SoftBank operating profit rises as Son sees sprint revival

SoftBank Group Corp increased third quarter operating income 7.3 per cent on new Japanese wireless customers as billionaire Chairman Masayoshi Son sees signs of a turnaround at its beleaguered US unit Sprint Corp. 

PHOTO: AFP

FEB 10, 20165:38 PM

[TOKYO] SoftBank Group Corp increased third quarter operating income 7.3 per cent on new Japanese wireless customers as billionaire Chairman Masayoshi Son sees signs of a turnaround at its beleaguered US unit Sprint Corp.

Operating profit rose to 189.6 billion yen (S$2.3 billion) in the three months ended Dec 31, the Tokyo-based company reported on Wednesday. Net income fell 88 per cent to 2.3 billion yen.

SoftBank stock has been hammered by pessimism about Mr Son's ability to turn around Sprint after he paid US$22 billion for a controlling stake in 2013. With about US$100 billion of debt, ending losses at the US wireless carrier is seen as critical to reviving the shares, with Mr Son saying Wednesday that the struggling unit is making progress.

"Sprint is showing definitive signs of a turnaround," Mr Son told reporters in Tokyo.

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"There are yet more opportunities for cost cutting at Sprint."

Sales for the quarter rose 4.3 per cent to 2.4 trillion yen. The company didn't provide full-year forecasts.

Shares of SoftBank fell 3.5 per cent to 4,603 yen in Tokyo before the earnings were announced. The stock has fallen 25 per cent this year.

Average revenue per user for its main phone business in Japan rose to 4,720 yen in the third-quarter, as data usage increased, SoftBank said.

The company added 74,000 net new subscribers in the period to a total of 31.7 million users. Profit in the business rose 12 per cent to 172.4 billion yen.

"Sprint is indeed coming around, but it's a recovery driven largely by cost cuts," said Hideki Yasuda, an analyst at Ace Research Institute in Tokyo.

"Son is correct in saying that Sprint has hit bottom, which matches investors' assessment."

Sprint, which had been hemorrhaging cash over the past year, increased its cash and equivalents by almost 12 per cent to US$2.2 billion in the December quarter.

The US company increased its profit forecast, calling for earnings before interest, tax, depreciation and amortization of as much as US$8 billion in fiscal 2016, compared with a previous outlook for up to US$7.1 billion.

The US carrier is SoftBank's second biggest investment, trailing only its stake in Alibaba Group Holding Ltd.

Sprint's shares have fallen 27 per cent this year, while those of Alibaba have slumped 24 per cent.

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French wine and spirits exports hit all-time high

FEB 10, 201610:04 PM

[PARIS] The value of French wine and spirits exports reached an all-time high last year, mainly helped by a weak euro, strong demand for champagne and cognac and a recovery in the Chinese market, but producers warned there was a further drop in volumes.

After two years of decreases, sales abroad of French wine and spirits rebounded to reach a record 11.7 billion euros (US$13.2 billion) in 2015, up 8.7 per cent from the previous year, the sector's export federation FEVS said on Wednesday.

The increase put the sector back in second place in the rankings for the largest export industries in France, behind aerospace and ahead of perfumes and cosmetics, with net exports totalling 10.4 billion euros and equivalent to the price of 126 Airbus aircraft, FEVS said.

"There is a clear advantage from the euro and low oil prices helped on further-away markets," said FEVS's chairman, Christophe Navarre, after a news conference.

He declined to give a forecast for 2016. "It's like the weather, you have to take it when it's good and adapt when it's bad," he said.

About 60 per cent of French wine and spirits exports are made outside the European Union.

The United States remained France's largest market, helped by growing demand for high-value products and the favourable exchange rate making euro-denominated wines more competitive.

The US market now accounts for 22 per cent of French wine and spirits exports at 2.6 billion euros, up more than 28 per cent in 2015.

French exports to Asia were boosted by a near 23 per cent rise in wine and spirits sales to China, where the market had been subdued by the clampdown on extravagant spending.

But the economic slowdown in China caused FEVS to remain cautious in its forecasts for sales in 2016.

Cognac was the main driver of the spirits sector, with a near 20 per cent jump in exports by value to 2.6 billion euros but lower vodka sales limited total growth for spirits exports to 13 per cent, to 3.7 billion euros.

The wine sector was buoyed by champagne exports which rose by 12 per cent by value in 2015 to 2.7 billion euros, bringing total wine exports to 7.9 billion euros, a rise of 6.7 per cent on 2014.

However, FEVS warned that overall, wine shipments fell 3.6 per cent by volume, due mainly to a drop in still wine supplies.

Navarre called the enduring drop in wine output "a real weakness" hurting France's market share abroad.

