Russia’s Gazprom Neft says 2018 net profit up 49%

Gazprom Neft, the oil arm of Russian gas producer Gazprom, yesterday reported a 48.7% jump in 2018 net profit to 376.7bn roubles ($5.8bn) buoyed by higher prices and output. Russia’s fastest-growing oil producer by output, Gazprom Neft said it expects production to rise by 2% this year despite a global deal to curb production. Output in 2018 rose 3.5% to 688.4mn barrels of oil equivalent, or 92.88mn tonnes. It reiterated a hydrocarbon production target of 100mn tonnes of oil equivalent by 2020 and expects oil prices of around $60 per barrel through to 2030 in its base scenario. Gazprom Neft reported a 45.1% jump in 2018 adjusted earnings before interest, tax, depreciation and amortisation (EBITDA) to 799.5bn roubles. Revenue rose by 28.7% to 2.49tn roubles on production, including shares in joint ventures.

TBC Bank 
Georgia’s biggest retail bank TBC Bank Group Plc reported a 21.5% jump in full-year earnings yesterday and took action to resolve a dispute with the country’s central bank over its corporate bank subsidiary. TBC, which serves retail, corporate and small and medium-sized enterprise customers across the country, said profit rose to 437.4mn lari ($165.24mn) in the 12 months ended December 31 from 359.9mn lari, a year earlier. TBC’s corporate division, TBC Bank JSC, said it would pay about 1mn lari to the National Bank of Georgia related to an investigation into certain transactions. TBC Bank JSC also said it would end legal action against the central bank, restructure its supervisory board and that the founding shareholders would step down from that board. Mamuka Khazaradze, who is chairman of TBC Bank Group’s board, said he had stepped down as chairman of the supervisory board of TBC Bank JSC as he did not want to harm the bank’s reputation further. Badri Japaridze also stepped down as vice-chairman of TBC Bank JSC’s supervisory, but remained in TBC Bank Group. TBC Bank Group, which listed in London in 2014, said net interest margin — the main indicator of a bank’s financial strength — expanded to 6.9% for the year from 6.5%. The Tbilisi-based lender’s market share in total loans rose by 1.8 percentage points to 38.8% as of December 31, while gross loans and advances to customers surged 19.7% to 10.37bn laris at the end of 2018. The Georgian banking industry is dominated by TBC and its main competitor, Bank of Georgia, which last week warned that growth of unsecured consumer loans would moderate on the back of new regulations.




Deutsche Telekom 
Network operator Deutsche Telekom was undeterred yesterday from its optimism for 2019, even as it reported falling profits last year and looked ahead to massive investments in 5G networks and a hoped-for merger with Sprint in the US.Net profit at the Bonn-based giant fell 37.4% to €2.2bn ($2.4bn), a slump the group said was mainly down to a fatter bottom line in 2017 thanks to tax reforms in the US. Operating, or underlying profit also dropped 8.9% to €21.8bn, although revenues grew 0.9% to reach 75.7bn — in line with forecasts from analysts surveyed by Factset. “We’re swimming against the trend across the telecoms sector” with “excellent numbers,” chief executive Tim Hoettges said at a press conference. Looking to 2019, the group said it would stick to a forecast path set last year of average annual increases in revenue of between one and 2% until 2021, with adjusted operating profit projected to add between two and 4% each year.Telekom highlighted strong performance at its T-Mobile US division as a powerful growth motor for the firm, as revenue grew 6.8%, to $43.1bn (€38bn), while operating profit increased almost twice as fast, rising 13.6% to reach $11.9bn.

