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Back-to-Back Losses, the First in a Month

July 24, 2013 by Leave a Comment

A gloomy earnings report and outlook on Wednesday from Caterpillar, the world’s largest construction equipment company, helped to pull two of the three major American indexes lower.

The drop for the Dow and the Standard Poor’s 500-stock index gave the stock market two consecutive days of losses, for the first time in a month.

Caterpillar’s earnings fell 43 percent in the second quarter as China’s economy slowed and commodity prices sank. The company also warned of slowing revenue and profit, and its stock dropped $2.08, or 2 percent, to $83.44.

Nine of 10 industry groups in the S. P. 500 ended lower.

The holdouts were technology companies, which got a lift from Apple’s surging stock. Apple shares jumped $21.52, or 5 percent, to $440.51. The Nasdaq composite index, which lists many technology companies, edged up 0.33 of a point, or less than 0.1 percent, to 3,579.60.

The Dow Jones industrial average fell 25.50 points, or 0.2 percent, at 15,542.24.

The S. P. 500-stock index fell 6.45 points, or 0.4 percent, to 1,685.94. Although far from a blockbuster earnings season, the larger trend for corporate profits appears strong. Analysts forecast that second-quarter earnings for companies in the S. P. 500 increased 4.2 percent over the same period last year, according to SP Capital IQ. At the start of the month, those analysts were looking for earnings to rise 2.8 percent. More than six out of every 10 companies have surpassed Wall Street’s profit targets.

“Yes, they’re beating expectations, but expectations are so low,” said Brad McMillan, chief investment officer at Commonwealth Financial.

But financial firms, like Goldman Sachs and Capital One, have posted the highest rate of earnings growth of any industry. Ignore their results, however, and earnings are on track to slump 3.5 percent, according to FactSet.

“You can’t call this a blowout quarter so far,” Mr. McMillan said.

In the market for government bonds, the benchmark 10-year Treasury note fell 21/32 to 92 26/32, to yield 2.58 percent, up from 2.51 percent late Tuesday.

Article source: http://www.nytimes.com/2013/07/25/business/daily-stock-market-activity.html?partner=rss&emc=rss

Filed Under: Global Business Tagged With: , ,

Bet on U.S. Pays Off for Germany’s Carmakers

February 5, 2013 by Leave a Comment

German carmakers, at least, had a different vision of the future.

The recovery in the United States auto market, which produced big earnings growth at Chrysler and Ford in their fourth quarters, has also been a boon for Germany’s big three — Daimler, BMW and Volkswagen.

The double-digit increases in their American sales last year reflected an overall surge in demand by American buyers for European and, above all, German products. Well-designed vehicles and machinery, so coveted a Germany specialty that they can often fetch premium prices, were by far the biggest categories of European exports to the United States.

As a result, overall German exports to America rose 24 percent in October from a year earlier, outpacing the 18 percent growth for euro zone exports to the United States.

In many ways, the success of the German carmakers has let them invest to produce further success in the American market. The German companies are cashing in on years of commitment to the United States, which remained an important market for them even as the global auto industry trained its sights on China.

Volkswagen, for example, has invested $4 billion in the United States since 2008, building a factory in Chattanooga, Tenn., that began churning out Passat sedans in 2011.

“Five years ago, we reset the clock here in America,” Martin Winterkorn, the chief executive of Volkswagen, said in Detroit last month. “The Passat was made in America for America.”

BMW and Daimler’s Mercedes-Benz unit have been making sport-utility vehicles and other autos in America since the 1990s: BMW in Spartanburg, S.C., and Mercedes in Tuscaloosa, Ala.

That presence put them in position to take advantage of the revival of the American market.

Nearly a third of the vehicles that BMW sells in America are built in that country, according to LMC Automotive, a research firm in Troy, Mich. Mercedes and VW both produce about a quarter of what they sell in the United States in local factories.

BMW and Mercedes have also expanded their appeal in the United States by moving carefully into more affordable parts of the market. Mercedes, for example, sells an entry-level Mercedes sedan for less than $30,000.

All of that has contributed to a sales surge. BMW vehicle sales in the United States rose 14 percent last year, including the Mini brand; sales of Daimler’s Mercedes and Smart brands increased more than 15 percent; and Volkswagen’s sales soared 34 percent, including Audi brand cars.

For Mercedes and VW, those were better growth rates than in China, and they helped to offset slower sales there.

The German automakers’ strong financial results contrast with those of European rivals like Renault and PSA Peugeot Citroën, which abandoned the United States market decades ago. Now the French carmakers are short of ways to counterbalance the stricken European market. It is probably too late for them to re-enter the United States, even if they could afford the cost of re-establishing a dealership network.

Mercedes and VW are so well placed in the United States that they even did a little strutting during the televised Super Bowl football championship on Sunday, showing splashy commercials.

