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Danone Sees Signs of Improvement in Europe

July 29, 2013 by

The world’s largest yoghurt maker kept its full-year forecast for higher sales but weaker profitability as it tries to offset sluggish demand in Europe by expanding in fast-growing emerging markets in Asia and Latin America.

Danone, the maker of Bledina baby food and Volvic water, achieved like-for-like quarterly sales growth of 6.5 percent, above a 5.7 percent average analyst estimate compiled by the company and 5.6 percent growth achieved in the first quarter.

Its operating margin was pulled lower, as expected, by the ongoing weak demand from European consumers and charges for cost cuts in the region – narrowing in the first half by 49 basis points to 13.34 percent.

“The sales beat is encouraging and the company keeping guidance means EBIT margin trends will either stay the same or improve in the second half,” said Liberum analyst Pablo Zuanic.

The company maintained its full-year goal for like-for-like sales growth of at least 5 percent and a decline of between 30 and 50 basis points in the operating margin.

Danone, which competes with Nestle and Unilever, is the most exposed among the big food groups to the euro zone crisis and is under pressure from U.S. activist shareholder Nelson Peltz to improve its performance.

That pressure rose by a notch last month when Danone said it had cut prices of baby milk formula in China by up to 20 percent following an investigation by Beijing into possible price-fixing and anti-competitive behaviour in the sector.

The move fuelled fears among some investors that Danone could reduce its profit outlook for the year, concerns the company sought to allay on Monday.

“Price reduction in China will have an impact but a manageable impact. Long term, we see China and Asia as strong growth profiles but we are prepared for ups and downs. We are managing it,” Finance Chief Pierre-Andre Terisse told analysts.

EUROPE OPTIMISM

Danone shares were up 3.1 percent at 59.22 euros, among the top gainers on the CAC-40 index of French blue chips

The stock trades at 17.93 times 12-month forward earnings, broadly in line with Unilever’s 17.77 times and above Nestle’s 16.97 times.

At Danone’s dairy division, which includes brands such as Actimel and Activia and makes up nearly 60 percent of revenue, sales grew 2.6 percent in the second quarter, an acceleration from 0.7 percent growth in the first quarter.

Danone said that reflected double-digit sales growth in Russia and North America but also early signs of stabilisation in Europe.

The company has been cautious about prospects for a recovery in the region. It said dairy sales in Europe would not improve before the second half, when new product launches and price cuts in countries such as Spain kick in.

“Our first goal is to stabilise the business and start growing again. Overall for the second half I would not expect to grow business but to stabilise sequentially,” Terisse said.

At the baby food division, which makes up 22 percent of Danone’s revenue, sales growth was 14 percent, driven by strong sales in Asia-Pacific, notably in China and Hong Kong.

First-half operating profit rose 2.3 percent to 1.475 billion euros ($1.96 billion) on a like-for-like basis, while sales rose 6.0 percent to 11.058 billion euros.

A Thomson Reuters I/B/E/S poll of analysts had given an average estimate of sales of 11.041 billion euros and operating profit of 1.480 billion euros.

Danone, which has unveiled plans to cut costs to cope with the downturn in Southern Europe, said it still aimed to return to “strong, profitable” organic growth from 2014.

(Editing by Christian Plumb and Tom Pfeiffer)

Article source: http://www.nytimes.com/reuters/2013/07/29/business/29reuters-danone-earnings.html?partner=rss&emc=rss

Filed Under: Global Business Tagged With: , ,

Stock Indexes Are Mixed

February 13, 2013 by Leave a Comment

Wall Street opened mixed on Wednesday, staying close to multiyear highs for stock indexes.

The Standard Poor’s 500-stock index rose 0.3 percent in morning trading, the Dow Jones industrial average slipped 0.1 percent and the Nasdaq composite index jumped 0.5 percent. European markets were up moderately in afternoon trading.

Equities have been strong performers of late, buoyed largely by healthy growth in corporate earnings, with the S.P. 500 gaining 6.5 percent so far this year. The Dow is about 1 percent from an all-time intraday high, reached in October 2007.

