Johnson & Johnson plans US$10 billion share repurchase program

OCT 13, 20157:45 PM

[LONDON] Johnson & Johnson (J&J), the world's biggest maker of health-care products, said its board approved a plan to buy back as much as US$10 billion in shares, double the amount it budgeted last year.

The company will finance the repurchases with debt, New Brunswick, New Jersey-based J&J said in a statement on Tuesday. The repurchase program has no time limit, and J&J had US$34 billion in cash, equivalents and short-term investments at the end of June, leaving plenty of room for acquisitions.

J&J has about 2.77 billion shares outstanding. The program would let the company buy back about 3.8 per cent of those shares at yesterday's closing price.

Investors have been waiting to see if the drugmaker makes a large acquisition to bolster its pharmaceutical division, an industry that has been rapidly consolidating as larger players seek out new hot drugs. In March, J&J lost out to AbbVie Inc. when the latter bid US$21 billion for Pharmacyclics Inc, J&J's partner in the development of Imbruvica. The cancer drug is projected to be a blockbuster with sales surpassing US$1 billion for J&J as soon as next year.

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The drugmaker is scheduled to report third-quarter profit Tuesday morning. Earnings, excluding one-time items, may have reached US$1.45 on a per-share basis, according to the average of 18 analysts' estimates compiled by Bloomberg.

J&J has been investing heavily in building up its pharmaceutical business as other products, such as medical devices, face pressure to compete on price to retain customers.

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Climate qualms mean oil will never be used up: BP 

OCT 13, 20154:50 PM

[LONDON] Concerns about the climate change impact of burning the world's remaining oil resources mean the reserves will never be fully exploited, BP Chief Economist Spencer Dale said on Tuesday.

That assumption means the relative price of oil will not necessarily increase over time, Dale said at an economists'conference in London on Tuesday.

Burning existing reserves of oil, gas and coal would emit more than 2.8 trillion tonnes of climate-harming carbon emissions, much more than the 1 trillion threshold scientists have set to limit global warming to 2 degrees.

"Concerns about carbon emissions and climate change mean that it is increasingly unlikely that the world's reserves of oil will ever be exhausted," Mr Dale said.

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BP is among the world's top oil producing companies but it is also part of a group of energy firms that has called for the creation of a global carbon pricing mechanism that would limit investments in climate-harming forms of energy.

Technological advances will also reduce the cost to extract harder-to-reach resources, Mr Dale said.

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Oil glut to persist in 2016 as global growth demand slows: IEA

A global oil supply glut will persist through 2016 as demand growth slows from a five-year high and key Opec producers maintain near-record output, the International Energy Agency said on Tuesday, even as low prices curb supply outside Opec. 

PHOTO: REUTERS

OCT 13, 20154:17 PM

[LONDON] A global oil supply glut will persist through 2016 as demand growth slows from a five-year high and key Opec producers maintain near-record output, the International Energy Agency said on Tuesday, even as low prices curb supply outside Opec.

The IEA, which advises the United States and other industrialised countries on energy policy, said in a monthly report world oil demand would rise by 1.21 million barrels per day (bpd) in 2016, down 150,000 bpd from last month's forecast.

"A projected marked slowdown in demand growth next year and the anticipated arrival of additional Iranian barrels - should international sanctions be eased - are likely to keep the market oversupplied through 2016," the Paris-based IEA said.

The Organization of the Petroleum Exporting Countries increased supply in September by 90,000 bpd to 31.72 million bpd, the IEA estimated.

The agency said it expected Opec crude oil output to remain around 31.5 million bpd in coming months as Saudi Arabia and Iraq focus on market share.

REUTERS

    
 

Saudi offers of extra oil in Asia fail to lure interest in cutthroat market

OCT 13, 20154:01 PM

[SINGAPORE] Saudi Arabia failed to attract offers for additional oil cargoes for loading in October, industry sources said, in a sign that the market remains over supplied despite recent production cuts.

The offers were made to some customers in Asia ahead of maintenance at a major Saudi refinery, two sources close to the matter said, as the world's biggest crude exporter seeks to maintain its market share in Asia.

