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Safran, France's aerospace company, raises its 2025 outlook following higher mid-year profits
Safran, the French aerospace company, raised its forecasts for next year after announcing higher than expected first-half earnings on Thursday. This was due to brisk demand of spare parts for jet engine. Safran, who together with GE Aerospace produce engines for Airbus medium-haul aircraft and Boeing long-haul jets reported higher maintenance profits, and its cabin interiors business, which had been struggling, saw further progress in the black. After certain adjustments, the company's closely-watched recurring operating income increased 27% to 2,51 billion euros ($2,87 billion), while revenues rose 13% to 14,77 billion euros. According to a consensus compiled by the company, analysts expected an average operating profit of 2,39 billion euros for the first half of 2014 on revenues of 14,74 billion euros. Safran has raised its forecast for the full year of the same profit measure from 4.8 to 4.9 billion euros to a range between 5.0 and 5.1 billion euro. This is an increase over a previously stated range. It forecast revenue growth of the low teens instead of 10%. Safran, which was founded 20 years ago by the merger of Snecma, a state-owned engine manufacturer, and Sagem Electronics (now part of Sagem), acquired the Collins Aerospace actuation and control business for $1.8 billion last week. The company also sold a small U.S. operation to comply with the demands of regulators for clearing Collins' acquisition. Safran estimated that the combined transactions will add between 600 and 700 million euro to the group's revenues for the remainder of the year. (1 dollar = 0.8747 euro) (Reporting and editing by Tim Hepher)
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Lufthansa announces Q2 earnings that are higher than expected
Lufthansa reported Thursday better results for the second quarter than expected. Low oil prices and currency effect were key factors. The airline also confirmed its full year guidance. Lufthansa's analyst poll revealed that the German airline reported an operating loss of 871 millions euros, compared to 805 million euro expected. This is a 27% increase compared to the 686 million euro reported for the same quarter in last year. The company said that the increased earnings were primarily due to the expansion of its flight program in the passenger business. It also attributed the improvements in earnings to the positive effects of its investment in Italy’s ITA Airways, and a doubled operating result in the logistics segment. Lufthansa said that demand for flights in the United States was also strong, despite the weakening of the U.S. Dollar. Major European airlines are watching for any possible drop in transatlantic travel, as Europeans have been reluctant to book trips this year. Delta was among the U.S. carriers that pulled their forecasts for this spring due to a weakening of travel demand following tariffs announced by President Donald Trump. European airlines have been more optimistic up to now.
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Avolta, a Swiss travel retailer, has seen its H1 sales rise by 5.7%
Avolta, the Swiss travel and F&B retailer, reported on Thursday a 5.7% increase in its first-half organic turnover. The company attributed this to a resilient performance fueled by increased passenger traffic and higher spending per traveler. The company's core turnover was 6.61 billion Swiss Francs ($8.13billion), up from 6.34 francs the year before. Basel-based firm also confirms its mid-term and full-year targets. In a press release, Chief Executive Xavier Rossinyol said, "We are pleased with the performance over the first half of the year, particularly with the softer background in North America and the challenges in the Middle East." U.S. consumer trust declined in June as a result of rising concerns about job security and economic uncertainties linked to tariffs. It has caused consumers to hesitate when making large purchases. However, vacation plans – especially international travel – remain unaffected. Travel spending is resilient, especially in the U.S., despite tougher comparisons year-over-year and cautious consumer behavior. Vontobel believes that any stabilization of domestic travel trends in the second quarter will likely boost sentiment. Analysts are optimistic about Avolta. Avolta's mid-term goals are still considered achievable thanks to its solid execution thus far. Although consumers are reducing their spending on major purchases, they continue to be willing to spend money on travel and other services. This reflects a nuanced approach marked by caution rather than retreat. Basel-based company reported that performance in North America remained largely the same as the previous year due to a decline in passenger traffic in the United States. ($1 = 0.8131 Swiss francs)
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SK Innovation reports improved refining margins for Q3, Q2 losses worsen
SK Innovation Co Ltd, the owner of South Korea’s largest refiner SK Energy said that it expected third-quarter margins for refining to improve, after losses increased in the second quarter. In a press release, SK Innovation stated that "Sales and Operating Profit fell compared to previous quarters due to difficult external environments such as global economic insecurity, tariff impact and falling oil price." It said that "further improvements are expected in refining profit margins in the third quarter. (And) easing of tariff risks, and increased sales volume in Europe for the battery business in Europe will positively impact earnings improvement." The company reported an operating loss for the period April to June of 418 billion won (about 301.20 millions dollars), compared to a loss of about 45.8 billion won one year ago. The results were lower than the average analyst's forecast of a 140 billion won (US) loss compiled by LSEG SmartEstimate. $1 = 1,387.8000 Won (Reporting and Editing by Himani Sark and Neil Fullick; Reporting by Joyce Lee and Heekyong Yay)
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Sources: Supertanker delivers oil from sanctioned Nayara Energy refinery to Vadinar