Over the past 15 years French wine's market share in international trade has been cut by nearly half by volume, FEVS said. By value it has been cut by a third.

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BMW sales rise 7.5% in January on demand in Europe, China

BMW reported a 7.5 per cent rise in monthly car sales to 152,879 vehicles in January, as growth in Europe and China more than offset a slide in the United States, where winter storms deterred car buyers.

PHOTO: EPA

FEB 10, 20164:07 PM

[FRANKFURT] BMW reported a 7.5 per cent rise in monthly car sales to 152,879 vehicles in January, as growth in Europe and China more than offset a slide in the United States, where winter storms deterred car buyers.

"Despite many markets showing continuing volatility, we remain optimistic that this positive trend will continue through 2016," sales chief Ian Robertson said in a statement on Tuesday.

Deliveries of BMW and MINI model cars in China were up 8.4 per cent at 43,441 vehicles in January, while deliveries in the United States slipped 4 per cent to 26,667 cars to due to storms that disrupted large parts of the country, BMW said.

Sales in Europe were up 10.9 per cent, helped by double-digit growth in Italy, France and Spain.

REUTERS

    
 

BP CEO 'very bearish' on oil as storage tanks are filling up

BP is planning for oil prices to stay low for the first six months of the year and expects surplus production to only start diminishing when storage tanks fill up in the second half. 

PHOTO: EPA

FEB 10, 20169:00 PM

[LONDON] BP is planning for oil prices to stay low for the first six months of the year and expects surplus production to only start diminishing when storage tanks fill up in the second half.

"We are very bearish for the first half of the year," Chief Executive Officer Robert Dudley said at the IP Week conference in London Wednesday. "In the second half, every tank and swimming pool in the world is going to fill and fundamentals are going to kick in. The market will start balancing in the second half of this year."

More than a year into a downturn sparked by OPEC's decision to keep pumping to defend market share, prices are still 70 per cent below their 2014 peak and companies are beset by plunging profits, dividend cuts and mass layoffs. The oil industry's annual IP Week gathering in London has been dominated by warnings that the worst of the slump isn't over.

Crude is trading below US$30 a barrel in New York after falling to a 12-year low last month, but production is still taking longer than expected to decline and record oil stockpiles just keep on growing, according to bankers, traders and executives attending the IP Week conference.

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Global oil supply still exceeds demand by as much as 1.7 million barrels a day, Igor Sechin, CEO of Russia's largest producer Rosneft OJSC, said at the conference. The imbalance will probably ease by the end of this year and potentially become a shortfall of 700,000 barrels a day by the end of 2017, he said. BP expects to see "a faster tightening" than that, Dudley said.

The anticipated decline in oil production resulting from low prices is taking longer than expected, according to Christopher Bake, a member of the executive committee at Vitol Group, the world's largest independent oil trader. Both conventional crude production and U.S. shale output have been "sustained" better than forecast, he said at the conference in London Tuesday.

About 360 million barrels of crude and refined products - or about 2 million a day - will be placed into storage over the next six months, Bake said. That's a surplus equivalent to the output of Nigeria, Africa's largest oil producer. Onshore storage tanks are brimming and now would be a good time to own ships capable of storing oil offshore, he said.

Crude stockpiles in the US, the world's largest consumer, rose above 500 million barrels last month to the highest since 1930, according to data from the Department of Energy. They are forecast to increase for a fifth week, according to a Bloomberg survey before government data released Wednesday. Inventories at the nation's biggest storage hub in Cushing, Oklahoma, expanded to the highest since 2004 last month.

With capacity to store oil exhausted in some places, prices may need to drop low enough to halt crude output that can no longer be stockpiled, according to Jeff Currie, head of commodities research at Goldman Sachs Group Inc. "I wouldn't be surprised if this market goes into the teens," he said in an interview with Bloomberg Television Tuesday.

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Opec points to larger oil surplus in 2016 as it pumps more

FEB 10, 20167:49 PM

[LONDON] Opec pointed to a larger oil supply surplus on the world market this year than previously thought as Saudi Arabia and other members pump more oil, making up for losses in non-member producers hurt by the collapse in prices.

The Organization of the Petroleum Exporting Countries pumped 32.33 million barrels per day (bpd) in January, the group said in a monthly report on Wednesday citing secondary sources, up 130,000 bpd from December.

Opec's extra barrels come as the group expects the pace of oil demand growth to slow down in 2016, and more than offset a forecast of a slightly larger than expected supply contraction from non-Opec producers.

The report points to a 720,000-bpd excess supply in 2016 if the group keeps pumping at January's rate, up from 530,000 bpd implied in last month's report.

REUTERS