Anglo American
Anglo American reported yesterday better than expected core earnings, driven by higher copper and coal prices, but said no financial performance was “worth a life” and its biggest challenge was eliminating danger at its mines. Anglo American’s underlying 2018 EBITDA (earnings before interest, tax, depreciation and amortisation) of $9.16bn was up 4% from $8.82bn a year earlier and beat analysts’ average estimate of $8.7bn, according to Refinitiv IBES data. As investors focus on sustainability, CEO Mark Cutifani said Anglo American was an industry leader and backed calls from BHP earlier this week for an independent body to oversee the tailings dams that store increasingly high volumes of waste generated by mining. He said Anglo American’s accident rate was at a record low as the rate of recordable incidents had fallen to 2.66 injuries permn hours worked. The goal, however, is zero harm. In 2018, five Anglo American workers died in safety incidents.

Shares in British Gas parent Centrica slumped to a 16-year low yesterday after the group warned a national price cap on energy bills, a fall in nuclear output and lower volumes at its oil and gas division would hit its 2019 results. Centrica said a regulator-imposed cap on standard energy prices would lead to a £300mn ($392mn) hit to profits in 2019, including a one-off impact of about £70mn in the first quarter of 2019. Late last year Centrica, whose British Gas unit is Britain’s largest energy supplier, said it would seek a judicial review of the way regulator Ofgem calculated part of the price cap, which was initially set around 6% lower than British Gas’s standard variable tariff. Ofgem this month said the cap will be raised by 10% from April 1 and British Gas has already said it will increase its prices by the same amount. “We believe (the cap) is the wrong intervention but it is here and we will live with it,” chief executive Iain Conn told journalists. British Gas shed 742,000 customer accounts in 2018 as the company came under pressure from smaller, nimbler rivals, often able to offer cheaper deals.Centrica posted a 12% rise in 2018 operating profit to £1.39bn, bolstered by higher commodity prices, and maintained its full-year dividend at 12 pence. In exploration and production, volumes at Centrica’s Spirit Energy are expected to remain in the lower half of its 45 to 55mn barrels of oil equivalent range for 2019.

AccorHotels, Europe’s largest hotel company, posted record operating profits for 2018, helped by cost controls and robust demand in most key regions including France and Brazil. The French company said it would invest €225mn ($255mn) over coming years to support new initiatives to boost its presence in hospitality and entertainment services. These investments will cost AccorHotels €55mn in 2019 and 45mn euros in 2020.The programme is expected to reach breakeven in 2021 and the group expects it will help it exceed its 2022 core earnings or EBITDA target of €1.2bn that was presented last November. AccorHotels, which runs high-end chains such as Raffles and Sofitel as well as budget brands such as Ibis, said annual EBITDA reached a record 712mn euros, up 8% on a like-for-like basis and in line with revised company guidance for core earnings between 700mn and 720mn. Revenue reached €3.61bn, up 16.9% on a reported basis and driven by acquisitions. On a like-for-like basis revenue grew 8.8%.Revenue per available room (RevPAR), a key gauge of activity, grew 6.6% in France, with strong gains of 12.2% in Paris.

Spanish telecoms group Telefonica expects 2% organic growth in revenue and core profit and to make savings this year after underlying revenue rose in 2018. Chief executive Jose Maria Alvarez Pallete said 2018 results, along with “remarkable operating momentum in the initial months of 2019, allow us to announce with confidence our 2019 targets”, as well as a €0.40 cash dividend. The targets imply revenue and core profit growth, stripping out currency effects and other one-offs, will be close to or slightly lower than the 2.4% and 3.5% registered in 2018. However, the company raised its revenue target last October. Telefonica, which has invested billions of euros in high-speed networks to carry bells-and-whistles packages including pay-TV, said it had boosted the share of its revenue from services beyond traditional connectivity to 15%. It also pledged to make gross savings of over €340mn ($386mn) in the course of the year, and spend around 15% of sales on investments not including spectrum. Plunging currencies in Brazil, where Telefonica makes about a quarter of its core profit, and other Latin American countries that account for a further 20%, have dragged on earnings in recent quarters. Operating income before depreciation and amortisation came in at €15.57bn ($17.7bn) in 2018, helped by improving margins at its British and Brazilian operations. The impact of currency effects, restructuring and other one-offs meant this translated into a 3.8% drop, on the back of €48.7bn in revenue, which in reported terms was a 6.4% fall. Telefonica shaved a further 5.5% in 2018 off the debt it piled up through its network investment, leaving it with debt equivalent to less than three times its core earnings.