The recent gains could leave the market vulnerable to a pullback as investors take profit amid a dearth of new trading catalysts. While analysts continue to see an upward bias in markets, recent daily moves have been small and trading volumes have been light.

“This is a market that refuses to go down, and the trend suggests that we’ll not only hit a new high on the Dow, but move well beyond it,” said Adam Sarhan, chief executive of Sarhan Capital in New York.

Industrial and construction shares will be in focus following President Obama’s State of the Union address on Tuesday, during which he called for a $50 billion spending plan to create jobs by rebuilding degraded roads and bridges. He also backed higher taxes for the wealthy.

Deere Co. reported earnings that beat expectations and raised its full-year profit outlook. After initially rallying in premarket trading, the stock turned 1 percent lower.

Comcast agreed late Tuesday to buy General Electric’s remaining 49 percent stake in NBCUniversal for $16.7 billion. Comcast jumped 8.9 percent while G.E., one of the stocks in the Dow average, was up 3.1 percent.

According to the latest Thomson Reuters data, of 353 companies in the S.P. 500 that have reported fourth-quarter results, 70.3 percent have exceeded analysts’ expectations, above a 62 percent average since 1994 and 65 percent over the past four quarters.

Retail sales rose 0.1 percent in January, as expected, as tax increases and higher gasoline prices restrained spending. The data barely moved the markets.

Wall Street stocks closed modestly higher Tuesday.

Article source: http://www.nytimes.com/2013/02/14/business/daily-stock-market-activity.html?partner=rss&emc=rss

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I.B.M. Beats Forecasts and Raises Profit Estimate for Year

October 18, 2011 by Leave a Comment

The giant company provides a gauge of business investment trends because it is the largest supplier of computing technology — hardware, software and services — to corporations. I.B.M.’s performance echoes the reassuring results in recent weeks from a handful of corporate technology companies, like Oracle and Salesforce.com, whose quarters end in July or August instead of September.

Corporations, analysts note, are holding ample cash reserves and continue to spend on technology to cut costs and lift productivity, despite uncertain economic prospects in many countries.

Still, the profit outlook for technology companies — and most other companies — is dimming somewhat as growth slows, especially in Europe and the United States.

I.B.M. reported net earnings of $3.84 billion, a 7 percent increase from the year-earlier quarter. Its earnings per share from continuing operations — the number most closely watched on Wall Street — rose 15 percent, to $3.28.

The average estimate of analysts was $3.22 a share, according to FactSet.

In a conference call with analysts, Mark Loughridge, I.B.M.’s chief financial officer, singled out major sources of strength. First, he said, was the continuing rapid growth of markets abroad, including China, India, Brazil and a few dozen other emerging nations, which grew 19 percent and now account for 23 percent of I.B.M.’s revenue.

Mr. Loughridge also pointed to newer products and services like business analytics, which helps companies sift through data to spot sales opportunities and streamline operations.

“We’re on track for a great year,” Mr. Loughridge said.

Based on the third quarter and outlook, I.B.M. raised its estimate slightly for full-year profits to “at least $13.35 a share,” up from the previous guidance of “at least $13.25 a share.”

But investors were apparently looking for more. In after-hours trading, the stock fell 4 percent. In regular trading, it dropped 2 percent, or $3.94, to $186.59, in a down day for the market.

I.B.M.’s sales, analysts noted, were a little less than estimates, and the company’s earnings benefited from a lower tax rate than in the first half of the year. That contributed to the pullback in after-hours trading, they said, as did profit-taking; I.B.M.’s shares had run up 27 percent so far this year.

“It was still very solid,” said A. M. Sacconaghi, an analyst at Sanford C. Bernstein Company, “but it didn’t have the breathing room that I.B.M. quarters have typically had recently.”

Revenue for the quarter increased 8 percent, to $26.2 billion, slightly less than analysts’ estimates. Excluding gains from currency translation, revenue rose 3 percent. With the dollar strengthening recently against the euro, currency-related gains will most likely decline in the current quarter, analysts say.

