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Tag: Earnings reports

  • Starbucks reports record Q4 revenue despite China declines

    Starbucks reports record Q4 revenue despite China declines

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    Pumpkin spice pumped up Starbucks‘ sales in its fiscal fourth quarter, and the company said it’s confident that momentum will carry on into next year.

    Starbucks’ revenue rose 3% to a record $8.41 billion in the July-September period. The company said Thursday it saw its highest-ever sales week in September when it introduced its fall drinks. Sales of both hot and cold pumpkin spice drinks jumped 17% during the quarter.

    Starbucks shares rose nearly 2% in after-hours trading.

    Customers shrugged off higher prices and continued to pay extra for specialty drinks and snacks. Starbucks noted that 60% of the beverages it sells are now customized with flavor shots, foam and other extras.

    “There is an affordable luxury to Starbucks that our customer base has been willing to support,” Starbucks’ interim CEO Howard Schultz said Thursday in a conference call with investors. Schultz said the company raised prices around 6% over the last year.

    The Seattle coffee giant said its same-store sales —— or sales at locations open at least a year —— were up 7% worldwide in the July-September period. That beat Wall Street’s forecast of a 4.2% increase, according to analysts polled by FactSet.

    North American strength offset weakness in China, where pandemic lockdowns are still impacting sales.

    Same-store sales jumped 11% in North America, driven by a 10% increase in spending per visit. Same-store sales in China, Starbucks’ second-largest market after the U.S., fell 16%. Still, Starbucks noted that was significantly better than the third quarter, when China’s same-store sales plunged 44%.

    “We are encouraged by the early signs of recovery we saw in China,” Schultz said.

    Starbucks said it expects global same-store sales will rise between 7% and 9% in its 2023 fiscal year, compared to 8% in the fiscal year that just ended. Schultz said he’s confident the company can meet that goal because of its strong rewards program and its increasingly younger and very loyal customer base. Schultz said more than half of Starbucks’ customers are Millennials or Generation Z.

    Starbucks said its net income fell 50% to $878 million in the three-month period that ended Oct. 2 as it invested in store remodels and employee wages. Adjusted for one-time items, the company earned 81 cents per share. That also beat Wall Street’s forecast of 72 cents.

    Starbucks has been spending heavily on a plan to boost U.S. store efficiency and employee morale as it tries to head off a growing unionization movement, which it opposes. At least 249 of Starbucks’ 10,000 company-owned U.S. stores have voted to unionize since late last year.

    At an investor meeting in September, Starbucks announced it will invest $450 million next year to make its North American stores more efficient and less complex. Employees have struggled with rising demand for customizable cold drinks —— they now make up 76% of U.S. drink sales —— in store kitchens designed for simpler hot drinks.

    Sara Trilling, Starbucks’ executive vice president for North America, said the company has already rolled out hand-held cold foamers, new espresso machines and new warming ovens to the majority of its company-owned U.S. stores.

    The company also announced a $1 billion investment in employee wages and benefits last fall and added $200 million more for pay, worker training and other benefits in May.

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  • Oil giant Saudi Aramco has $42.4B profit in third quarter

    Oil giant Saudi Aramco has $42.4B profit in third quarter

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    DUBAI, United Arab Emirates — Oil giant Saudi Aramco on Tuesday reported a $42.4 billion profit in the third quarter of this year, buoyed by the higher global energy prices that have filled the kingdom’s coffers but helped fuel inflation worldwide.

    The oil firm’s profits will help fund the kingdom’s assertive Crown Prince Mohammed bin Salman’s plans for a futuristic city on the Red Sea coast, but also comes as the U.S. grows increasingly frustrated by higher prices at the pump chewing into American consumer’s wallets.

    Those tensions yet again have chilled relations between Riyadh and Washington before the Nov. 8 midterm elections.

    In a note to investors, the predominantly state-owned oil company said its average barrel of crude sold for $101.70 in the third quarter — up from $72.80 at the same point last year. It’s Aramco’s second-largest quarterly profit in its history, just before its second-quarter results this year saw a profit of $48.4 billion.

    It put its profits so far in 2022 at $130.3 billion, compared to $77.6 billion in 2021.

    “While global crude oil prices during this period were affected by continued economic uncertainty, our long-term view is that oil demand will continue to grow for the rest of the decade given the world’s need for more affordable and reliable energy,” Aramco CEO Amin H. Nasser said in a statement.