Barclays hit back at its activist shareholder critic by reporting rising annual income at its investment bank but sounded a note of caution with a £150mn provision against possible losses due to Brexit. Barclays shares rose 3.5% yesterday as investors looked past an annual profit of £3.5bn ($4.56bn) that came in below expectations, focusing instead on progress in its investment bank where profit increased 15%. Barclays chief executive Jes Staley is locked in a high-profile tussle over the bank’s strategy with activist investor Edward Bramson, who believes the lender should ditch a costly plan to grow its investment bank and focus on other less risky parts of its business.Profits fell 3% in the Barclays UK division on the Brexit provision as well as flat interest margins from lending that Barclays said could fall yet further in 2019. The bank also saw a 20% decrease in corporate lending income, which it attributed to resources being deployed to higher-returning business elsewhere. Barclays paid a dividend of 6.5 pence per share and signalled intentions to return more capital via dividend increases and buybacks when it was practical to do so. The bank however reported its core capital ratio fell to 13.2% from 13.3% a year ago, a dip which is likely to renew a debate over its ability to return more capital to shareholders at a time when rivals Lloyds Banking Group and RBS are ramping up payouts.Staley’s total pay package for 2018 fell to £3.36mn , down from £3.87mn pounds the previous year. He was the lowest paid among the four biggest British bank bosses.

Orange, France’s number one telecoms operator, struck a cautious tone for 2019 due to a protracted price war in its home country and few chances of a merger between its rivals that could improve market conditions. The tough competitive landscape prompted chief executive Stephane Richard to say he did not have enough visibility on operations to guarantee a dividend above a floor price of 70 euro cents per share in 2020, depressing shares in the company. “We don’t say that we will not grow the dividend,” Richard said on a call with analysts.”We say that today we want to have a better visibility on what we can achieve on 2019… to make the final decision.” Orange posted a higher-than-expected quarterly operating profit, mainly driven by increased revenues in France and Spain and cost cuts. Adjusted core earnings (EBITDA) rose by 1.4% on a comparable basis to 3.33bn euros ($3.8bn), above market expectations for growth of 0.6%. Richard said he would present a new strategic plan dubbed Vision 2025 later this year.

Greece’s biggest telecoms operator OTE expects a double-digit percentage rise in cash flows this year as recovery in Greece takes hold and its Romania business stabilises. The former national monopoly, which is 45% owned and managed by Germany’s Deutsche Telekom, yesterday posted a 2.6% drop in fourth-quarter core profit at €325.2mn ($369.30mn). Weakness in Romania outweighed growth in its home market. However, the group forecast free cash flow will reach about €350mn this year, up 31%. OTE said it will benefit from investments in advanced fixed and mobile telephony networks and stabilising revenue in Romania following one-off provisions and restructuring plans. Strong cash flow will raise payouts to shareholders, it said. OTE will pay a dividend of €0.46 per share on 2018 profit, up 31% rise compared to a year earlier. Heavy spending on new high-speed VDSL broadband services and a fast growing pay-TV business in Greece, where it generates about 90% of its core profit, have helped the group win back fixed-line customers. After implementing several voluntary redundancy schemes in past years, OTE said it is “systematically” exploring cost-reduction initiatives to boost profits across its businesses.

