Wednesday, August 5, 2015

Tesla stock falls on wider loss, CEO comments on cash need

AUG 6, 20157:59 AM

[DETROIT] Shares of Tesla Motors Inc fell about six per cent on Wednesday after the electric car maker posted a wider quarterly loss and said it may raise more cash to offset heavy spending on expanded production.

A recently negotiated credit line can be extended from US$500 million to US$750 million and should be enough to cover planned investments in California and Nevada factories, chief financial officer Deepak Ahuja told analysts on a conference call.

But "there may be some value" in raising additional funds for "risk reduction," chief executive Elon Musk added. He declined to elaborate.

Tesla may not be cash-flow positive until early 2016, Mr Ahuja said. Mr Musk's previous estimate was the end of this year.

Tesla's new storage battery business could generate revenue of US$400 million to US$500 million in 2016, and "a few billion dollars" in 2017, Mr Musk said on Wednesday.

Tesla lowered its full-year sales forecast to a range of 50,000 to 55,000 cars. Last year, Mr Musk had forecast sales of 60,000 cars in 2015, but cut that earlier this year to 55,000. He forecast vehicle sales next year of 83,000 to 93,000.

Tesla's stock fell to US$254 in extended trading, after closing up 1.4 per cent at US$270.13. It has swung widely over the past 12 months, from a low of US$181.40 to a high of US$291.42.

The company said it lost US$184.2 million in the second quarter, compared with a loss of US$61.9 million in the year-ago period. Revenue climbed 24 per cent to US$955.0 million, from US$769.3 million, as car sales continued to rise.

On an adjusted basis, Tesla said it lost 48 US cents a share, less than the 60 US cents analysts had expected. In the year-earlier period, Tesla said, it earned 13 US cents a share on an adjusted basis.

With expenses still outstripping revenue, Tesla's cash reserves fell to US$1.15 billion as of June 30, from US$1.5 billion on March 31 and US$1.9 billion on Dec 31, bringing total cash burn in the first half to US$755.0 million.

Earlier this year, Mr Ahuja said total cash burn for the year should be less than US$1.0 billion.

Capital expenses totaled US$405.2 million, as the company continued to spend to complete tooling on the crossover Model X and equip the new Nevada battery factory, which is slated to open in 2016. Spending in the first half totaled US$831.2 million. Tesla said it expects full-year capital expenditures of about US$1.5 billion.

Free cash flow fell slightly to US$564.7 million. The cash burn in the second quarter was partially offset by US$218.4 million in cash from financing activities.

REUTERS

Ackman discloses 7.5% stake in Mondelez

AUG 6, 201512:10 PM

[NEW YORK] Activist investor Bill Ackman's Pershing Square Holdings Ltd disclosed a 7.5 per cent stake in Cadbury chocolate and Oreo cookies maker Mondelez International Inc.

Pershing Square said its beneficial ownership of 120.3 million shares includes forward purchase contracts and call options.

Mr Ackman's stake is valued at about US$5.5 billion based on Mondelez's closing price on the Nasdaq on Wednesday. "We welcome Pershing Square as investors in our company," a Mondelez spokeswoman said. "We'll continue to focus on executing our strategy son Reuters data. Mr Peltz, who is on Mondelez's board, played a role in the breakup of Kraft into Kraft Foods Group and Mondelez.

Mr Peltz said in April that he was not pushing Mondelez to do a big deal and wanted the company to continue improving its and on delivering value for all our shareholders." The Wall Street Journal, which first reported that Ackman has built a stake in the company, said the activist investor wants the snack maker to grow revenues faster and cut costs significantly or sell itself to a rival. A potential buyer for Mondelez could be the newly formed Kraft Heinz Co, the Journal said, citing people familiar with the matter. Reuters could not immediately reach Kraft Heinz for comment outside regular US business hours.

In 2012, Mondelez spun off its former North American grocery brands business into Kraft Foods Group, which merged with Ketchup maker HJ Heinz Co earlier this year to form Kraft Heinz.

Mr Ackman's arrival at Mondelez squeezes the food company between two of the best known activist investors.

Billionaire activist investor Nelson Peltz's Trian Fund Management LP holds a 3 per cent stake in Mondelez, according to Thomprofit margin, sales and market share.

Reuters could not immediately reach representatives at Trian for comment.

Mondelez has taken several measures to cut costs, including shutting factories and "zero-based budgeting," which requires managers to justify every expense in each new budgeting period.

Mondelez last week reported a better-than-expected second-quarter profit, helped by lower costs and raised its share buyback plan by US$6 billion.

REUTERS

Ringgit weakens most in Asia as psychological reserves mark eyed

AUG 6, 201512:50 PM

[KUALA LUMPUR] The ringgit weakened the most in Asia on concern Malaysia's foreign-exchange reserves dropped to the lowest level since the 2008 global credit crunch, reducing ammunition to defend the region's worst-performing currency.

The holdings declined 13 per cent this year to US$100.5 billion amid a 10 per cent plunge in the ringgit, fueling speculation Bank Negara Malaysia intervened by buying the currency. A slump in oil, a political scandal involving Prime Minister Najib Razak and the prospect of higher US interest rates have sent the ringgit to a 17-year low. Figures for the two weeks to July 31 are due on Friday.

"The market is probably getting nervous because reserves are expected to fall below the psychological US$100 billion mark given that Bank Negara is seen to be intervening to smooth out volatility in recent sessions," said Nizam Idris, the Singapore-based head of foreign-exchange and fixed-income strategy at Macquarie Bank Ltd. The second-most accurate forecaster for the ringgit in the four quarters through June in Bloomberg rankings predicts they may come in at US$96.5 billion.

The currency declined 0.3 per cent at 3.8905 a dollar as of 12:13 pm in Kuala Lumpur, prices from local banks compiled by Bloomberg show. It earlier fell as much as 0.5 per cent to 3.8948, the lowest since September 1998 when it reached 3.9340.

The US$100.5 billion is enough to finance 7.9 months of retained imports and is 1.1 times short-term external debt, according to a central bank statement issued when the figure was released on July 23.

Global investors have sold a net 11.7 billion ringgit (S$4.15 billion) of Malaysian shares this year through July, the biggest outflows since 2008, according to a report from MIDF Amanah Investment Bank Bhd. The FTSE Bursa Malaysia KLCI Index has proved quite resilient to the selling, and is down 2.9 per cent this year, compared with losses for benchmarks in Taiwan and Indonesia of 9.6 per cent and 7.3 per cent, respectively.

Malaysia's 10-year government bonds declined, with the yield rising two basis points to 4.09 per cent, according to Bursa Malaysia prices. That's the highest level since July 8. The five-year yield climbed one basis point to 3.70 per cent.

BLOOMBERG

Wednesday, August 5, 2015