Mint Market Watch - 29 Oct 22
Exxon & Chevron deliver nearly $30B in profits; Maruti Suzuki profits up 3.5x and Tata Power profit rises 85%.
Exxon & Chevron profits surge on high oil prices & volumes. BoJ keeps rates unchanged as Yen drops to 147.36.
Exxon and Chevron post surging profits on record refining volumes. Exxon profits at $19.7B, Chevron at $11B.
AbbVie and Colgate Palmolive revenue falls short of expectations.
Tata Power profit rises 85%, Maruti Suzuki profit increases 334%.
US PCE Price Index shows 0.3% MoM increase in September.
BoJ keeps rates unchanged sticking to loose monetary policy, Yen drops to 147.36. Indian Forex Reserves decline to $524.5B.
HEADLINES
Exxon Mobil profits surge to $19.7B on record refining volumes
Chevron profit tops $11B
AbbVie revenue falls short of expectations
Colgate Palmolive misses revenue expectations even with 11.5% price hike
Tata Power net profit rises 85%
Maruti Suzuki net profit rises four-fold as supply worries ease
Dr Reddy’s profit jumps 12%
JSW Energy profit rises 35%
NIIT profit falls 24%
Vedanta profit falls 53%
Japan’s unemployment rate unexpectedly rises to 2.6% in September
BoJ keeps ultra-low interest rates defying global trend
US PCE index shows increasing prices in September
US Consumer Sentiment recovers in October
Russian central bank leaves key rate unchanged at 7.5%
Indian Foreign Exchange reserves hit another low as RBI defends rupee
EU business confidence drops lower
Singapore private home prices increase 3.8% in Q3
Australia PPI increases +1.9%
Exxon Mobil profits surge to $19.7B on record refining volumes
Exxon Mobil reported adjusted EPS of 4.45 (3.67 E) on revenue of $112.07B ($107.24B E), 52% higher YoY. Net income surged to $19.7B up from $17.85B last year. Earnings were driven by higher commodity prices and record refining volume. Exxon said its U.S. oil and gas production from the Permian Basin was near 560,000 barrels of oil and gas per day (boepd), a record. Production for the year will increase about 20% over 2021.
Refinery margins were significantly higher than in the year-ago period, but retreated from the second quarter due to loftier output and "flat US gasoline demand."
Oil company profits have soared this year as rising demand and an undersupplied energy market collided with Western sanctions against Russia over its invasion of Ukraine. U.S. exports of gas and oil to Europe have jumped close to setting all-time profit records for the industry.
Earnings from pumping oil and gas tripled last quarter while profit from selling motor fuels jumped tenfold compared with year-ago levels. Natural gas sales to Europe and soaring demand for diesel fuel led the company's better-than-expected results.
Exxon will maintain its $30 billion share buyback through 2023 while increasing dividends, Chief Financial Officer Kathryn Mikells said. Exxon declared a fourth-quarter per-share dividend of 91 cents, up 3 cents, and will pay $15 billion to shareholders this year. (Reuters, Marketwatch, Barrons)
Chevron profit tops $11B
Chevron reported adjusted EPS of 5.66 (4.83 E) on revenue of $66.64B ($57.03B E), up 49% YoY. Net income jumped to $11.23B up from $6.11B last year. Total costs rose less than revenue, up 41.4% to $51.84 billion. Net per-day oil-equivalent production in its U.S. Upstream operations rose 49,000 to 1.18 million barrels, but was down 56,000 barrels to 1.85 million barrels for International Upstream. They reported record production in the Permian over 700k bpd and announced a 50% expansion at a refinery in Pasadena.
Chevron’s LNG cargoes were a record out of Australia, and that likely contributed to the earnings beat. Elevated oil and natural-gas prices were a key factor, too. The company said the average sales price per barrel of crude oil and natural gas liquids was $76, up from $58 a year earlier.
Chevron bought back $3.75 billion worth of shares, at the high end of its guidance. Large share buybacks by oil companies have attracted criticism from President Joe Biden who instead urged them to spend more on boosting production. (Barrons, Marketwatch)
AbbVie revenue falls short of expectations
AbbVie reported adjusted EPS of 3.66 (3.58 E) on revenue of $14.81B ($14.93B E), up 4% YoY. Sales from AbbVie’s immunology portfolio, which includes Humira, Rinvoq and Skyrizi were $7.65 billion, slightly lower than the consensus call of $7.66 billion. Immunology drugs contribute a significant portion to its revenue.
Humira generated $5.5 billion in revenue for the quarter, against a consensus of $5.6 billion. Botox sales in its aesthetics division were $637 million in the recent quarter, missing the forecast of $641 million. Sales of wrinkle treatment Juvederm were largely in line with the consensus of $352 million.