I.B.M. is more stable than most technology companies regardless of the economic conditions. Analysts point to its global reach, skilled management and the fact that so much of its business comes from steady revenue from software licenses and services contracts instead of sales of new hardware products.

I.B.M. said it had seen a slowdown in government business in developed nations amid a budget squeeze. The other notable weak market, Mr. Loughridge said, was Japan, which continues to struggle to recover after the tsunami and earthquake disaster earlier this year.

In the United States, I.B.M.’s business grew by 4 percent, and it grew 7 percent in Canada.

I.B.M.’s software business worldwide grew 13 percent in the quarter, to $5.8 billion, with the biggest growth coming from its Internet-based commerce software and its data management and analysis software.

The company’s big services business grew 8 percent, to $15.2 billion. Hardware sales rose 4 percent, to $4.5 billion. Mainframe sales fell 5 percent from a year ago, though I.B.M. attributed that mainly to the comparison with the strong 2010 third quarter, when new mainframe lines were introduced.

Article source: http://feeds.nytimes.com/click.phdo?i=55da334554b91b2ee2637f1a211c8eac

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Retailers Attracted More Shoppers in September

October 6, 2011 by Leave a Comment

September is considered a key month for retailers because back-to-school shopping, as well as bringing in sales, can indicate how the consumer is feeling about the future.

Some of the sales increases, though, seemed due to heavy promotions.

“One of the questions as we go into holidays, frankly, is where margins end up,” said Chris Donnelly, an executive in Accenture’s retail practice. “I think you’re going to see more aggressive discounting to make sure they capture as much of the holiday sales as they can. And you’ve seen it in some of the folks that reported today, where they said sales have gone up but margin and average selling prices have gone down a little bit.”

Generally, stores that go after a higher-end shopper fared better than those focusing on middle- and low-end customers.

The top performers among department stores was Nordstrom, where same-store sales rose 10.7 percent, beating estimates by more than five percentage points. There, shoppers seemed drawn to luxury purchases — Nordstrom said its top categories for the month were designer clothing, dresses and handbags.

Saks Fifth Avenue’s sales increased 9.3 percent, and there, too, people were drawn to non-essential items. Shoes, purses, jewelry and cosmetics were among its top sellers.

Macy’s, Kohl’s and Dillard’s came in a bit lower than the more plush department stores, at 4.9 percent, 4.1 percent and 3 percent respectively.

J.C. Penney had one of the few negative September results, with same-store sales down 0.6 percent. Analysts had expected growth of 0.6 percent. The company said Internet sales also dropped for the month because people were buying fewer expensive home-furnishing items.

J.C. Penney revised its profit outlook for the third quarter on Wednesday, saying that because of lower-than-expected sales, it was now expecting profit to be 10 to 15 cents a share, excluding one-time charges, versus the 15 to 20 cents a share it had previously projected.

The best performance over all was turned in by Costco, which, despite being a club store, caters to a well-off shopper. Costco’s same-store sales rose 12 percent, and its American sales, excluding gas, rose 7 percent.

Other than Costco and Nordstrom, the rest of the top five performers included Limited Brands, up 11 percent, and the teen stores The Buckle and Zumiez, up 10.3 and 10.1 percent, respectively.

On the bottom, Gap Inc.’s brands — Banana Republic, Gap and Old Navy — had a combined 4 percent drop in same-store sales, though analysts had expected about that. Smaller retailers Bon-Ton, Cato, Stein Mart and Stage Stores were also among the worst results.

Over all, according to MasterCard Advisors SpendingPulse, which tracks all forms of consumer spending, , 2011 was the best back-to-school spending season since 2006. SpendingPulse compared spending in July, August and September in school-related categories like children’s apparel and office-supply stores to earlier years,

“It’s a positive surprise that the American consumer is maintaining some degree of resilience here,” said Michael McNamara, vice president of research and analysis for SpendingPulse.

But Mr. Donnelly of Accenture warned that could soon change.

