Samsung posts record Q3 despite smartphone woes

Samsung Electronics yesterday posted record quarterly operating and net profits as solid demand for its memory chips cushioned the fallout from slowing smartphone sales - but warned of tougher times ahead.The South Korean tech giant - the world’s top maker of smartphones and memory chips - has recovered from a series of setbacks, including a humiliating recall and the jailing of its de facto chief, to post a series of record-breaking numbers.The profits have been driven by its mighty semiconductor unit, which provides chips for its own devices as well as competitors including Apple.But that run was coming to an end, Samsung signalled in a statement, saying it expected “overall earnings across the company to decline” in the fourth quarter because of seasonal factors in the semiconductor market.Going into 2019, “earnings are forecast to be weak for the first quarter” for the same reason, it added, before business conditions improved.For July-September, Samsung reported an operating profit of 17.6tn won ($15.4bn), up 21% from a year ago and an all-time higher for any quarter.Net profit also jumped 17.5% to 13.1tn won, also a record, while sales rose 5.5% to 65.4tn won.“It was in line with expectation but this will be the peak,” Greg Roh of HMC Securities & Investment told AFP.“I’m expecting a decrease in the fourth quarter across the company including semiconductors and smartphones to around 16.6tn won,” he said.The figures - in line with estimates announced earlier this month - were “driven mainly by the continued strength of the memory (chip) business”, Samsung said.The unit dominates the global market and the firm has invested tens of billions of dollars each year to build and expand its factories.The handset division reported an operating profit of 13.6tn won, the second consecutive quarterly record, offsetting sagging profits at the mobile phone division.Mobile handsets once contributed the lion’s share of Samsung Electronics’ overall sales and profit, but the unit reported a third-quarter operating profit of only 2.22tn won, down 33% year-on-year.Air France-KLMAir France-KLM said yesterday that a third-quarter operating profit of €1.065bn ($1.2bn) showed “resilience” in the face of rising fuel and currency costs.The operating result was down €77mn compared to last year, but up €11mn adjusting for currency changes, the group said.The solid results come less than two weeks after Air France finally struck a deal with unions on a 2% pay rise annually in 2018 and 2019.Former chief executive Jean-Marc Janaillac resigned in May when unions rejected his earlier proposals to end a series of one- and two-day strikes that the company said cost it €335mn in the first half of the year.“The agreement on salaries signed at Air France brings stability as well as new perspectives for our businesses and employees,” Janaillac’s successor Benjamin Smith said. Air France-KLM said it was keeping its projected unit cost rise at between 0 and 1% at constant currency, fuel and pension charges.Sprint CorpSprint Corp beat Wall Street’s estimates for quarterly revenue, profit and overall net subscriber additions yesterday, driving shares in the No 4 US wireless carrier 9% higher in morning trading.Sprint, which is awaiting regulatory approval to merge with bigger rival T-Mobile US Inc, focused on increasing its revenue from devices such as tablets and smartwatches, and getting more customers for its higher-priced unlimited phone plans, chief executive Michel Combes said during an earnings call with analysts.As customers add more devices other than phones, “it should reduce churn at the end of the day, because that means more devices per account,” Combes said.Sprint reported net income attributable to the company of $196mn, or 5 cents per share, in the quarter ended September 30, compared with a net loss of $48mn, or 1 cent per share, a year earlier.Analysts were expecting the company to report a loss of 1 cent per share, according to Refinitiv data.Total operating revenue rose to $8.43bn from $7.93bn. Analysts had expected the company to report revenue of $7.97bn. Kellogg CoKellogg Co cut its full-year profit outlook yesterday, citing increased spending on advertising and higher distribution costs, and shares of the Corn Flakes maker slid 5.6%.Battle Creek, Michigan-based Kellogg has been spending more on advertising and promotions to drive cereal sales, as consumers have shifted toward healthier low-sugar options, protein bars and yogurt for breakfast.The company now expects full-year adjusted earnings per share to rise about 7% to 8%, a downward revision from the prior outlook of an 11% to 13% rise. Analysts on average had been expecting an 11.9% rise in full-year adjusted profit, according to Refinitiv data.Sales declined 1.3% in the third quarter ended September 29 at Kellogg’s US morning foods