BRUSSELS (Reuters) – ArcelorMittal (ISPA.AS), the world's top steelmaker, forecast higher shipments but lower prices in the first three months of 2010 and a core profit that could fall from a fourth-quarter figure that just missed expectations.
The firm, which has about 8 percent of the global market and capacity some three times greater than nearest rival Nippon Steel (5401.T), said it expected its EBITDA (earnings before interest, tax, depreciation and amortization) to be between $1.8 and $2.2 billion in the first quarter.
The average of a Reuters poll was $2.6 billion, albeit with a wide range of forecasts.
Chief Executive Lakshmi Mittal said 2010 would continue to be challenging, although capital expenditure would rise.
"We therefore start the year in a good position to benefit from the progressive, albeit slow, recovery that is underway," he said in a statement.
ArcelorMittal said its shipments were expected to be higher in the first quarter of this year than at the end of 2009, but it would face lower average selling prices and increased costs. Net debt was expected to increase over the period.
EBITDA was $2.1 billion in the final quarter of 2009, against the average $2.23 billion forecast of a Reuters poll of 21 analysts. The company had given a range of $2.0 to $2.4 billion in October.
(Reporting by Philip Blenkinsop; Editing by Sharon Lindores, John Stonestreet)
Tuesday, February 9, 2010
ArcelorMittal sees little improvement in first quarter
BHP beats forecasts, cautious on China demand
MELBOURNE (Reuters) – Top global miner BHP Billiton (BHP.AX) signaled caution over a sustained global recovery and held off from a share buyback after reporting its weakest first-half profit in four years. BHP's July-December profit nevertheless beat market forecasts and was 24 percent stronger than in the previous half, spurring the miner to raise its dividend slightly, pushing its shares up more than 3 percent.
"The momentum's the important factor," said Tim Schroeders, a portfolio manager at Pengana Capital, which owns BHP shares.
"There should be some more good news over the next few months with prices for iron ore and coal appearing as though they'll go up, which should further buoy profits going forward."
Fund managers said BHP was wise to hold on to its cash instead of launching a share buyback, which analysts had flagged might be possible, as the global outlook remained uncertain and it had $12 billion worth of expansion projects underway.
"With such a large number of reinvestment opportunities, they're just going to play the conservative angle until they gain more confidence in the global economic recovery," said Adam Dixon, a portfolio manager at Ausbil Dexia.
BHP (BLT.L) warned the pace of monetary tightening and the rate of loan growth for commodity-intensive sectors in China, its biggest customer, would be critical, and was wary about the speed and strength of recovery in developed economies.
"We do not expect China to stop lending," BHP said. "However, reduced credit liquidity in key segments of the commodity market may have a flow-on impact on prices."
At the same time, CEO Marius Kloppers highlighted China's roaring demand for iron ore, which has driven up spot prices <.IO62-CNI=SI> to more than double the benchmark price.
"So that would indicate there is extremely strong demand on the back of China's iron ore imports, surprising everybody to the upside in the last six months," he told reporters.
BUYBACK POSSIBLE
Analysts expect a sharp turnaround in BHP's second-half profit, which could result in contract price hikes of about 30 percent for iron ore and more than 50 percent for coking coal.
The company highlighted its low gearing of 15 percent with net debt of $7.9 billion, flagging that it may be in a position to launch a share buyback in the future.
"Our strong balance sheet continues to give us significant flexibility to progressively grow production capacity, return to shareholders and opportunistically consider acquisitions."
Growth projects cover iron ore, alumina, thermal coal, oil and gas, with potash and uranium expansions in the pipeline.
Kloppers played down speculation about potential takeovers, saying the main focus was its proposed $116 billion iron ore production joint venture with Rio Tinto (RIO.AX)(RIO.L), set to save the two companies more than $10 billion.
"We continue to view this as the most value-adding acquisition that can be done in the mining industry," he said.
Rio and BHP face a big hurdle winning approval from regulators in Europe and China as steelmakers oppose allowing the world's No.2 and No.3 iron ore miners to link their production. Their combined annual output of more than 350 million metric tons would overtake Brazil's Vale (VALE5.SA).
BHP's July-December underlying profit before one-offs fell 7 percent to $5.70 billion, beating analysts' forecasts of $5.1 billion as coal and aluminum earnings were better than expected.