In the Mercedes spot, the actor Willem Dafoe, playing the devil, offers a young man a new CLA sedan in exchange for his soul. After a fantasy sequence in which the young man cuddles with the model Kate Upton, dances alongside Usher and overtakes Formula One cars on a racetrack, he sees a billboard advertising the CLA for $29,900. He realizes he can afford one without the devil’s help.

The euro zone recession would clearly be much worse than it is without the income that European companies are bringing in from the United States. While Germany has been the main beneficiary, accounting for 40 percent of euro zone exports to the United States, countries including France, Italy and Spain also recorded big gains in sales in America of products that span categories from chemicals to wine.

Bill Vlasic contributed reporting from Detroit.

Article source: http://www.nytimes.com/2013/02/05/business/global/german-automakers-bet-on-us-market-and-win.html?partner=rss&emc=rss

Filed Under: Global Business Tagged With: , ,

German Automakers Bet on U.S. Market and Win

February 4, 2013 by Leave a Comment

German carmakers, at least, had a different vision of the future.

The recovery in the U.S. auto market, which produced big earnings growth at Chrysler and Ford in their fourth quarter, has also been a boon for Germany’s Big Three — Daimler, BMW and Volkswagen.

Their double-digit increases in U.S. sales last year reflected an overall surge in demand by American buyers for European and, above all, German products. Well-designed vehicles and machinery, so coveted a Germany specialty that they can often fetch premium prices, were by far the biggest categories of European exports to the United States.

As a result, overall German exports to America rose 24 percent in October from a year earlier, outpacing the 18 percent growth for euro zone exports to the United States.

In many ways, German success has let German carmakers invest in further success when it comes to the American market. The German companies are cashing in on years of commitment to the United States, which remained an important market for them even as the global auto industry trained its sights on China.

Volkswagen, for example, has invested $4 billion in the United States since 2008, building a factory in Chattanooga, Tennessee, that began churning out Passat sedans in 2011.

“Five years ago we reset the clock here in America,” Martin Winterkorn, the chief executive of Volkswagen, said in Detroit last month. “The Passat was made in America for America.”

BMW and Daimler’s Mercedes-Benz unit have been making sport utility vehicles and other autos in America since the 1990s: BMW in Spartanburg, South Carolina, and Mercedes in Tuscaloosa, Alabama. Both brands have expanded their appeal in the United States by moving carefully into more affordable parts of the market, for example with an entry-level Mercedes sedan for less than $30,000.

That presence put them in position to take advantage of the revival of the U.S. car market. BMW vehicle sales in the United States rose by 14 percent last year including the Mini brand; sales of Daimler’s Mercedes and Smart brands increased more than 15 percent; and Volkswagen’s U.S. sales soared 34 percent, including Audi brand cars.

For Mercedes and VW, those were better growth rates than in China, and helped to offset slower sales there.

Germany’s success contrasts with results by European rivals like Renault and PSA Peugeot Citroën, which abandoned the U.S. market decades ago. Now the French car makers are short of ways to counterbalance the stricken European market. It is probably too late for them to re-enter the U.S. market, even if they could afford the cost of re-establishing a dealership network.

Mercedes and VW are so well placed in America that they even did a little strutting during the televised Superbowl football championship on Sunday, airing splashy commercials.

In the Mercedes spot, the actor Willem Dafoe, playing the devil, offers a young man a new CLA sedan in exchange for his soul. After a fantasy sequence in which the young man cuddles with the model Kate Upton, dances alongside Usher and overtakes Formula One cars on a racetrack, he sees a billboard advertising the CLA for $29,900. He realizes he can afford one without Satan’s help.

The spot is part of a Mercedes strategy to appeal to a younger, less affluent market.

The euro zone recession would clearly be much worse than it is without support from U.S. customers. While Germany has been the main beneficiary, accounting for 40 percent of euro zone exports to the United States, countries including France, Italy and Spain also recorded big gains in sales in America of products that span categories from chemicals to wine.

Britain, which is in the European Union but not the euro zone, expanded exports to America by 11 percent in October from a month earlier. That made Britain second to Germany in total sales of goods to the United States that month, with about €4 billion, or $5.4 billion, in October versus €8 billion for Germany, according to official figures.

At least part of Britain’s gain came from sales in America of the BMW Mini, which is made in Oxford, England.

Article source: http://www.nytimes.com/2013/02/05/business/global/german-automakers-bet-on-us-market-and-win.html?partner=rss&emc=rss

Filed Under: Global Business Tagged With: , ,

G.E. Profit Is Lifted by Jet Engines and Energy Equipment

January 19, 2013 by Leave a Comment

G.E. notched strong earnings growth at units that make jet engines and equipment used in oil and gas production. Jeffrey R. Immelt, the chief executive, has worked to expand its presence in the energy industry in recent years.

The order backlog, watched by investors as an important indicator of future sales growth, hit a record high $210 billion in the fourth quarter, up from $203 billion in the third quarter.