unit, which makes Fruit Loops and other cereals. Sales suffered after a June recall of 1.3mn cases of Honey Smacks cereal due to a potential salmonella contamination. The US Centers for Disease Control and Prevention said at the time that 135 people across 36 states were infected.Net income attributable to the company rose to $380mn, or $1.09 per share, from $288mn, or 83 cents per share, a year earlier. Net sales rose nearly 7%, driven by Kellogg’s acquisition of protein bar maker RXBAR last October. (Tata MotorsLosses at Jaguar Land Rover and a one-off payment to close a subsidiary dragged India’s Tata Motors into the red for the three months to September, the company said yesterday.The Indian car giant reported a consolidated net loss of 10.49bn rupees ($141.9mn) for the second quarter as demand weakened for its luxury cars across China and Europe.The company had reported a net profit of 24.83bn rupees for the same period a year earlier.JLR sales dropped 13.2% worldwide, largely due to higher import duties in China as it engages in an aggressive tariffs war with the US. “In the latest quarterly period, we continued to see more challenging market conditions,” JLR chief executive Ralf Speth said in a statement. “Our results were undermined by slowing demand in China, along with continued uncertainty in Europe over diesel,” he added.Earnings were also hit by a 4.37bn-rupee payment to close the operations of a local subsidiary in Thailand.Tata Motors’ total revenues fell 10.9%.PanasonicJapan’s Panasonic Corp yesterday reported a decline in quarterly profit far beyond what analysts estimated, as costs rose at the battery plant it jointly runs with US electric vehicle maker Tesla Inc .Business with Tesla has yet to contribute to profit. Yet Panasonic said it was in talks to add to its $1.6bn investment and take capacity at the so-called Gigafactory over the 35 Gigawatt hours (GWh) it is set to reach by March-end.Panasonic is the exclusive battery cell supplier for Tesla cars. As production of the automaker’s mass-market Model 3 accelerated in the July-September quarter, Panasonic had to send more engineers and spend more to increase cell production.The higher costs, as well as slower demand for factory automation equipment in China amid an escalating Sino-US trade war, pushed Panasonic’s July-September operating profit down 15% to ¥95.2bn ($840.92mn).The result compared with the ¥112.60bn average of 7 analyst estimates compiled by Refinitiv.Last week, Tesla reported a net profit, positive cash flow and wider-than-expected margins for the quarter. The automaker is averaging roughly 4,300 Model 3s a week which, though below its 5,000 target set for June, was enough to boost earnings.TelefonicaSpain’s Telefonica reported a 1.4% fall in third-quarter core profit yesterday, citing currency volatility in Latin America, but it raised its revenue target for the year due to a brighter outlook for its domestic market.Currency turbulence in Brazil and Argentina have dented the telecoms group’s results in recent quarters, even as its dual strategy to aim for both the upper and lower ends of the Spanish market has shown signs of bearing fruit.The company upgraded its 2018 revenue target to a 2% rise on an organic basis yesterday, compared with a previous forecast for a 1% increase.Operating income before depreciation and amortisation (OIBDA) was €4.04bn ($4.58bn) which, stripping out currency effects, was a 4.1% rise from a year earlier.In Spain, which accounts for just over a quarter of its core earnings, 81,000 customers signed up in the quarter to the premium Movistar Fusion package, which includes broadband, pay TV and mobile.Standard CharteredStandard Chartered warned yesterday an escalating Sino-US trade war was weighing on business sentiment in its core emerging markets, after posting a better than expected 31% rise in quarterly profit before tax.The downbeat comments on global trade reflect a more pessimistic tone than the Asia-focused lender’s statement in July where CEO Bill Winters said he saw a “minimal” hit to the bank’s performance from the US-China spat.The British lender is particularly sensitive to trade tensions, since it has during its 150-year history focused on financing trade between Asia, Africa and other parts of the world. Greater China and the rest of North Asia account for 40% of its operating income.StanChart posted a profit before tax of $1.1bn in the three months ended September 30, above the $814mn profit in the same period a year ago and higher than the $978mn average of analysts’ forecasts.StanChart said the trade tensions particularly impacted its wealth management business, as falling stock prices as a result of the economic uncertainty made retail customers more reluctant to invest.Wealth management income in the quarter dropped 4.7% from a year-ago period to $465mn.StanChart’s results come after