BHP's shares rose as much as 3.5 percent after the result but drifted off to close up 0.1 percent at A$39.88.
Hit by weaker iron ore contract prices set last year after demand slumped, earnings from iron ore, its biggest business, were cut in half to $2.09 billion. Base metals earnings were back in the black at $2.5 billion.
Rival Xstrata (XTA.L), the world's biggest thermal coal exporter, said on Monday its full-year profit slid 41 percent, but it resumed paying dividends, reflecting its confidence in recovering commodities demand.
Rio Tinto posts its half-year results on Thursday.
(Editing by Ian Geoghegan and Mark Bendeich)
Honda expands airbag recall as more Toyotas probed
Honda Motor Co said it would recall another 440,000 cars around the world for faulty airbags as rival Toyota Motor Corp faced further probes over its largest-ever safety crisis.
Honda, Japan's No.2 automaker, said the faulty airbags had previously been linked to one fatality and a total 11 injuries in the United States, but no accidents elsewhere.
While auto recalls are not uncommon and the size of Honda's is not massive, it comes at a sensitive time for the industry.
Automakers are struggling to draw customers back to showrooms after a brutal downturn during the financial crisis, and Toyota, the world's largest carmaker, is facing a storm of criticism over safety issues and its response to them.
In the latest of a string of embarrassing product problems for Toyota, U.S. regulators said they are reviewing dozens of complaints about potential steering problems in newer Toyota Corollas.
The National Highway Traffic Safety Administration (NHTSA) said it is discussing the matter with Toyota to see if a formal investigation is warranted, a standard procedure when reviewing complaints.
Toyota expanded its largest ever recall on Tuesday, including more than 400,000 of its latest version Prius and other new hybrid models due to braking problems. It also recalled more than 7,300 late model Camrys in the United States for an unrelated braking problem.
That comes on top of some 8.1 million vehicles recalled for problems with slipping floormats and sticking accelerator pedals that have been linked to crashes that killed at least 19 people.
A U.S. congressional committee postponed a hearing scheduled for Wednesday to examine the recalls and Toyota's response due to a snowstorm expected to hit Washington.
Toyota President Akio Toyoda said on Tuesday he may travel to the United States next week to tackle criticism that his company moved too slowly on earlier recalls.
Toyota faces potential litigation over the crashes linked to the problem of unintended acceleration as well as class-action lawsuits over the brake problems with the Prius.
INFLATING RECALLS
Honda's move comes on top of a recall first announced in November 2008 for 4,200 Accord and Civic sedans due to faulty airbag inflators, and expanded last June to cover an additional 510,000 vehicles globally.
Ongoing investigation had determined the defect was caused by insufficient stamping pressure during production of the inflator propellant and not by the propellant's excessive moisture intake as previously believed, Honda said.
The airbags are made by the U.S. unit of Japan's Takata Corp, a Honda spokesman said. A spokesman at the supplier said the company was not aware of any defect in airbags it supplies to other automakers.
The latest recall applies to 2001 and 2002 model-year Accord, Civic, Odyssey, CR-V, Pilot and 2002 Acura TL and CL vehicles in the United States, as well as the Inspire, Saber and Lagreat in Japan. All vehicles are made at Honda's U.S. and Canadian plants.
Last month, Honda announced a global recall of about 646,000 cars for a fault with a window switch.
Some analysts said automakers regularly make recalls, and media reactions to recent cases have been somewhat overblown.
"While the way automakers handle recalls is important, I think people should be careful not to overreact to every single recall," said Yoshihiko Tabei, chief analyst at Kazaka Securities.
"Rather, my concern for the auto industry is their earnings for the next financial year, given the absence of the boost they enjoyed from government incentives this year."
Honda shares eased 0.2 percent in Tokyo, while shares of Toyota, which lost about a fifth of their value since late January, edged up 0.3 percent.
(Additional reporting by Taiga Uranaka in TOKYO; David Bailey and Bernie Woodall in DETROIT; John Crawley in WASHINGTON, Writing by Lincoln Feast; Editing by Ian Geoghegan)
Tax credits, Medicare fix in Senate jobs bill
WASHINGTON (Reuters) – Highway funding and tax breaks for hiring workers figure prominently in a jobs-creation bill that Democrats and Republicans in the U.S. Senate hope will attract rare joint support in an election year, lawmakers said on Tuesday.