“There is a limit to how much consumers are going to be able to spend, because folks aren’t making any more — we just saw a couple of weeks ago wages are very low, real wages aren’t growing, employment’s not moving anywhere, the stock market’s got a lot of volatility — so it’s unclear how sustained this uptick in spending will last,” Mr. Donnelly said.

“As much as the consumer can surprise you on the positive side, like they did the last couple of months, they can also catch you on the negative side,” Mr. Donnelly said.

Article source: http://feeds.nytimes.com/click.phdo?i=5c086b7bb68964e26d58c8b57d14a2af

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Amazon Earnings Hurt by Spending as Revenue Increases 38%

April 27, 2011 by Leave a Comment

The building binge of warehouses and data centers sacrificed Amazon’s short-term profits to lift business over the long term, the company said on Tuesday when it released its first-quarter earnings statement.

It also said that it had no intention of slowing the spending.

The effect of the expansion, along with an uncertain economy, could be seen in Amazon’s second-quarter financial forecast. The company gave a profit outlook that was far from specific but below analysts’ expectations.

It said its second-quarter profit, excluding certain costs, would fall as much as 65 percent or as little as 9 percent.

Meanwhile, Amazon said revenue would rise 35 percent to 47 percent, or $8.85 billion to $9.65 billion.

Thomas J. Szkutak, Amazon’s chief financial officer, explained the wide range by saying during a conference call that “there is uncertainty, so we are making sure to give an appropriate conservative range.”

In after-hours trading, Amazon’s shares fell about 1 percent. They had dropped 1.7 percent, to $182.30, in regular trading before the earnings announcement.

Amazon reported that first-quarter net income fell 33 percent, to $201 million, or 44 cents a share, from $299 million, or 66 cents in the period a year ago.

Revenue climbed 38 percent, to $9.86 billion, from $7.13 billion.

Net income was below the expectations of Wall Street analysts. They had expected 61 cents a share and revenue of $9.52 billion, according to a survey of analysts by Thomson Reuters.

Amazon is undergoing a major expansion this year that calls for adding at least nine warehouses after adding 13 warehouses last year. If growth in customer orders continues, however, it will add even more fulfillment centers, Mr. Szkutak said.

Jeff Bezos, Amazon’s chief executive, was not on the call.

The company, based in Seattle, said that sales of books and music during the quarter rose 15 percent, to $3.96 billion.

Sales of electronics and other merchandise grew 59 percent, to $5.59 billion.

As usual, Amazon boasted about its Kindle digital book reader but did not provide any specific sales numbers.

Data centers are crucial to its digital music storage service, introduced late last month. Consumers can use the service to back up files from their computers and then gain access to them from a computer, laptop or smartphone.

Adding data center capacity is especially important for Amazon’s Web hosting service, which stores data for a large number of businesses.

Last week, after the first quarter ended, the hosting service suffered an embarrassing failure.

The glitch, which the company said was fixed on Monday, took down a number of Web sites, including Foursquare, Reddit and Quora.

Amazon is still looking into the cause, Mr. Szkutak said.

Youssef H. Squali, an analyst with Jefferies Company, said of Amazon’s spending on infrastructure, “this is the right strategy longer term but it makes for a stressful stock to own.” Given the potential for growth overseas, he said that Amazon’s expansion could go on for several years.

And, Sandeep Aggarwal, an analyst with Caris Company, said that Amazon’s profit shortfall relative to expectations and its disappointing guidance were not particularly worrisome. The company is growing quickly, he pointed out, and it therefore needs to invest in its business by building.

“We see that as a good problem to have,” Mr. Aggarwal said.

Japan’s earthquake and subsequent disasters bit into Amazon’s business in the first quarter, reducing operating income by $20 million.

Japan accounts for up to 15 percent of the company’s business, according to analyst estimates.

Sales in Japan are picking up, Mr. Szkutak said, but they continue to be weak as the country tries to rebuild.

Meanwhile, analysts expect high gasoline prices in the United States and in other countries to increase Amazon’s shipping costs.

Article source: http://feeds.nytimes.com/click.phdo?i=adf7427237d646b981882098ee8d3efe

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