    Aramco will keep its dividend this quarter at $18.8 billion, the world’s highest.

    Benchmark Brent crude traded just shy of $95 a barrel Tuesday. The sliver of Aramco that the kingdom has put on Riyadh’s Tadawul stock market stood at $9.29 a share before trading Tuesday — putting its valuation at just over $2 trillion. Only Apple’s valuation, at $2.44 trillion, is higher.

    OPEC and a loose confederation of other countries led by Russia agreed in early October to cut its production by 2 million barrels of oil a day, beginning in November.

    OPEC, led by Saudi Arabia, has insisted its decision came from concerns about the global economy. Analysts in the U.S. and Europe warn a recession looms in the West from inflation and subsequent interest rate hikes, as well as food and oil supplies being affected by Russia’s war on Ukraine.

    In Washington, anger has grown with Saudi Arabia, particularly from President Joe Biden, who traveled to the kingdom in July and shared a fist bump with Crown Prince Mohammed. Biden recently warned the kingdom that “there’s going to be some consequences for what they’ve done.”

    Saudi Arabia lashed back, publicly claiming the Biden administration sought a one-month delay in the OPEC cuts that could have helped reduce the risk of a spike in gas prices ahead of the U.S. midterm elections.

    Biden on Monday separately accused oil companies of “war profiteering” as he raised the possibility of imposing a windfall tax on American energy companies if they don’t boost domestic production.

    ———

    Follow Jon Gambrell on Twitter at www.twitter.com/jongambrellAP.

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  • Hard-drive maker Seagate Tech faces China sanctions warning

    Hard-drive maker Seagate Tech faces China sanctions warning

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    BEIJING — Seagate Technology said Thursday the U.S. Department of Commerce has warned it may charge the computer hard-drive maker with violating restrictions on exports of high-tech products to China.

    The company said in an SEC filing that it rejected the allegations. It says its hard disc-drives are not subject to U.S. Export Administration regulations, but troubles over the issue could affect its business.

    “Seagate believes it has complied with all relevant export control laws and regulations,” it said.

    Seagate said the allegation is over sales between August 2020 and September 2021 to “a customer and its affiliates.” It did not name the customer, however, Seagate is a major supplier of hard drives to telecoms equipment giant Huawei Technologies, a major target of U.S. export controls.

    The other major supplier, Western Digital, stopped sales to Huawei in 2019, not long after it had signed a strategic partnership with the Chinese company, the biggest maker of network gear for phone and internet carriers.

    Huawei did not immediately respond to a request for comment.

    In reporting lower profit and revenues for its fiscal first quarter, Seagate said it was reducing its headcount by 3,000 people as part of a restructuring. It cited global uncertainties and slower demand.

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  • Facebook parent Meta’s revenue, profit decline amid ad slump

    Facebook parent Meta’s revenue, profit decline amid ad slump

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    Facebook parent Meta on Wednesday reported that its revenue declined for a second consecutive quarter, hurt by falling advertising sales as it faces competition from TikTok’s wildly popular video app.

    The quarter’s weak results raised fresh questions about whether Meta’s plans to spend $10 billion a year on the metaverse — a concept that doesn’t quite exist yet and possibly never will — is prudent while its main source of revenue is faltering.

    The quarterly results from Meta Platforms Inc. sent its stock tumbling 19% in after-hours trading to $105.20. If the sell-off holds through Thursday’s regular trading day, it will be the lowest it’s been since 2016. The stock closed Wednesday down 61% for the year.

    Meta’s disappointing results followed weak earnings reports from Google parent Alphabet Inc. and Microsoft this week. The Menlo Park, California, company earned $4.4 billion, or $1.64 per share, in the three month period that ended Sept. 30. That’s down 52% from, $9.19 billion, or $3.22 per share, in the same period a year earlier.

    Analysts were expecting a profit of $1.90 per share, on average, according to FactSet.

    Revenue fell 4% to $27.71 billion from $29.01 billion, slightly higher than the $27.4 billion that analysts had predicted.

    Some of the company’s investors are concerned Meta is spending too much money and confusing people with its focus on the metaverse, a virtual, mixed and augmented reality concept that few people understand — while it also grapples with a weakening advertising business.

    “Meta has drifted into the land of excess — too many people, too many ideas, too little urgency,” wrote Brad Gerstner, the CEO of Meta shareholder Altimeter Capital, earlier this week in a letter to Meta CEO Mark Zuckerberg. “This lack of focus and fitness is obscured when growth is easy but deadly when growth slows and technology changes.”

