BHP reported impressive second-quarter production, with most commodities up strongly on both the September and previous corresponding quarters. In many cases, in percentage terms, output growth was double-digit, or better. Compared to the September quarter, sales volumes rose 10% for iron ore, 23% for copper, 20% for coking coal and 13% for aluminium – all above expectations. Strong increases are notable for being in some of the highestmargin businesses. The major exception was liquid hydrocarbons, up just 4%, and below expectations. Nickel and diamonds also fell short, but are no longer major divisional earners for BHP. In fact, the diamond…
Author: Ryan Wallace
Noble reported decent fourth-quarter earnings, with healthy sequential improvements in revenue and operating income. Contract drilling revenue increased 11% from the third quarter to $922 million while operating income increased 21% over the same time frame to $217 million, thanks to increases in operating days and day rates. Noble’s operational hiccups marred an otherwise solid performance, as following the addition of three newbuilds to the fleet as well as two other drillships returning to service following major maintenance efforts, the rigs suffered downtime due to certain components (we suspect blowout preventers). About 33% of Noble’s downtime days in the fourth…
Vodafone reported weak first fiscal half revenue due to currency issues. The firm’s reported revenue declined 7.4% year over year as the British pound strengthened against most of the other currencies where it operates. On an organic basis, Vodafone’s revenue increased 0.2%, which is close to analysts 0.8% full-year assumption. However, the mix was different from our projections. Europe as a whole struggled more than we anticipated. Germany (plus 4.2% in local currency terms) was the only major country that outperformed our expectations, while the U.K. (negative 2.7%), Italy (negative 8.2%), and Spain (negative 13.9%) were all worse. On the…
Renewable Energy Corporation’s third quarter results were unsurprisingly awful. Solar-related manufacturing remains severely distressed, and REC’s module business remains fundamentally noncompetitive, in our view. EBITDA margins in the company’s module business tumbled 20%, partially due to writing down inventories, but still firmly in negative territory even without these charges. This also marks the company’s fifth consecutive quarter of negative EBITDA margins, inclusive of charges. It took years, but REC has finally capitulated and shut down its European manufacturing footprint. That leaves its brand new Singapore facility as the lone culprit in producing these brutal results. Management isn’t considering closing this facility…
At its recent investor seminar Rio Tinto warned of an uncertain and volatile short-term outlook, nothing new there, though with an expected fourth-quarter pick-up in Chinese fixed-asset investment. Longer term, Rio remains bullish on global commodity consumption with China remaining the key driver until at least the mid-2020s.