Market Downturn Gives Lower Earnings

Elkem’s result for the second quarter of 2019 was negatively impacted by a steep decline in silicones prices in China following the implementation of additional US tariffs. In addition, the upstream silicones plant in France had a delayed start up after the maintenance stop in April/May, which resulted in lower production and sales. The current market sentiment is weak, particularly in automotive and construction. The downturn in these markets largely explains the weaker earnings and outlook for the group.

Total operating income for the second quarter 2019 was NOK 5,882 million, which was down 17% compared to second quarter 2018. EBITDA amounted to NOK 647 million in the quarter, down from NOK 1,971 million in the corresponding quarter last year. Earnings per share (EPS) was NOK 0.25 in the quarter.

“Prices for silicone products in China picked up in March after Chinese New Year but were hit by a new steep decline in May after the implementation of additional US tariffs. The tariffs created significant market uncertainty and Chinese customers decided to temporarily halt orders in May and June. The demand in China seems to be picking up again in July, but at low price levels,” says Helge Aasen, CEO of Elkem.

“Prices for specialty silicones and foundry alloys were stable, but sales volumes have been negatively impacted by weak market conditions, particularly in automotive and construction. The production problems in France following the regular maintenance stop in April and May, has also negatively impacted the results in the quarter. The delayed start-up resulted in lower production and sales of upstream intermediaries and downstream specialty products. The negative financial impact of the maintenance stop, and subsequent delayed start-up, amounted to NOK 185 million”, says Aasen. 

The accelerated improvement programme, with a target of NOK 500 million, is progressing according to plan and the realised effects by end of second quarter amounted to NOK 148 million. Based on the weak market sentiment Elkem will further reinforce measures to reduce costs and improve working capital.

The group’s equity as at 30 June 2019 amounted to NOK 12,637 million, which gave a ratio of equity to total assets of 44%. Net interest-bearing debt was NOK 5,110 million, which gave a ratio of net interest-bearing debt to EBITDA of 1.3 times. Elkem had cash and cash equivalents of NOK 5,365 million as at 30 June 2019. The financial position is strong.

The market sentiment continues to be weak which creates uncertainty going forward. This is also expected to affect demand for specialty products, particularly within silicones and foundry alloys. The demand for silicones in China is expected to pick up during third quarter.

EBITDA for the third quarter is expected to be in line with the second quarter.

About Elkem ASA
Founded in 1904, Elkem is one of the world’s leading suppliers of silicon-based advanced materials with operations throughout the value chain from quartz to specialty silicones, as well as attractive market positions in specialty ferrosilicon alloys and carbon materials. Elkem is a publicly listed company on the Oslo Stock Exchange, and is headquartered in Oslo. The company has 6200 employees with 27 production sites and sales offices in a total of 28 countries worldwide. In 2018 Elkem had revenues of 25.9 billion NOK. To learn more, please visit www.elkem.com

EasyJet Q3 Revenue Rises

Low-cost airline easyJet Plc (ESYJY.PK, EZJ.L) reported Thursday that its third-quarter total revenue increased 11.4 percent from the year-ago period to 1.76 billion pounds.

Passenger revenue for the quarter increased by 10.7 percent to 1.39 billion pounds and ancillary revenue increased by 14.3 percent to 374 million pounds.

Passenger numbers in the third quarter increased 8 percent to 26.4 million, driven by an increase in capacity of 10 percent to 28.8 million seats.

Load factor decreased, as anticipated, by 1.7 percentage points to 91.7 percent, due to late yield initiatives as well as high prior-year comparatives due to industrial action in France and Monarch’s bankruptcy.

Total revenue per seat increased 0.7 percent at constant currency, including a strong late yield performance which benefited from easyJet’s revenue initiatives as well as positive ancillary revenue growth and a solid Easter performance.

Looking ahead to fiscal 2019, easyJet forecast its headline profit before tax to be between 400 million pounds and 440 million pounds, in line with market expectations. The company also affirmed its outlook for full-year capacity to grow by about 10 percent.

Further, easyJet maintained its outlook for second-half revenue per seat at constant currency to be slightly down, and capacity to grow by about 7 percent.

easyJet also said that Peter Bellew will join the company as Chief Operating Officer. He will be a member of the Airline Management Board and will report to easyJet’s CEO, Johan Lundgren.

Bellew joins the airline from Ryanair where he has been Chief Operations Officer since December 2017, responsible for all aspects of Ryanair’s flight operations.

BOA Merrill Lynch beats Wall Street forecasts with record second-quarter earnings

  • Bank of America Merrill Lynch reported record second-quarter earnings Wednesday that beat analysts’ profit expectations.

Bank of America Merrill Lynch posted a record $0.74 in second-quarter earnings per share, outpacing the $0.71 expected by Wall Street analysts surveyed by Bloomberg. Revenue and net income rose in the consumer banking and global wealth and investment management divisions, but fell in the global banking and global markets segments. 

Here are the key numbers:

  • Adjusted net income: $7.35 billion versus the $6.81 billion estimate
  • Earnings per share:  $0.74 versus the $0.71 estimate
  • Revenue: $23.08 billion versus the $23.16 billion estimate
  • Expenses: $13.26 billion

“Our commitment to responsible growth resulted in the best quarter and first-half year of earnings in our company’s history, said BAML CEO Brian Moynihan in the statement. “In the second quarter, we generated $7.3 billion in earnings and delivered $7.9 billion back to shareholders. Our return on assets was over 120 basis points and our return on equity was well above the firm’s cost of capital.”

“Our view of the economy reflects the activity by the one-in-two American households we serve, which points to a steadily growing economy,” he added. “We see solid consumer activity across the board, with spending by Bank of America consumers up five percent this quarter over the second quarter of last year.”