The bill, likely to be less costly and more bipartisan than the one passed by the House of Representatives, also extends unemployment benefits and postpones a scheduled 20 percent cut in payments to doctors under the Medicare health insurance program for the elderly.
The Senate legislation, which has yet to be formally introduced, faces more than the usual procedural hurdles as a record snowstorm has paralyzed Washington and made it difficult for many lawmakers to get to work.
Senate Democratic leader Harry Reid initially hoped to finish the bill this week but his optimism on the timing waned over the day as another major snowstorm hit the Washington area and forced the Senate to cancel Wednesday's session.
Reid, in remarks on the Senate floor, said he doubted senators would be able to hold any votes this week because of the weather. The Senate is in recess next week, which means no votes then either, but Reid expressed optimism.
"Despite the storm, we're going to make progress on the jobs bill," he said.
Reid said he had "a good conversation" on Tuesday with Senator Charles Grassley, the top Republican on the Senate Finance Committee, "and we're going to continue to work with everyone on an agreement to move forward with this matter."
Senate Republican Whip Jon Kyl praised what appeared to be a rare outburst of congressional bipartisanship but said he did not expect a vote this week on the jobs legislation.
"Something might be written this week to go out as a draft to everybody. But it will not be acted on this week. No way," Kyl told reporters, explaining that Republicans would need time to study the provisions.
The Senate's top Republican, Minority Leader Mitch McConnell, said the jobs legislation would carry a price tag of roughly $80 billion. That would be about half the size of the $155 billion package that Democrats in the House passed in December with no Republican support.
Toyota is running apologetic TV ads and vowing to win back customers'
It's part of an all-out drive by the world's biggest auto manufacturer to redeem its once unassailable brand — hit anew on Tuesday as Toyota's global recall ballooned to 8.5 million cars and trucks. The day's safety recall of 440,000 of its flagship Prius and other hybrids, plus a Tokyo news conference where the company's president read a statement in English pledging to "regain the confidence of our customers," underscored a determination to keep buyers' faith from sinking to unrecoverable depths.
In Washington, facing congressional inquiries and government investigations, Toyota through its lawyers and lobbyists is working full-speed to salvage its reputation. The confidential strategy — Toyota will say little publicly about its efforts — includes efforts to sway upcoming hearings on Capitol Hill and is based on experiences by companies that have survived similar consumer and political crises — and those that haven't.
Rep. Bart Stupak, D-Mich, said Toyota representatives visited his offices seeking to learn all they could.
"They're probing us. 'What are you going to ask us, where are you going with this whole thing?'" said Stupak, who is chairman of a House subcommittee looking into Toyota's problems.
Toyota, which reported spending more than $4 million on lobbying last year, declined to discuss details of its plans. The company has "beefed up our team" by hiring additional lobbyists, lawyers and public relations experts to "work with regulators and lawmakers collaboratively towards a successful recall effort, ensuring proper, diligent compliance," spokeswoman Cindy Knight said in an e-mail to The Associated Press.
Rough headlines for Toyota continued Tuesday. In other developments:
_State Farm, the largest U.S. auto insurer, said it had informed federal regulators late in 2007 about growing reports of unexpected acceleration in Toyotas. That disclosure raised new questions about whether the government missed clues about problems. Reps. Henry Waxman, D-Calif., and Stupak wrote insurance executives on Tuesday seeking information on any warnings they may have provided the government about unintended acceleration in Toyotas.
_Congressional investigators cited growing evidence that not all the causes of Toyota's acceleration problems have been identified. A staff memo from the House Oversight and Government Reform Committee, which had planned an oversight hearing for Wednesday, said there was substantial evidence that remedies such as redesigned floor mats have failed to solve problems. The hearing was postponed until Feb. 24 due to snow in Washington.
Oil prices fell to near $73 a barrel Wednesday in Asia
Benchmark crude for March delivery was down 53 cents at $73.22 a barrel at midday Singapore time in electronic trading on the New York Mercantile Exchange. The contract jumped $1.86 to settle at $73.75 a barrel on Tuesday.
U.S. crude stocks jumped 7.2 million barrels last week, the American Petroleum Institute said late Tuesday, suggesting weak consumer demand for fuels like gasoline and heating oil. Analysts had expected an increase of 2 million barrels, according to a survey by Platts, the energy information arm of McGraw-Hill Cos.
