971 previously, before rising even further in the new year. Executives are being asked to submit a breakdown of expected profits and payouts, as well as investment plans for the next three years. Former prime minister Gordon Brown has suggested scrapping the price cap and negotiating lower rates with energy bosses, according to reports. Tory party leadership contenders Rishi Sunak and Liz Truss continue to face questions about what they will do to help struggling families, while Labour has called for a "loophole" in the oil and gas windfall tax to be closed to raise more support cash.
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Bank of England Chief Economist Huw Pill conceded raising interest rates in the fight against inflation will slow economic growth, but maintained it is required to stabilise the economy in the longer term, Bloomberg reported on Wednesday. "It's very important that we use monetary policy to prevent that high level of inflation from getting ingrained," Pill said in a virtual Q&A. "In the short term higher interest rates means higher mortgage payments. It probably also means some slowing in the economy." Earlier this month, the BoE raised UK interest rates by 50 basis points to 1.75% from 1.25% - the biggest rate hike since 1995. The decision came after the UK inflation rate raced to 9.4% in June, reaching a 40-year high. Pill maintained increasing rates will help to "head off that ingrainedness" of rising prices, which is "very disruptive to society" as it makes it harder for businesses to plan, and for investors to save, Bloomberg reported.
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Donald Trump said he declined to answer questions under oath in New York over alleged fraud at his family business, as legal pressures pile up for the former president whose house was raided by the FBI just two days ago. Trump said he had "no choice" but to invoke the fifth amendment – which allows individuals to remain silent under questioning to protect against self-incrimination – during the deposition at the New York attorney general's office. "I declined to answer the questions under the rights and privileges afforded to every citizen under the US Constitution," Trump said.
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Global oil demand will rise more than previously forecast this year as heatwaves and soaring gas prices are prompting countries to switch fuels for power generation, the International Energy Agency said. Oil prices have dropped by USD30 per barrel from a peak in June due to growing supplies and "escalating concerns over the deteriorating economic outlook", the Paris-based agency said in a monthly report. Meanwhile, prices of natural gas and electricity have jumped to new records, prompting some countries to switch to oil use, the IEA said. Consequently, the IEA raised its demand forecast by 380,000 barrels per day. Demand is now seen rising by 2.1 million barrels per day to a total of 99.7 million bpd in 2022. It will reach 101.8 million bpd in 2023, exceeding pre-Covid levels.
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By Tom Waite; thomaslwaite@alliancenews.com
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