    In addition to an accelerating revenue decline, Meta also forecast weaker-than-expected sales for the current quarter, further raising worries that the revenue slump is more of a trend than an aberration.

    “While we face near-term challenges on revenue, the fundamentals are there for a return to stronger revenue growth,” Zuckerberg said in a statement. “We’re approaching 2023 with a focus on prioritization and efficiency that will help us navigate the current environment and emerge an even stronger company.”

    Meta said it expects staffing levels to stay roughly the same as in the current quarter — a departure from previous years’ double-digit workforce growth. The company had about 87,000 employees as of Sept. 30, an increase of 28% year-over-year.

    “To return to stronger growth, Meta needs to turn its business around,” said Insider Intelligence analyst Debra Aho Williamson. “As Facebook Inc., it was a revolutionary company that changed the way people communicate and the way marketers interact with consumers. Today it’s no longer that innovative groundbreaker.”

    She added that “Meta would benefit from less priority on the metaverse and more on fixing its core business.”

    Meta’s Reality Labs unit, which includes its metaverse and virtual reality efforts, had an operating loss of $3.67 billion in the third quarter, compared with a loss of $2.63 billion a year earlier. Its revenue was $285 million.

    Meta said it expects Reality Labs operating losses in 2023 to “grow significantly year-over-year.”

    Despite the revenue decline, Meta grew its user base. Facebook’s monthly active users were 2.96 billion as of Sept. 30, up 2% from a year earlier. And 3.71 billion people logged in to at least one of Meta’s family of apps — Facebook, Instagram, WhatsApp or Messenger — up 4% year-over-year.

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  • American Airlines posts $483 million profit for late summer

    American Airlines posts $483 million profit for late summer

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    DALLAS — The three biggest U.S. airlines enjoyed a boffo summer, reaping a combined profit of more than $2 billion as Americans jammed on to planes despite fares that were sharply higher than a year ago.

    What pandemic?

    American Airlines said Thursday that it earned $483 million on record-breaking revenue that more than offset higher fuel costs in the third quarter. American predicted that profit will continue to exceed Wall Street expectations during the holiday-packed remainder of 2022.

    The results from American, however, weren’t quite as grand as figures from its more prosperous rivals. United Airlines reported a $942 million profit on Tuesday, and Delta Air Lines posted third-quarter earnings of $695 million last week.

    Clearly, many people are eager to travel after most were grounded during the early part of the pandemic. Executives at all three big U.S. airlines said they see no indication that consumer concerns about inflation and the economy are hurting ticket sales.

    “American’s third-quarter results, including our record revenue performance, are significant considering the macroeconomic uncertainty facing so many people,” CEO Robert Isom said on a call with analysts and reporters. “Demand remains strong.”

    American, which is based in Fort Worth, Texas, predicted that fourth-quarter profit will be between 50 cents and 70 cents per share, which would beat Wall Street’s forecast of 19 cents per share.

    U.S. air travel has roared back from pandemic lows in early 2020. Last Sunday, the Transportation Security Administration screened nearly 2.5 million travelers on a single day, the busiest day at the nation’s airports since February 2020.

    Travel is booming despite a 43% leap in airfares in the past year, according to government figures.

    One reason fares are high is that the number of flights has not returned to pre-pandemic levels, leaving consumers vying for fewer seats. American, for example, did nearly 10% less flying in the third quarter than in the same period of 2019.

    American said it plans to run at 95% to 100% of 2019 levels next year. That is in line with Delta, which expects to restore its full schedule by next summer. United recently announced it will expand European flying next summer.

    Isom said American could add more flights next year but will take a cautious approach. American, Delta and others canceled flights earlier this year when they didn’t have enough staff, particularly pilots.

    “We are going to make sure that we don’t outpace what we have, either in terms of aircraft deliveries if that’s the constraint, or if it’s pilots at a regional level or our ability to train pilots” at American, he said.

    For the third quarter, American said its adjusted profit, which excludes certain items, was 69 cents per share, compared with a forecast of 54 cents per share by analysts surveyed by FactSet.

    Revenue rose to $13.46 billion, slightly higher than the $13.36 billion predicted by analysts. American, which has a major hub operation in Miami and operates many flights to the Caribbean, said it lost about $40 million in revenue because of hurricanes Fiona and Ian in September.