Sales of their best-selling drug Humira achieved annual sales of $20.7B however their patent protection for the drug expires next year after which they will face competition from generic versions. (Marketwatch, Barrons)
Colgate Palmolive misses revenue expectations even with 11.5% price hike
Colgate Palmolive reported adjusted EPS of 0.74 (0.74 E) on revenue of $4.46B ($4.48B E). They reported a net income of $618M down from $634M last year. Colgate said it retained a 39.7% share of the global toothpaste market and a 31.6% share of the manual toothbrush market.
Colgate Palmolive raised prices by 11.5% in the quarter. They updated full-year guidance and said it now expects sales growth in the middle of its 1% to 4% range. It expects adjusted per-share earnings to decline by 7% to 8% due to the strong dollar impact. (Marketwatch)
Tata Power net profit rises 85%
Tata power reported an 85% increase in consolidated net profit to Rs. 935 Cr. ($113M). The total income of the company rose to Rs 14,181.07 crore in the quarter from Rs 10,187.33 crore a year ago.
Tata Power’s Profit After Tax has increased for the 12th consecutive quarter pointing to the effectiveness of their business strategies. (Economic Times)
Maruti Suzuki net profit rises four-fold as supply worries ease
Maruti Suzuki reported 334% year-on-year (YoY) growth in its standalone net profit for the quarter ended September FY23 (Q2FY23) on a low base. Profit increased to Rs. 2,061.5 Cr. ($250M). Higher commodity prices and chip shortage concerns had impacted earnings last year.
Maruti Suzuki sold a total of 5.17 lakh vehicles during the quarter ended September FY23, the highest ever in any quarter, increasing 36 percent YoY, which comprises domestic sales of 4.54 lakh units and exports at 63,195 units.
Shortage of electronic components impacted production by about 35,000 vehicles during the quarter. Shortage of electronic components impacted production by about 35,000 vehicles during the quarter.
The operating profit margin expanded sharply by 670 bps year-on-year to 7.2 percent during the quarter. (Moneycontrol)
Dr Reddy’s profit jumps 12%
Dr Reddy’s reported 12% year-on-year (YoY) rise in consolidated net profit to Rs 1,114 crore. Total revenue in the quarter increased 9.4% on year to Rs 6,332 crore. The operating margin expanded 651 basis points to 29.99%.
Global generics sales, which make for the lion’s share of the company’s total turnover, increased 18% on year to Rs 5,595 crore. North America led the growth in this segment, seeing a rise of 48% in sales. In India, sales growth was muted at 1% due to a higher base of last year, which included contribution from Covid-related product sales.
R&D costs as a percentage of revenue decreased to 7.7% from 8.3% last quarter. (Economic Times)
JSW Energy profit rises 35%
JSW Energy reported a 35% increase in consolidated net profit to Rs. 456 Cr. its consolidated total income rose 16% to Rs 2,596.27 crore from Rs 2,237.36 crore last year. The rise in revenue was largely due to increase in fuel costs which are pass through in nature.
The firm is also looking to expand its installed capacity to 10 GW by FY25 and 20 GW by FY30. With a locked-in capacity of 9.9 GW, the company expects to achieve its FY25 target well ahead of the timeline. (Financial Express)
NIIT profit falls 24%
NIIT reported a 24.5% decrease in consolidated net profit to Rs. 39.5 Cr. Revenue for the quarter was 24.3% higher YoY at Rs. 392.2 Cr. The company attributed the decrease in revenue to a turbulent macro environment. (Moneycontrol)
Vedanta profit falls 53%
Vedanta reported a 53% decline in consolidated net profit to Rs. 2,690 Cr. Revenue increased 20% to Rs. 36,237 Cr.
The performance in the September quarter was affected by weaker commodity prices. The impact was particularly severe for its aluminium business due to a sharp decline in prices and also in its oil & gas division due to the windfall tax and lower crude prices.
In its aluminium segment, production went up by 3 percent QoQ and 2 percent YoY. Cost of production decreased 8 percent sequentially, driven by improved operational and buying efficiencies. (Moneycontrol)
Japan’s unemployment rate unexpectedly rises to 2.6% in September
Japan’s unemployment rate increased to 2.6% in September from 2.5% in August. The country's job availability ratio increased to 1.34 in September, rising 0.02 point from the previous month. (Business Standard)
BoJ keeps ultra-low interest rates defying global trend
The Bank of Japan kept its short term interest rates unchanged at -0.1% and long term yield at 0% under its Yield Curve Control Policy. This was largely expected as the BoJ is trying to revive the economy post COVID. BoJ governor said the central bank was nowhere near raising interest rates, with inflation likely to fall short of its 2% target for years to come.