bigger British rival HSBC earlier this week posted a surprise 28% rise in third quarter earnings as it tightened its grip on costs. HSBC had said the impact of the trade spat was “not yet manifesting itself in business activities in a meaningful way”.AirbusEuropean aerospace giant Airbus reported yesterday a third quarter net profit of €957mn ($1.1bn), more than triple the 2017 performance.The company, which rivals Boeing of the US, said it was maintaining its forecast for deliveries of 800 commercial aircraft this year but added that there was still much to do to reach that target.On the key, much-delayed and over-budget military A400M programme, Airbus said there had been “tangible progress” on delivery but risks remained.For the nine months to September, net profit rose four% from the same period a year earlier to €1.45bn.The results reflected the “good performance” of the key A350 long-haul twin-jet, Airbus head Tom Enders said.Of the 800 delivery aircraft, 18 are the A220 model, the latest member of the Airbus family of single-aisle jets after the company took over the aircraft from Bombardier.Enders said the main priority continued to be delivery of commercial aircraft and boosting output of the workhorse A320neo, which has been held back by engine supply problems.BaiduChinese online search giant Baidu yesterday said net profit for the third quarter jumped 56% on continued robust growth in revenue and traffic to its mobile app.Net income grew to 12.4bn yuan ($1.78bn) for the three months ending September 30.The Beijing-based, Nasdaq-listed company credited “impressive” gains in its search function, news feed, and the new artificial intelligence (AI) projects that Baidu is staking its future on.Quarterly revenues remained strong, growing 27% year-on-year to 28.2bn yuan, Baidu said in a statement. It follows second-quarter earnings that were up 32%.“Feed revenue has been a bright spot in driving Baidu’s revenue growth due to robust user traffic growth, as well as strong traction with Baidu’s video offerings,” chairman and CEO Robin Li said in the statement.Baidu forecast slower revenue growth than expected for the fourth quarter of between 25.5bn and 26.7bn yuan, down slightly from previous estimates.EBayEBay Inc beat analysts’ estimates for third-quarter profit by managing costs at a time when bigger rival Amazon.com Inc missed revenue estimates and forecast sales below expectations for the holiday quarter.Shares of EBay, which also expects fourth-quarter profit marginally above analysts’ estimates, rose as much as 6.0% in after-hours trading. The shares have fallen 27% so far in 2018.The San Jose, California-based company has been splurging on product developments, brand marketing and making its website more user-friendly to better compete with increased competition in the online shopping sphere, while also cutting jobs to rein in costs.EBay forecast fourth-quarter adjusted profit of 67 cents to 69 cents per share and revenue of $2.85bn to $2.89bn.Analysts on average were expecting a profit of 67 cents per share and revenue of $2.90bn, according to Refinitiv data.However, EBay’s total gross merchandise volume (GMV), the value of goods sold on its websites within a certain timeframe, rose 4.8% to $22.72bn in the third quarter, but missed Refinitiv estimates of $23.40bn.The company’s profit rose to $721mn, or 73 cents per share, in the third quarter ended September 30, from $520mn, or 48 cents per share, a year earlier.Excluding items, the company earned 56 cents per share, beating estimates of 54 cents.Net revenue rose 6% to $2.65bn, in line with analyst expectations.T-MobileT-Mobile US Inc on Tuesday exceeded Wall Street’s quarterly estimates for net new phone subscribers and profit, driven by its competitive wireless plans and trade-in offers for iPhones aimed at fending off its bigger rivals.Shares of the Bellevue, Washington-based company rose over 3% to $66in extended trading.The third-largest US wireless carrier by subscribers is awaiting regulatory approval for its deal to buy smaller rival Sprint Corp as it strives for more scale to compete with Verizon Communications Inc and AT&T IncThe company still expects to close the merger in the first half of next year and has so far received approval from half of the state commissions that are reviewing the deal, T-Mobile chief executive officer John Legere said on a conference call with analysts.T-Mobile’s revenue rose to $10.84bn from $10.02bn, beating analysts’ estimates of $10.72bn, according to Refinitiv data.Its net income rose to $795mn, or 93 cents a share, in the quarter ended September 30, from $550mn, or 63 cents a share, a year earlier.The company said net income was impacted during the quarter by $53mn in costs related to the pending Sprint merger.FacebookFacebook Inc on Tuesday beat profit estimates but missed targets for growing monthly users and reported