Five sources with knowledge of the situation said that the supertanker Kalliopi is currently discharging Iraqi crude oil for India's Nayara Energy. This is the first delivery of crude oil to the refiner after it was sanctioned. One source reported that more than half the two million barrels Basrah on the vessel were discharged. A second source stated that the unloading was expected to be complete on Thursday. Kpler's ship tracking data revealed that the supertanker was the first vessel to deliver crude oil to Nayara Vadinar Refinery in the last 12 days. Nayara didn't immediately respond to our request for comment. On July 18, the EU announced new sanctions against Russia and its energy industry that targeted Nayara. One source said that Nusa Merdeka has also delayed the discharge of Russian crude oil in Nayara port. The tanker, which was supposed to discharge Urals at Vadinar on July 26, has been hovering around the anchorage since then. The tanker's failure to discharge on time was not immediately apparent. Last week, the oil carrier Omni that was carrying Russian Urals crude from Nayara Energy Vadinar diverted to the port of Mundra (India) in order to discharge its cargo. Nayara has reported that its crude production at the 400,000 barrels per day site, owned in majority by Russian companies, is now between 70 and 80 percent. While product tankers loaded with fuel from Nayara Energy’s Vadinar facility are still afloat, they have not been discharged as traders and shippers avoid the issue. (Reporting and editing by Jan Harvey, Nidhi verma, Mohi narayan)
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Airbus asks Dassault to make a decision after tensions between fighters
Europe's Airbus challenged its partner Dassault Aviation on Wednesday to "decide what it wants to do" after Dassault questioned arrangements for a new fighter, in the latest sign of tensions over the Franco-German-Spanish project. Dassault Airbus, two rivals in the industry who were asked to collaborate after French President Emmanuel Macron launched the Future Combat Air System initiative (SCAF) in 2017, and the then German Chancellor Angela Merkel announced the launch of the initiative. They have been at odds over the management of the project that aims to replace the current warplanes before 2040. Last week, Dassault Aviation CEO Eric Trappier demanded a clearer leadership for the project. He accused Airbus, of interfering with the core crewed-fighter part of the Pillar One project, which is being led by Dassault, and causing delays. Dassault is representing France, and Airbus represents Germany and Spain, in this project. It is currently in an early design phase known as Phase 1B. A second phase will be launched next year, aimed at building the demonstrator. Airbus CEO Guillaume Faury said to reporters on Wednesday at a results mid-year briefing that "there is an agreed governance" for the launch Phase 1B. We are part of this governance. He said, "If there is an industrial partner in one of the pillars who is unhappy with the governance they can decide what to do. I will leave it up to them." "But we will continue to serve Airbus and the countries that have contracted with us for Phase 1B and continue the program." When it comes to Airbus we continue. Dassault was not available for immediate comment. The project is under threat of collapse due to rising tensions. This follows France's decision in the 1980s to abandon the Eurofighter program and develop the Rafale. Trappier responded that the future of the program was at risk when asked last week whether Dassault feared to abandon the current project. The project is known as SCAF in French. He said, "It's not about leaving SCAF. It's about deciding whether it will continue or not." He denied that Dassault wanted 80% of the control. Airbus, which represents Germany and Spain, covers two thirds of the project under the current framework. Each company is also responsible for the day-today management of certain parts of the project. This includes a system of drones that are paired with each fighter. Defense News reported that Germany's Boris Pistorius, after meeting with his French counterpart the previous week, said Germany and France will seek to clarify the current situation by the end the year. (Reporting and editing by Jamie Freed; Tim Hepher)
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Panama auditor files lawsuit to cancel CK Hutchison's port contract
Anel Flees, Panama's comptroller-general, announced on Wednesday that he filed a lawsuit in the Supreme Court of the country against a contract for the operation of ports near the Panama Canal held by a firm owned by Hong Kong's CK Hutchison. Flores stated that the two lawsuits were filed to declare the unconstitutionality of the port contracts for Balboa & Cristobal and nullify them. The Supreme Court must still accept the request for the complaint of the comptroller. The lawsuits are the result of a month-long audit led by Flores who publicly complained about the contract not serving the nation's interest. Flores did not make the audit public but stated on Wednesday that "many irregularities" had been revealed. A complaint can throw you for a loop In a planned deal, a consortium of MSC, the family-owned shipping company of Italian billionaire Gianluigi Aponte BlackRock, a U.S. investment company, has bought out the majority of CK Hutchison’s global port business including both ports. CK Hutchison owns 90% of the local Panama Ports Company. The company's 25-year concession for the operation of the ports was renewed in 2021. Reports indicate that the Chinese state-owned shipping company COSCO has been under pressure to sell its shares. You can also bring in other parties to the deal Flores stated, "They're talking about billion dollar deals, but they don't include Panama as the real owner of the Panamanian port." "We are not satisfied, and that is why we took the actions we did." Reporting by Elida Moreno; writing by Kylie Madry, editing by Brendan O'Boyle
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Heathrow Airport expansion plans are being considered by Britain in comparison with rival proposals