Australian carrier Qantas yesterday announced a 16% drop in net profit for the last six months of 2018, as rising fuel costs ended a record profit run for the company. Net profit for the period came in at A$498mn (US$359mn), compared to the record A$595mn earned for the same period in 2017.
Underlying profit excluding one-off items fell 18.7% to A$780mn, the company reported. Qantas CEO Alan Joyce attributed the profit hit to a sharp A$416mn jump in the airline’s fuel bill during the period to a total AUS$2bn. Company revenue across all activities rose 6% over the same six-month period, boosted by a strong performance on domestic routes by both Qantas and its low-budget counterpart Jetstar. The profit outlook going forward looked good, Joyce said, with fuel prices expected to fall as the company deploys more fuel-efficient Boeing 787s and retires its older 747s.

Albemarle Corp
Albemarle Corp, the world’s largest lithium producer, posted a higher-than-expected quarterly profit on Wednesday and gave a bullish 2019 outlook, saying it sees nothing that could slow demand for the white metal used to make electric car batteries. The company reported fourth-quarter net income of $129.6mn, or $1.21 per share, compared to a net loss of $218.4mn, or $1.95 per share, in the year-ago quarter. Excluding one-time items, Albemarle earned $1.53 per share. Analysts expected earnings of $1.47 per share, according to IBES data from Refinitiv. Lithium sales rose 18% to $341.6mn during the quarter on both higher volume and prices that were up 4% from a year ago, the company said.

Britain’s Serco raised its 2019 profit and revenue forecasts yesterday, buoyed by a run of recent contract wins that mark a bright spot in a troubled outsourcing sector beset by what CEO Rupert Soames called “the fog of Brexit”. Under Soames, a grandson of British wartime prime minister Winston Churchill, Serco is at the tail end of restructuring and has focused on winning business abroad and cutting costs. That has allowed the provider of public sector administration, training and custody services to weather a slowdown in British decision-making caused in part by Brexit uncertainty and the collapse of contractor Carillion last year. Shares in the company rose 4% after it said that 2018 underlying trading profit rose 40% in constant currency terms to £93.1mn ($121.7mn), meeting recently raised targets. New contracts that are starting to boost results include three in Australia — running correctional centre Grafton in New South Wales, the design and construction of an icebreaker ship and provision of health services in the defence sector — as well as a mammoth UK asylum seekers’ accommodation contract won this year. That will eventually mean a return to dividends that were suspended in 2014, Soames told Reuters, with a pipeline of prospective work weighted towards the second half of this year.Serco expects 2019 profit of about £105mn, above its previous guidance of £95mn to £100mn, on revenue of £2.9bn to £3bn, up from £2.8bn to £2.9bn.

GAM Holding
Shares in GAM Holding AG extended their fall yesterday as the Swiss asset manager said it faced another challenging year after swinging to a giant 2018 loss. GAM had a torrid year after being forced to write down the value of its $217mn acquisition of British hedge fund Cantab and closing several funds after suspending top money manager Tim Haywood for alleged breaches of its rules. It said yesterday it had sacked Haywood for “gross misconduct. There was serious failure to achieve the standard of skill and care which were to be expected of someone in his position.” Haywood has not responded to requests for comment. Assets under management (AuM) continued to fall, hitting 132.2bn Swiss francs ($132.2bn) at the end of the year from 139.1bn at the end of November. The steep decline has made GAM a potential takeover target, and chief executive David Jacob told a conference call that GAM’s board was examining all strategic options. The company had said in December it would cut 10% of its staff and ditch its dividend as it warned it would slide to a 2018 net loss, which said yesterday was 929mn francs.