The Energy Department's Energy Information Administration has delayed announcement of its inventory report until Friday because of snow storms. The report was expected later Wednesday.
Sluggish crude demand is weighing on oil prices as investors continue to mull over concerns about the health of the global economy.
"While China's lending restrictions and potential changes in US banking regulations were the first seeds of concern sown in the minds of investors, the latest has come about due to the short-term financing needs in Southern European countries," Barclays Capital said in a report.
"In the short-term, oil prices may be caught in between the shrapnel of negative macro sentiment yet improving fundamentals, resulting in some heightened volatility," Barclays said.
In other Nymex trading in March contracts, heating oil fell 1.1 cent to $1.9264 a gallon, and gasoline was down 0.6 cent at $1.9227 a gallon. Natural gas rose 8.5 cents to $5.375 per 1,000 cubic feet.
In London, Brent crude was down 60 cents at $71.53 on the ICE futures exchange.
Tuesday, February 2, 2010
Hollywood sees year of ‘Paranormal Activity’
The picture is more muddled than a bad script.
Hollywood kissed a pretty record in 2009 — $10.6 billion in ticket revenue, thanks, in part, to moviegoers flocking to theaters to escape their economic worries. Despite box office success, however, 2009 also was the year that some studios sat temporarily idle or even slashed jobs, production companies were shuttered, fewer films were released and DVD sales lagged.
Confused? Let’s cut to the chase. The oddly conflicting trends atop the movie industry can be partly explained in two words: Paranormal Activity. We’re talking both the movie of the same name and the ghosts of Hollywood past. Paranormal Activity,” about a house haunting told via “found” video footage, was filmed for only $11,000 yet grossed $100 million-plus for Paramount, plunking it among the year’s top 30 earners. But talk about a horror movie: That juicy-fat margin spooked many studio chiefs, signaling a massive economic shift was underway inside their backlots.
With “Paranormal Activity” taking an unprecedented underground route to blockbuster heights, “Many in Hollywood realized that their old rules don’t apply,” said Tim Gray, editor of Variety. “But what are the new rules? Nobody knows.”
Last year was a game-changing year for Hollywood, and no one quite knows what the future holds for the movie industry.
“Every 20 or 30 years, there is a revolution in the way that entertainment is delivered,” Gray said. “It happened with the ‘talkies,’ with the popularization of radio, the introduction of television and home video. And it’s happening now. There is both excitement and fear ... a sense [of]: ‘I know something is happening but I don’t know what to do about it, and I don’t want to get left behind.’ ”
New revenue modelWhat it comes down to is not what the studio thinks matters but what consumers will pay for, said Jeff Cox, chief executive officer of ARSGroup, an Evansville, Ind.-based communication research agency. As DVD sales — a major source of revenue for studios — continue to slide (down 13 percent in 2009), and Video on Demand grabs a tighter toe-hold with movie lovers, Cox predicted: “a whole new revenue model” will shape the film industry.
Need hard evidence? Look again at “Paranormal Activity,” which was boosted largely by Internet chatter and friend-to-friend reviews spread via Facebook and Twitter.
“The explosion of ‘Paranormal Activity’ proved to motion picture studios that word-of-mouth could make or break a film and that viral marketing is a very low cost way to entice people to the movie theaters,” said Marjorie DeHey Daleo, president of MediaVix, a Los Angeles company that specializes in managing brand relationships.
The reason is as simple as a neighborly chat. People trust their friends’ film reviews — and their online friends’ opinions — more than they do slick movie advertising, according to a July 2009 study by the Nielsen Company. Nine out of 10 Americans rely most on the consumer recommendations of folks they know — or even people they know only through Facebook — while 62 percent trust TV ads, and only 52 percent are swayed by movie ads, the study found.Of course, that shift can work to the advantage of the studios — especially those, like Paramount — that already are attracting audiences through social media pipelines. Simply put, Facebook and Twitter offer cheap advertising. That dynamic also played into the industry’s glowing, albeit somewhat misleading, 2009 revenue numbers, some experts said.
“A generation ago, publicizing and marketing a movie on a global scale involved hundreds of people spending thousands of man-hours around the world — advertising agencies in every continent, stars hustling to interviews in every major market, millions of dollars to take out ads in major publications. Today, five people can set up a Web site and do it all from the comfort of an air-conditioned office,” said Mario Almonte, a New York PR strategist and Huffington Post blogger.