In fresh quarterly projections, the BOJ revised up its core consumer inflation forecast to 2.9% for the year ending in March 2023. That is higher than a 2.3% estimate made in July and well above the central bank's 2% target. The BOJ also upgraded its inflation forecasts to 1.6% for both fiscal 2023 and 2024, in a nod to recent evidence that companies are actively passing on rising raw material costs to households.
The yen fell against the dollar in the aftermath of the BOJ's decision, and later extended its losses to hit a session high of 147.36 on dovish comments. The decision also pushed the 10-year bond yield to its lowest level in four-weeks. (Reuters)
US PCE index shows increasing prices in September
The US PCE Price Index which is the preferred inflation gauge for the Fed showed that US inflation rose 0.3% MoM in September to reach 6.2% YoY increase. Core PCE price index, which excludes volatile food and energy prices, rose 0.5%. The PCE Price Index shows easing but still high inflation in the US. Core price index was at 5.1% YoY which was just a tick below the high of 5.4% YoY in February.
The cost of gasoline fell in September for the third month in a row, though prices have started to rise again. Food prices increased in September, as did the cost of housing and transportation.
Unlike the CPI, the PCE index takes into account how consumer change their behavior due to rising prices. The CPI showed 8.2% YoY inflation in September. (Marketwatch)
US Consumer Sentiment recovers in October
US Consumer Sentiment improved slightly to 59.9 from 58.6 in September. Buying conditions for durable goods--products meant to last at least three years--surged 23% in October on easing prices and supply constraints, but year-ahead expected business conditions worsened 19%, according to the survey's data.
Americans' inflation expectations increased again in October after easing in September. For the next year, consumers expect prices to increase 5%, up from the 4.7% gain expected the previous month. Inflation expectations for the next five years, a closely watched indicator for Federal Reserve's officials, rose to 2.9% from 2.7% the prior month. (Marketwatch)
Russian central bank leaves key rate unchanged at 7.5%
Russian Central Bank left its key rate unchanged at 7.5% bringing an end to a rate-cutting cycle from the emergency hike of 20% in February. The central bank said it had noted a pickup in inflation expectations, and warned of long-term pro-inflationary effects from Russia's mobilisation of hundreds of thousands of reservists, which began in September.
The rouble was 0.3% stronger against the dollar at 61.53 and had gained 0.9% to trade at 61.12 versus the euro. It had firmed 0.6% against the yuan to 8.42. (Reuters)
Indian Foreign Exchange reserves hit another low as RBI defends rupee
India foreign exchange reserves fell to a two-year low as the RBI continued to defend the rupee’s downslide against the Dollar. Forex Reserves fell by $3.85B last week to $524.5B. The spot forex reserves have fallen from $607 billion in end-March and depleted by $117.93 billion from the record high of $642.45 billion seen on September 3 last year.
Foreign currency assets dropped $3.59 billion to $465.08 billion for the week ending Oct 21. Gold reserves fell $247 million to $37.21 billion.
Interventions by central banks across the globe to support their local units have eroded global foreign-currency reserves by about $1 trillion, or 7.8%, this year to $12 trillion. (Economic Times)
EU business confidence drops lower
EU business confidence dropped by 1.5 points to 90.9, its lowest level since 2020. Optimism deteriorated in both the services and manufacturing industries due to slipping demand expectations.
The European Commission's Economic Sentiment Index declined from a reading of 93.6 for September to 92.5 in October as the industrial confidence sub-index fell to -1.2. (Sharecast, Investing)
Singapore private home prices increase 3.8% in Q3
Singapore’s private home prices rose at a 3.8% pace in Q3 slowing from a strong Q2. The increase was largely driven by the prices of non-landed homes across Singapore, which went up 4.4 per cent this quarter. The private residential property price index increased to 187.8, up from 180.9 in the second quarter.
Prices of non-landed properties rose 4.4 per cent, up from 3.6 per cent last quarter. Non-landed home prices in the core central region rose by 2.3 per cent, compared with 1.9 per cent in the previous quarter. Prices of non-landed homes outside the central region saw the biggest jump, increasing by 7.5 per cent in the third quarter, up from 2.1 per cent in the last quarter. (Channelnewsasia)
Australia PPI increases +1.9%
Australia’s Producer Price Index increased 1.9% QoQ in Q3 (1.5% E) up from a 1.4% increase in Q2. This puts the PPI 6.4% higher YoY. (ForexLive)
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