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GLOBAL FINANCIAL ROUNDUP: Fiat Chrysler Profits Shift Into Higher Gear

July 27, 2016
FCA profits are up a quarter, but net profit checks in below the forecast with sales down, too. ... Nissan profits are down thanks to stronger yen. ... Airbus profits soaring. ... Nintendo loss disappoints, Pokemon Go Plus delayed. ... Hyundai Heavy posts best quarter since 2013. ... JSW Steel surges to record.

MILAN — Fiat Chrysler Automobiles announced Wednesday that its second-quarter net profit jumped thanks to better operating performance in its main markets and a jump in Jeep sales. Excluding one-time items, adjusted operating profit rose 14% to 1.63 billion euros.

However, the net profit of 321 million euros ($353 million) was far below the 619 million euro consensus forecast of analysts surveyed by Factset. A 2% dip in sales to 27.89 billion euros also disappointed investors who were expecting sales to rise by that amount.

Fiat said the increase in net profit was “driven by strong operating performance” in its key North American and European markets as well by its components unit. FCA continued to benefit from the launch of its new Jeep Renegade model, with Fiat’s worldwide Jeep sales up 16%.

Net profit over the first half of the year nearly tripled to 799 million euros. The Italian-US manufacturer nudged up its annual targets. It now sees ending the year with an adjusted net profit of 2 billion euros on 112 billion euros in sales.

Copyright Agence France-Presse, 2016

Nissan Profit Declines 11% on Stronger Yen

Nissan Motor Co. posted an 11% drop in quarterly profit as a stronger yen eroded overseas earnings, and domestic sales of minicars supplied by Mitsubishi Motors Corp. slumped after a mileage scandal.

Net income in the quarter through June declined to 136.4 billion yen ($1.3 billion), in line with analysts’ estimates, and down from 152.8 billion yen a year earlier, the Yokohama, Japan-based automaker said in a statement Wednesday.

Nissan’s deliveries in Japan tumbled more than 20% in the quarter as it stopped selling the DayZ models after supplier Mitsubishi Motors said it manipulated fuel-economy data. The rising yen, which has strengthened more than 18% against the U.S. dollar in the 12 months through June, is eroding Japanese competitiveness and lowering the value of repatriated earnings.

Nissan maintained its full-year forecast for a 525 billion yen profit for the fiscal year ending in March. The company said operating profit increased by 38% in the first quarter if the impact of the currency exchange is excluded.

By Ma Jie and Masatsugu Horie, Bloomberg

Airbus Profit Soaring, Thanks to Exceptionals

Airbus Group said Wednesday that its net profit rose 15% in the first half of the year to 1.76 billion euros ($1.94 billion), but the gain was due to exceptional items that masked a slide in operating earnings.

The company was hit by charges of just more than 1 billion euros related to its troubled A400M military cargo transporter program, while adverse currency movements and charges on its widebody A350 aircraft totaled nearly 900 million. However, these were compensated for by the sale of shares in Dassault Aviation and the creation of a rocket launcher joint venture with Safran that generated a net gain of nearly 1.9 billion euros.

One-off items produced a net gain of 172 million euros, accounting for most of the 237 million increase in net profit. Before one-off items the company’s operating earnings fell by 11% to 1.7 billion euros. Revenue, which is received when aircraft are delivered, was flat in the first half of the year at 28.8 billion euros.

Orders tumbled by 27% to 39 billion euros, but the company pointed to brisk sales at the Farnborough Airshow earlier this month.

Copyright Agence France-Presse, 2016

Nintendo Posts Wider Quarterly Loss, Delays Pokemon Go Plus

Nintendo Co. delayed the release of a key accessory for the hit Pokemon Go game as the company posted a wider-than-projected loss amid weak demand for its Wii U consoles and a stronger yen.

The net loss was 24.5 billion yen ($232 million) for the three months through June, the Kyoto-based company said in a statement Wednesday. That compares with the prediction for a 3.4 billion yen loss, the average of analysts’ estimates compiled by Bloomberg. Nintendo kept its 35 billion yen profit outlook for the fiscal year, and its shares fell 10% in German trading.

Nintendo’s struggle to find new buyers for its traditional consoles and handheld players has been overshadowed by the runaway success of Pokemon Go, released this month by developers it partly owns. Even though the company is trying to reinvent itself in mobile games, the uncertainty over how much it will benefit from the hit has whipsawed the company’s shares since the app’s launch. Compounding those struggles, the game’s developers announced just before the earnings release that Pokemon Go Plus, a clip-on accessory for the hit game, will go on sale in September instead of this week.

In a report last week, Mitsubishi UFJ Morgan Stanley Securities Co. estimated the Pokemon Go Plus accessory will generate 45 billion yen in sales and add 8.2 billion yen to Nintendo’s bottom line in the current fiscal year, based on its original sale date.

By Yuji Nakamura and Takashi Amano, Bloomberg

Hyundai Heavy Posts Biggest Quarterly Profit in 3 Years on Costs

Hyundai Heavy Industries Co. reported its biggest quarterly profit in three years as the world’s largest shipbuilder cut costs under its restructuring efforts and its oil-refining unit posted stronger earnings.

Second-quarter net income, excluding minority interest, was 292 billion won ($257 million), compared with a loss of 241.2 billion won a year earlier, the company said in a regulatory filing Wednesday. The profit beat the 130.3 billion-won average of 11 analyst estimates and is the largest since the first quarter of 2013, according to data compiled by Bloomberg.

The world’s top three shipyards, all South Korean, plan to raise a combined 8.41 trillion won through asset and share sales as orders have dried up this year. They are among Asian shipbuilders that are reeling from a slowing global economy and a slump in oil prices, which have led them to post losses or smaller profits last year.

Hyundai Heavy second-quarter sales dropped 17% to 9.86 trillion won. Operating profit stood at 557.2 billion won, compared with a loss of 170.9 billion won a year earlier. That beat an average estimate of 159.5 billion won from 10 analysts, according to data compiled by Bloomberg.

By Kyunghee Park, Bloomberg

JSW Steel Surges to Record as Highest Profit Beats Estimates

JSW Steel Ltd.’s first-quarter profit surged to the highest on record, beating analysts’ estimates, after increased capacity at India’s second-largest producer of the alloy boosted volumes to an all-time high and costs fell. The shares advanced to the highest yet in Mumbai.

Group net income was 11.1 billion rupees ($165 million) in the quarter ended June 30 from 211.9 million rupees a year earlier, the company said in a statement Wednesday. It revised accounting standards to comply with new norms. Profit beat a 7.4 billion-rupee average estimate of 13 analysts compiled by Bloomberg. Sales rose 2% to 128.9 billion rupees, while costs fell 11% to 104.5 billion rupees.

The Indian steelmaker joins South Korea’s Posco and Nucor Corp., the largest U.S. producer, in reporting higher profit after national governments took steps to stem the tide of imports of cheaper products from China, the world’s biggest maker. Prices have rebounded this year after a run of five annual declines, coinciding with JSW’s capacity increase.

The global steel industry isn’t out of the woods, with supplies from China remaining a significant concern, JSW Steel Chairman Sajjan Jindal said. India, which has imposed floor prices on imports until August, needs to extend and expand these across products “to ensure that the imports come down, particularly when the Indian steel industry is competitive,” Joint Managing Director Seshagiri Rao said in Mumbai. Prices may be pressured as domestic demand is not very strong, he said.

By Swansy Afonso, Bloomberg

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