Yet in a sign of the ongoing price war between producers and the surplus supplies, potential buyers who received the offers said they were too prompt in delivery, adding that cheaper alternatives such as Iraq's Basra crude were also available.

"Even if the November OSPs (Official Selling Prices) are attractive, we do not have room to take more," one of the potential buyers said, declining to be named due to company policy.

Refinery maintenance across Asia in the third quarter has also curbed the appetite for more crude in the region.

Oil prices started plunging in June 2014 as soaring US shale output added to near-record production by the Organization of the Petroleum Exporting Countries (Opec) and Russia, creating a glut of several million barrels per day (bpd) and resulting in a more than 50 per cent drop in prices.

Instead of cutting output, Opec decided to keep pumping in a bid to protect its Asian market share against rising competition.

Production in Opec-leader Saudi Arabia has so far remained high, with September's output of 10.23 million bpd close to June's record of around 10.5 million bpd.

Saudi crude production in the first nine months of 2015 hit 10.21 million bpd, up from 9.69 million bpd in 2014, Reuters data showed.

In response to falling profits and the global glut, US energy firms cut oil rigs for a sixth week in a row last week, bringing the total rig count to 605, the least since July, 2010.

"Saudi Arabia's strategy of targeting market share amongst key Asian consumers remains at play," said Virendra Chauhan, an analyst at consultancy Energy Aspects. "It's a buyers' market at the moment so Saudi will be looking to place its barrels aggressively or risk losing out," he added.

Despite this strategy, Saudi may trim output further in October as domestic demand drops following the peak consumption summer months and because of maintenance at PetroRabigh's 400,000 bpd refinery. The Yasref refinery has also cut operating rates to 75 per cent, down from full capacity in July.

"We see 10-10.1 million bpd as the new norm for Saudi production given that more crude will be consumed domestically with the two new refineries ramping up to capacity," Mr Chauhan said.

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Philippines considers buying 1m T more rice ahead of severe El Nino    

The Philippines, one of the world's biggest rice buyers, is studying a proposal to purchase 1 million tonnes more rice to keep an adequate buffer stock and prevent a spike in local prices, a senior government official said on Tuesday. 

PHOTO: REUTERS

OCT 13, 20152:54 PM

[MANILA] The Philippines, one of the world's biggest rice buyers, is studying a proposal to purchase 1 million tonnes more rice to keep an adequate buffer stock and prevent a spike in local prices, a senior government official said on Tuesday.

The Southeast Asian country has suffered crop losses in recent months due to below normal rainfall and is set to miss its 2015 target for rice, the national staple, because of a stronger and prolonged El Nino dry weather phenomenon that is potentially one of worst in 65 years.

The government has bought 500,000 tonnes rice for delivery in the first quarter for its 2016 needs. But another purchase of 1 million tonnes would ensure a 45-day buffer stock kept by the state grain agency National Food Authority (NFA) is maintained throughout the dry season, Economic Planning Secretary Arsenio Balisacan, told reporters.

The proposal for additional rice imports still needs to be approved by the inter-agency NFA Council, said Balisacan, who is also a member of the council. "Based on our analysis of the current data, we may need to increase, to import another one million tonnes to maintain a 45-day buffer stock," said Balisacan, adding the proposal will be discussed with President Benigno Aquino this week. "Adequate supply and the timely importation is crucial because what we want to avoid is domestic prices shooting up while world prices are relatively stable. We want to make sure that supply is there when we need it the most." The Philippines last month split a 750,000-tonne rice supply contract between Vietnam and Thailand as it sought to boost shrinking stocks.

The government is assuming a 25 per cent drop in rice output due to the impact of the dry spell, the same magnitude recorded in the 1997-1998 El Nino weather disturbance, Balisacan said.

The NFA has approved imports for delivery this year reaching nearly 1.8 million tonnes, including 937,000 tonnes already shipped in by the state grain agency and purchases by private traders totalling 600,000 tonnes. The Southeast Asian country last year purchased about 1.7 million tonnes of rice.

REUTERS