Cooling towers at the Grafenrheinfeld power plant owned by EON Sean Gallup, Getty Images

Cooling towers at the Grafenrheinfeld power plant, located in Germany and owned by E.ON.

FINANCIAL ROUNDUP: German Power Giant E.ON Reports Profits Drop

In China, quarterly profits for Tencent jump 25%, while Alibaba doubles its quarterly net profit to almost $5 billion amid a disappointing report. ... Newly-merged Kraft Heinz plans to cut 2,500 jobs.

FRANKFURT — E.ON, Germany’s biggest power supplier, said Wednesday that first-half profits were hit by falling wholesale electricity prices, lower oil prices and a weak ruble.

“In line with expectations, at the half-year mark, earnings were below the respective prior-year figures,” E.ON said in a statement.

Underlying or operating profit, as measured by earnings before interest, tax, depreciation and amortisation (EBITDA), fell by 13% to 4.3 billion euros ($4.8 billion), while underlying net profit slumped 21% to 1.2 billion euros ($1.34 billion). First-half sales, meanwhile, increased by about 5.0% to 57.3 billion euros ($63.96 billion). 

“Transforming our company during a period of extremely low power prices and volatile oil prices is a challenge. Yet we delivered solid results,” chief financial officer Michael Sen said.

TENCENT: HONG KONG — Chinese Internet giant Tencent saw its net profit surge by 25% in the second quarter buoyed by growth in online advertising revenue and its popular messaging service WeChat, the company said Wednesday.

Net profit for the three months to June 30 stood at 7.31 billion yuan ($1.14 billion), up 25% from 5.84 billion yuan ($914.61 million) in the same period last year, while revenue rose by 19% from 19.75 billion yuan to 23.43 billion yuan ($3.09 billion to $3.67 billion).

Analysts quoted by Bloomberg News had forecast a revenue figure of 24 billion yuan ($3.76 billion), but earnings were seen as better than expected.

Based in the Chinese southern export hub of Shenzhen, Tencent operates China’s biggest messaging service WeChat, through which a variety of businesses including gaming, advertising and social networking have flourished in recent years.The technology giant recently said it will set up an online platform to allow WeChat users to buy and sell stocks online. 

ALIBABA: NEW YORK — Chinese ecommerce giant Alibaba turned in a disappointing quarterly report Wednesday showing sales growth cooling.

Profit in the quarter ended June 30 doubled to $4.97 billion, mainly due to one-time gains of $3.9 billion from the sale of its stake in film unit Alibaba Pictures. But Alibaba shares tumbled nearly five percent in pre-market New York trade, on disappointment over revenue growth.

The company said revenue, which excluded one-time gains, rose 28% from a year ago to $3.27 billion, below analysts’ expectations of $3.39 billion.

Barclays’ analysts said the results were “slightly softer than had been expected given the already lowered consensus estimates.” The rise in sales was driven by retail trade in China, which accounted for 78% of revenue in the first fiscal quarter, the company said in a statement.

KRAFT HEINZ: NEW YORK — Kraft Heinz plans to cut 2,500 jobs in the United States and Canada as it eliminates duplicative positions following the merger of the two food giants, a company spokesman said Wednesday. The job cuts will hit just over 5% of the company’s workforce.

About 700 of the affected jobs will come from the company’s headquarters in Northfield, Ill., spokesman Michael Mullen said. Employees who work in sales, marketing and finance are expected to be among the most affected. 

“We have developed a new streamlined structure for our organization to simplify, strengthen and leverage the company’s scale,” Mullen said. “This new structure eliminates duplication to enable faster decision-making, increased accountability and accelerated growth.”

The job cuts come about six weeks after the merger between Kraft and Heinz closed. The food giant is controlled by the Brazilian investment firm 3G Capital, which is known for cutting costs.

Copyright Agence France-Presse, 2015
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