its slowest revenue growth in about six years in a quarter some investors feared would be hit harder by defections from the social media site.Facebook is keeping costs in check better than some investors anticipated but is facing challenges growing users, causing shares to swing in both directions after the third-quarter results.Shares of Facebook seesawed after the bell, falling as much as 5% and rising nearly 4% after closing on Tuesday up 2.9% at $146.22.Shares fell again after Facebook chief executive Mark Zuckerberg, on a conference call with analysts, repeated the company’s warning that shifting user behaviour would leave revenue and cost growth out of sync for “some time.”He also noted costs would continue to rise to deal with safety and security issues.Total expenses in the third quarter surged to $7.95bn, up 53% compared with a year ago. But operating margin fell only 2 percentage points from last quarter, to 42%.Facebook’s revenue was in line with expectations, when accounting for what the company said were unfavourable foreign exchange rates.Overall third-quarter revenue was $13.73bn, up 33% from the same period last year and below the $13.78bn average analyst estimate in Refinitiv data.Quarterly profit of $5.14bn, or $1.76 per share, was up 9% from the same period last year and above the average per-share estimate of $1.48.General ElectricGeneral Electric slashed its stock dividend to just a penny on Tuesday amid continued losses, and disclosed that US authorities have broadened an investigation into the company’s accounting.GE reported a third-quarter loss of $22.8bn following a massive downgrade in the value of key assets held by the ailing industrial giant, a move that sparked new scrutiny by US officials.Chief executive H Lawrence Culp, who was tapped earlier this month to try to lead a recovery, also announced a plan to split up the troubled power division and signalled that a turnaround would take time.Investors have been hopeful that Culp, an outsider to GE as the former chief executive of the conglomerate Danaher, will change the company’s fortunes and the share price initially rose in pre-market trading after the results were released.But the stock price retreated after chief financial officer Jamie Miller disclosed on the conference call that the US Securities and Exchange Commission had expanded an ongoing investigation into the company’s accounting.That includes the latest $22bn charge, the bulk of which concerns GE’s 2015 purchase of power assets from French company Alstom.GE slashed the quarterly dividend to just a penny from 12 cents previously. It had been 24 cents prior to a November 2017 cut.The loss in the latest quarter compares with profits of $1.3bn in the year-ago period and is due to a $22bn write-down announced when Culp’s surprise appointment was unveiled on October 1.Revenues fell 3.6% $29.6bn, due in part to a big drop in power, although sales were higher in most of GE’s other segments. General MotorsGeneral Motors Co yesterday posted far higher-than-expected quarterly profit and said its full-year earnings would come in at the high end of its forecast due to strong demand in North America, driven by its new pick-up trucks.GM shares jumped more than 8% in pre-market trading.The Detroit automaker was able to push through higher pricing, mostly in North America, allowing it to benefit by $1bn in the quarter and offsetting higher commodity costs.Sales of the Chevrolet Tahoe, Suburban and GMC Yukon large SUVs rose about 12%, and the company increased production of the new Chevy Silverado and GMC Sierra full-size pickup trucks.The pricing gains are “absolutely sustainable,” GM chief financial officer Dhivya Suryadevara said.“We had strong execution despite the challenges that we faced. Revenues up, profits up, margins up,” Suryadevara told reporters at the company’s Detroit headquarters.Slowing demand in China, the world’s largest auto market, has begun to hurt the auto industry, but GM still was able to report record equity income in the quarter from its operations there. With US interest rates rising and the region having seen strong industry sales for several years, many believe US demand also will begin to slow.The No 1 US automaker said it still sees a full-year profit in the range of $5.80 to $6.20 a share, but said it now expected to finish at the high end of the range with potential to finish even higher. It cited a favourable tax rate and its strong performance.GM reported third-quarter net income of $2.53bn, or $1.75 a share, compared with a loss last year of $2.98bn, or $2.03 a share. Last year’s quarter included a charge related to Europe.Excluding one-time items, GM earned $1.87 a share in the third quarter, easily beating the $1.25 analysts polled by Refinitiv estimates had expected.Revenue in the quarter rose 6.4% to $35.8bn, above the $34.85bn analysts had expected.