    Also Thursday, the parent of Alaska Airlines reported a $40 million third-quarter profit on record revenue of $2.8 billion. The Seattle-based airline said, however, that non-fuel costs in the fourth quarter will be higher than expected because of three new contracts with union labor groups including pilots.

    Shares of American Airlines Group Inc. closed down 4% and Alaska Air Group Inc. dropped 5%, while shares of Delta, United and Southwest dipped by smaller percentages.

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  • Global stocks lower amid British political turmoil

    Global stocks lower amid British political turmoil

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    BANGKOK — Global stock markets declined Thursday as the British prime minister faced demands to quit and Japan reported its 14th straight monthly trade deficit.

    London and Frankfurt opened lower and Shanghai, Tokyo and Hong Kong declined. Oil rose more than $1 per barrel.

    British Prime Minister Liz Truss faced demands to resign following chaotic scenes in Parliament during a vote on a fracking ban. Truss has been defiant despite financial market turmoil caused by multiple policy U-turns.

    Truss “precipitated this political crisis by triggering the market crisis,” said Michael Every of Rabobank in a report. Britain is “deep in an emerging-market rut.”

    In early trading, the FTSE 100 in London was off 0.2% at 6,914.12 and the DAX in Frankfurt fell 0.7% to 12,655.08. The CAC 40 in Paris was little-changed at 6,041.18.

    On Wall Street, the future for the benchmark S&P 500 index was off 0.3%. That for the Dow Jones Industrial Average was up less than 0.1%.

    On Wednesday, the S&P fell 0.7%, breaking two days of gains. The Dow slipped 0.3% and the Nasdaq composite sank 0.9%.

    In Asia, the Nikkei 225 in Tokyo tumbled 0.9% to 27,006.96 after September imports ballooned 46% over a year earlier due to a surging oil prices and a weak yen. The Japanese currency is trading at a 32-year low against the dollar.

    The yen weakened to 149.82 to the dollar from Wednesday’s 149.81 yen.

    The dollar has gained against other currencies following repeated interest rate hikes by the Federal Reserve, which increases the return on assets valued in dollars. Investors also see the U.S. currency as a stable haven amid global uncertainty.

    “Rising U.S. yields and the strong U.S. dollar are the sledgehammers pounding global equities lower,” said Stephen Innes of SPI Asset Management in a report.

    The Shanghai Composite Index lost 0.3% to 3,035.05 and the Hang Seng in Hong Kong fell 1.4% to 16,280.22.

    The Kospi in Seoul retreated 0.9% to 2,218.09 and Sydney’s S&P-ASX 200 sank 1% to 6,730.70.

    On Wednesday, Wall Street pulled back as investors reviewed earnings and Treasury yields climbed to multiyear highs.

    Netflix soared 13% and United Airlines rose 5% after releasing quarterly results. Abbott Laboratories, M&T Bank and others sank.

    The yield on the 10-year Treasury, which influences mortgage rates, climbed to 4.13%, its highest level since June 2008. It was at 4.02% late Tuesday.

    The yield on the two-year Treasury, which responds to expectations of future Fed action, rose to 4.54% from 4.43%.

    The Fed and central banks in Europe and Asia have been raising interest rates to cool inflation that is at multi-decade highs. Investors worry they might tip the global economy into recession.

    Inflation in Britain hit a 40-year high of 10.1% over a year earlier in September.

    In energy markets, benchmark U.S. crude rose $1.56 to $86.08 per barrel in electronic trading on the New York Mercantile Exchange. Brent crude, the price basis for international oil trading, advanced $1.34 to $93.75 per barrel in London.

    The euro gained to 97.83 cents from Wednesday’s 97.68 cents.

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  • Wall Street wavers up and down as more earnings roll in

    Wall Street wavers up and down as more earnings roll in

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    NEW YORK — Stocks wavered between gains and losses in early trading on Wall Street, leaving indexes mixed as another batch of companies reported their latest quarterly results.

    Several companies including Netflix and United Airlines rose sharply while others, including Abbott Laboratories and M&T Bank, sank.

    The S&P 500 shook off an early slump and was little changed as of 10:23 a.m. Eastern. The Dow Jones Industrial Average rose 56 points, or 0.2%, to 30,582 and the Nasdaq fell 0.1%. Smaller companies fell more than the rest of the market.

    Stocks are coming off of two days of gains, but trading remains unsteady overall. Treasury yields rose back near multi-year highs. Crude oil prices rose slightly.