The British government will examine rival plans for expanding Heathrow, the country's largest airport in the next few months. This comes after the Arora Group announced on Thursday that it had submitted a proposal to build a new terminal and runway. Rachel Reeves, the Finance Minister, said that she wants Heathrow Airport to build a second runway in January. She is firmly in favor of expansion after years of indecision as governments have weighed environmental concerns versus growth. Heathrow Airport's plans for expansion will be submitted. Based on a plan from 2020, it is likely that a full length runway and the relocation of a portion of London's M25 autobahn are included. The government will compare that plan with the Arora Group. Heathrow Airport, located west of London is Europe's busiest hub. It operates at maximum capacity. Heathrow's two runways are in direct competition with the four runways at Charles de Gaulle Airport in Paris, Frankfurt Airport and Schiphol Airport Amsterdam. Arora Group which owns hotels, land and other properties near Heathrow has announced its Heathrow West plan. The plan includes a new terminal, a 2,800-metre runway (3,062-yards) which is too short to accommodate some of the largest aircraft. Arora Group stated that the plan is a "cost efficient solution" and does not require moving the M25. The cost of the development is estimated to be 25 billion pounds ($33.22billion). British Airways, IAG and other airlines have complained for years that Heathrow airport is among the most expensive in the world. They are worried about the impact of expansion on fees. A shorter runway that is suitable for modern aircrafts is part of the answer. IAG spokesperson stated that avoiding the M25 would reduce complexity, lower costs and improve value for passengers. $1 = 0.7527 pounds (Reporting and editing by Barbara Lewis; Sarah Young)
China's LNG imports set to slow: Kemp
China appears to have taken advantage of low costs in the area market so far in 2024 to increase the quantity of gas in storage, absorbing some of the extra fuel that would otherwise have been sent out to Europe.
But as storage centers fill and spot rates increase, the consumption is likely to taper over the summer, rerouting more melted natural gas (LNG) cargoes to Europe and speeding up the fill rate at the other end of Eurasia.
To the disappointment of foreign experts, China does not publish data on gas, oil or coal stocks, which are thought about commercially delicate and a matter of nationwide security.
But the country taken in a record 55 million metric tons of gas from overland pipelines and sea-borne LNG in the very first five months of 2024, according to data from the General Administration of Customs.
The intake increased from 47 million loads in the first five months of 2023 and 46 million in the exact same duration of 2022, when Russia's intrusion of Ukraine sent out spot gas rates skyrocketing.
It conveniently surpassed the pre-invasion record of 50 million tons embeded in the very first 5 months of 2021.
LNG imports ran above prior-year levels on a monthly basis in between January and May, and pipeline imports were also above prior-year levels in monthly other than April.
Chartbook: China gas imports
At the very same time, domestic production rose to a record 76 million heaps in the very first five months of 2024 from 72 million loads in 2023, 68 million lots in 2022 and 64 million heaps in 2021.
Output from Sichuan, easily the largest gas-producing province, has doubled since 2016, as the federal government has prioritised expansion of domestic fields to reduce dependence on imports.
As a result, the total quantity of gas available from domestic production and imports hit a record 130 million tons in the initially five months of 2024, up from 118 million in 2023 and 114 million in 2021.
China continues to connect more urban families to the gas network to minimize coal burning and enhance air quality.
However the huge increase in the amount taken in up until now this year far outstrips extra demand from homes and industry.
Much of the extra imported gas has actually likely been used to top up domestic storage after stocks were allowed to deplete in 2023 and 2022.
ACTIVE MANAGEMENT
China has a long tradition of actively using government-run inventories to stabilise product rates, which has been seen as a core function of the state.
In imperial China, the government's ever-normal granaries acquired surplus grain when materials were plentiful and sold when products were low to stabilise prices at a moderate level.
In the last few years, the exact same active approach has been extended to oil, copper, aluminium and other products. Now there are signs it is being used to gas via changes in LNG imports.
China's importers have contracted big volumes of LNG from Qatar, Australia, Malaysia and a host of other smaller exporters, but sometimes they have actually had the ability to insist on versatility to resell to 3rd nations.
The outcome is that China can adjust LNG imports and stocks in reaction to changes in area market value.
In 2022/23, flexibility was utilized to cut LNG imports and run down inventories in response to surging spot market prices. In 2024, the versatility has actually been employed in reverse to take in more cheap gas and fill up storage.
But area market prices for gas provided to Northeast Asia have actually climbed to an average of more than $12 per million British thermal units up until now in June, up from less than $9 in February and March.
Costs are no longer especially low-cost compared to prior years. China is most likely to lower discretionary purchases and slow the rate of stock accumulation.
As it retreats from the area market, more LNG will be sent to Europe in addition to price-sensitive customers in south and southeast Asia
Related columns:
- Europe's gas surplus narrows as LNG redirected to Asia. ( June 11, 2024)
- Europe fills gas storage at record rate as Asia's purchasers step aside (May 17, 2022)
John Kemp is a market analyst. The views expressed are his own. Follow his commentary on X https://twitter.com/JKempEnergy
(source: Reuters)