Standard Chartered 
Standard Chartered PLC (StanChart) has set aside $900mn to cover fines resulting from regulatory investigations in the United States and Britain, potentially drawing a line under probes which have dogged the bank for years. News of the provision, made for the fourth quarter of last year, comes ahead of a strategy update from the bank along with its 2018 earnings results on Tuesday, when chief executive Bill Winters is widely expected to outline an overhaul of operations. In a filing to the Hong Kong Stock Exchange yesterday, StanChart said the provision related to the potential resolution of US investigations into alleged violations of US sanctions, and for probes relating to foreign exchange trading. The filing is the first time the bank has quantified the possible cost of the investigations.Previously it said only in filings that it was “not practicable” to estimate the financial impact because the range of potential outcomes was too broad. StanChart also included in the provision a £102.2mn ($133.3mn) fine from Britain’s Financial Conduct Authority related to historical financial crime controls. It said it was considering its options in relation to the penalty. The British regulator declined to comment when contacted by Reuters. StanChart has been the subject of multiple investigations by US authorities into its dealings with Iran, which is the subject of heavy US sanctions. In 2012, the bank agreed to pay $667mn to settle alleged sanctions breaches from 2001 through 2007. It also agreed deferred prosecution agreements with the Department of Justice and New York County District Attorney’s Office. The agreements were extended to March 31 this year in December 2018. The current investigations are examining the extent to which the bank allowed clients with Iranian interests to conduct transactions after 2007, as well as the extent to which it shared such dealings with authorities at the time of the 2012 settlement. In October, Winters said US authorities were also investigating whether StanChart breached Iran-related compliance rules as recently as 2013.Media reports last year said London-based StanChart faced a possible $1.5bn fine for Iran-related sanctions violations. The 2018 provision will reduce profit at the bank, which analyst estimates had previously put at $3.9bn, Refinitiv data showed.

French conglomerate Bouygues predicted an increase in earnings for 2019 and growth at its telecoms arm after posting higher 2018 profits that lifted its shares. The family-controlled group has recently had problems at its construction division which have been offset by the strength of its telecoms unit. However, Bouygues said all its main businesses, including construction arms such as Colas, improved in the fourth quarter. Bouygues’ current operating profits rose 7.5% from a year earlier to €1.51bn, while sales rose 8% to €35.56bn. Core earnings at Bouygues Telecom, France’s third-biggest mobile operator which Bouygues failed to merge with market leader Orange in 2016, rose by 171mn euros from a year earlier to €1.27bn.For 2019, Bouygues said it hoped to improve group profits and generate some 300mn euros of free cash flow at Bouygues Telecom.

Exceptional charges along with natural disasters hacked into net profits at AXA, one of the world’s leading insurance firms, which nevertheless managed to boost its operating earnings to a record level. Net earnings plunged 66% to €2.1bn ($2.4bn) at the French firm. The drop can be primarily attributed to a number of exceptional items, such as a charges of €3.5bn it took to reduce the value of AXA Equitable Holdings when it listed the US unit on the stock market and reorganise its Swiss group life business.While the hit to net earnings was expected, the result was still less than the consensus of analyst forecasts compiled by Bloomberg at €2.3bn.Two major natural catastrophes in the United States in the final quarter of last year — California wildfires and Hurricane Michael — meant the integration of Bermuda-based property insurer XL into AXA Group translated into a €230mn loss. But AXA was able to increase its measure of operating profit to €6.2bn. Gross revenues rose by 4% to €102.9bn.

Lenovo Group, the world’s largest personal computer maker, posted better-than-expected quarterly results and shrugged off the impact of a bruising Sino-US trade war, sending its shares soaring 11% to three-year highs.The company, dual-headquartered in China and the United States, is optimistic of further growth in China and will focus on the premium market, CEO and chairman Yang Yuanqing told Reuters after December quarter revenue rose to the highest in four years on a strong showing across its major business groups. Net profit for the quarter was $233mn, ahead of the $207mn average of 10 analyst estimates compiled by Refinitiv and up from a loss of $289mn in the same period a year earlier when Lenovo took a one-off hit due to US tax reforms. Lenovo said its share in the global PC market rose to 24.6% and that it expanded in premium markets such as workstations, thin and light PCs and gaming PCs. Total revenue in the quarter rose 8.5% to $14.04bn, while that from its PC and smart devices group rose 12% to a record $10.7bn. Revenue declined 20%, with Lenovo attributing the fall to a strategy of focusing on core markets.

Sources and photo-credits: Gulf Times