    Homebuilders and other companies tied to the industry fell following a disappointing report on the housing industry. Construction on new homes declined more than expected in September. Homebuilder Lennar fell 4.4% and home-improvement retailer Lowe’s shed 5.1%.

    The yield on the 10-year Treasury, which influences mortgage rates, rose to 4.08% from 4.02% late Tuesday. The yield on the two-year Treasury, which tends to track expectations for future Federal Reserve action, also rose to 4.52% from 4.43%.

    U.S. crude oil prices rose 1.2% and energy stocks made gains. Exxon Mobil rose 2.2%. The White House plans to announce another release of oil from the U.S. strategic reserve.

    Investors have been focusing on the latest round of corporate earnings this week. The latest results are being closely watched for clues about how companies are dealing with the hottest inflation in four decades and how they intend to operate through the rest of the year and into 2023.

    Netflix soared 14.7% after the company said it picked up 2.4 million subscribers during the July-September period, a comeback from a loss of 1.2 million customers during the first half of the year.

    United Airlines rose 7.2% after reporting strong third-quarter financial results. American Airlines will report its results on Thursday.

    Household goods giant Procter & Gamble rose 2.2% after also reporting strong financial results. It joined a growing list of companies, including Hasbro and Johnson & Johnson, warning investors about a strong U.S. dollar cutting into revenue. A strong dollar decreases the value of overseas sales after converting the currency. The U.S. currency is now worth more than a euro for the first time in 20 years.

    The U.S. dollar has gained strength versus currencies worldwide as inflation and recession concerns prompt investors to look for relatively stable investments. Central governments and banks worldwide are dealing with stubbornly hot inflation. British food prices rose at the fastest pace since 1980 last month, driving inflation back to a 40-year high.

    The U.S. faces its own potential recession as high prices on everything from food to clothing barely budge and the Fed raises interest rates to temper inflation.

    The Fed’s rate increases are meant to make borrowing more difficult and slow economic growth in an effort to tame inflation. The strategy risks stalling the already slowing U.S. economy and bringing on a recession.

    ——

    Joe McDonald and Matt Ott contributed to this report.

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  • Taiwan chipmaker TSMC says quarterly profit $8.8 billion

    Taiwan chipmaker TSMC says quarterly profit $8.8 billion

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    TAIPEI, Taiwan — Taiwan Semiconductor Manufacturing Co., the biggest contract manufacturer of processor chips for smartphones and other products, said Thursday that its quarterly profit rose 79.7% over a year earlier to $8.8 billion amid surging demand.

    Quarterly revenue rose 47.9% over a year ago to $19.2 billion, the company reported.

    TSMC, headquartered in Hsinchu, Taiwan, makes processor chips for brands including Apple Inc. and Qualcomm Inc. Many of their products are assembled by factories in China, which has exposed TSMC to the possible impact of U.S.-Chinese tension over technology and security.

    TSMC’s U.S.-traded shares fell 14% in value after Washington on Friday tightened restrictions on Chinese access to advanced computer chips. Those controls are based on limiting the ability of TSMC and other suppliers to use U.S. chip or manufacturing technology for Chinese customers.

    The American Embassy in Beijing didn’t immediately respond to a question about whether TSMC had received an exemption that might allow normal supplies to Chinese factories to continue.

    TSMC’s chip supplies to China already were restricted under a 2020 order by then-President Donald Trump that prohibits vendors from using U.S. technology to manufacture for Huawei Technologies Ltd., a maker of network switching gear and smartphones. Washington says Huawei is a security risk and might facilitate Chinese spying, which the company denies.

    Chipmakers are benefiting for demand for next-generation telecoms, high-performance computing and chips for use in products from cars to medical devices.

    TSMC announced plans last year to invest $100 billion over the next three years in manufacturing and research and development.

    Most semiconductors used in smartphones, medical equipment, computers and other products are made in Taiwan, South Korea and China.

    That has prompted concern among American officials about reliance on supplies that might be disrupted by conflict between China and Taiwan. They are lobbying TSMC and other chipmakers to set up factories in the United States.

    TSMC announced plans last year to build its first chip factory in Japan. The company and Sony Corp. later said they would jointly invest $7 billion in the facility.

    TSMC operates a semiconductor wafer fabrication facility in Camas, Washington, and design centers in San Jose, California, and Austin, Texas.

    The company has announced plans for a second U.S. production site in Arizona.

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