“The backlog was a really good number. I didn’t expect to see a $7 billion, 3.5 percent rise in the backlog,” said Jack De Gan, chief investment officer at the Harbor Advisory Corporation, which holds G.E. shares. “Orders in the fourth quarter must have been really good for the industrial side.”

Orders rose 2 percent and would have been up 7 percent without a sharp drop in demand for wind turbines tied to the expected expiration of a tax credit.

Solid demand in China and other oil-producing countries helped offset unsteady economies at home and in Europe, Mr. Immelt said.

“We saw real strength in the emerging markets, and the developed regions stabilized,” Mr. Immelt told investors on a conference call.

The company, which is one of the world’s biggest makers of jet engines and electric turbines, said fourth-quarter earnings rose to $4.01 billion, or 38 cents a share, compared with $3.73 billion, or 35 cents a share, in the period a year earlier.

Factoring out one-time items, profit was 44 cents a share, a penny ahead of analysts’ estimates, according to Thomson Reuters.

Revenue rose 3.6 percent, to $39.33 billion from $37.97 billion a year earlier. Analysts had expected revenue of $38.76 billion.

Profit increased across all divisions, with the jet engine unit notching 22 percent growth, and GE Oil and Gas, which makes equipment used in energy production, up 14 percent.

Profit at the GE Capital finance arm, which is being scaled back, rose 6 percent.

“They saw some good organic growth in the industrial part of their business. GE Capital was a strong contributor,” said Oliver Pursche, president of Gary Goldberg Financial Services, a G.E. shareholder.

Over the last few years, G.E. has bolstered its position in the energy industry.

It has broadened its lineup of equipment used in oil and gas production and mining, with an eye toward capitalizing on surging natural gas production in the United States. G.E. also makes medical equipment and railroad locomotives.

At the same time, Mr. Immelt has concentrated on cutting costs across the company to try to raise operating profit to 15.8 percent of sales by the end of 2013.

Shares of G.E., which is based in Fairfield, Conn., rose 74 cents, or 3.5 percent, to $22.04.

Article source: http://www.nytimes.com/2013/01/19/business/ge-profit-is-lifted-by-jet-engines-and-energy-equipment.html?partner=rss&emc=rss

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G.E. Says Operating Profit in Quarter Rose 6%

January 20, 2012 by Leave a Comment

The financial performance is in line with Wall Street’s expectations and reflected the company’s strategy of paring back its reliance on its big finance arm and relying more on its diverse portfolio of industrial businesses.

The quarterly profit was helped by strong orders for jet engines and a favorable tax rate. G.E. executives expressed confidence that despite “volatile” economic conditions, especially in Europe, the company would remain on track for double-digit earnings growth in 2012 and an increase in the dividend payout to shareholders.

G.E. reported that its operating earnings rose 6 percent to $4.1 billion, which excludes the previous year’s contribution from NBC Universal, which G.E. had owned and sold a majority stake to Comcast.

Its operating earnings per share rose 11 percent, to 39 cents a share. The result partly reflects fewer shares outstanding than the year-earlier quarter, because the company bought back shares, and was just above analysts’ average estimate of 38 cents a share, as compiled by Thomson Reuters.

Revenue for the quarter declined 8 percent, to $38 billion. That was in line with Wall Street’s forecast of $40 billion. Excluding revenue in the 2010 fourth quarter from NBC, revenue from continuing operations rose 4 percent.

In a statement, Jeffrey R. Immelt, General Electric’s chief executive, said the quarterly performance underlined the company’s “strength and resilience,” continuing a steady recovery from the financial crisis. In Europe, Mr. Immelt said, the company would be restructuring its operations given the weakness in that market.

But Mr. Immelt said G.E. remained confident that its financial improvement would improve in 2012 enough to “provide dividend growth to our shareholders in line with earnings.”

Revenue in General Electric’s industrial businesses — ranging from jet engines and power generators to medical-imaging equipment and wind mills — rose 10 percent to $26.8 billion. The result was helped by strong sales of jet engines and gas turbines in the Middle East.

The company’s revenue was held back by a 9 percent decline, to $11.6 billion, in its finance unit, GE Capital. That contraction was by design. Before the financial crisis hit in 2008, GE Capital had grown well beyond its traditional business of financing sales of the company’s industrial equipment into home mortgages in Britain and consumer finance in Japan.

But battered by the credit crunch, General Electic was forced to cut its dividend for the first time since the Great Depression, and began the lengthy process of shedding bad loans and trimming the finance business.

A smaller GE Credit produces less revenue for the company, but the recovery of the unit has been the main source of profit gains in the last few years.

“GE Capital is continuing to improve and to drive earnings growth for the company,” said Steven Winoker, an analyst at Sanford C. Bernstein.

Article source: http://www.nytimes.com/2012/01/21/business/general-electric-says-quarterly-profit-rose-6.html?partner=rss&emc=rss

Filed Under: Global Business Tagged With: , ,