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The Gulf stock market has fallen due to weak corporate earnings
The Gulf stock markets were largely muted on Monday morning due to weak corporate earnings. However, rising expectations of interest rate reductions by the U.S. Federal Reserve eased concerns over the slowing economy. Data released on Friday indicated that U.S. employment growth was slower than expected in the month of July. This has led to expectations that rates could be cut by the Fed in September. Fed decisions can have a major impact on the Gulf's monetary policies, since most of the currencies in the region are pegged to U.S. dollars. Saudi Arabia's benchmark index fell 0.7%, with the majority of its constituents reporting losses. Saudi Aramco Base Oil Company-Luberef fell 3% following an 18% drop in its second-quarter profit. Saudi Aramco, the oil giant and its subsidiary Saudi Basic Industries (SABIC), both fell 0.5% and 0.4%. SABIC, the Saudi chemicals company, reported a surprise quarter loss on Sunday. The benchmark Abu Dhabi index dropped 0.2%. This was due to a drop of 2% in RAK Properties, and a decline of 0.7% in Fertiglobe. Fertiglobe, a nitrogen fertilizer manufacturer, reported a drop of 29% in its half-year net profits and declared a H1 dividend per share of 4.4 fils as opposed to 6.6 fils the year before. The second-quarter profit was higher by 41%. Dubai's benchmark index fell by 0.2%. Emaar Properties fell 1%, and Dubai Investments fell 1.4%. The benchmark Qatari index fell 0.1%. Financials were the main culprits, with Qatar National Bank - the largest lender in the region - dropping by 0.4%, and Commercial Bank falling by 0.5%.
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PostNL confirms guidance after posting surprise operating profit for Q2
Dutch postal company PostNL announced a surprise operating income for the second quarter on Monday and confirmed its full year guidance, citing progress made in strategic initiatives as well as benefits from targeted yield-measures. PostNL, a company that delivers letters and parcels across the Netherlands and Belgium, reported a normalised operating loss of 11 million euros (12.74 million dollars) for the third quarter. This is down from 18 million euros a year ago. Five analysts polled by the company had predicted a loss on average of 3 million euro. In a press release, CEO Pim Berendsen stated that "other measures to adapt our operation have resulted into efficiency improvements and planned cost savings at both Parcels and Mail and the Netherlands." PostNL, which is active in Belgium, The Netherlands, and Luxembourg, has confirmed that it expects its normalised annual operating profit to remain the same as last year. It did, however, flag a goodwill impairment of 40 million euros on its Dutch Mail business after the Dutch Government rejected its request for a financial contributions for 2025-2026. The impairment is excluded in the normalised results. PostNL announced that it would not be paying an interim dividend, but will still pay one over the course of the year. Reporting by Olivier Cherfan, Gdansk. Editing by Milla Nissi.
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Wall Street Journal, August 4,
These are the most popular stories from the Wall Street Journal. These stories have not been verified and we cannot vouch their accuracy. China has limited the flow of minerals critical to Western defense companies, delaying production. This is forcing the companies to search the globe for the stockpiles needed to manufacture everything from bullets and jet fighters. Amphenol is close to a deal worth approximately $10.5 billion including debt for the broadband connectivity and cable division of CommScope Holdings. Boeing defense workers will strike on Monday after the union representing 3,200 workers in the St. Louis area rejected the latest contract offer from the company. Delta faces criticism for using AI in setting airfares. However, the airline insists that it does not use personal information to target offers. This is after lawmakers expressed concerns over the technology. (Compiled by Bengaluru Newsroom)
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FT reports that rail customers are urging regulators to stop the Union Pacific-Norfolk Southern merger.
The Financial Times reported that U.S. railroad customers groups had demanded that regulators block the merger between Union Pacific and Norfolk Southern or impose onerous conditions. The report stated that seven associations of shippers expressed concerns about the proposed deal, stating it would increase the power of a merged railroad in raising prices or reducing service standards. Union Pacific reported that it spoke with over 100 customers regarding "low-cost rail options", adding that they would include all the details in their Surface Transportation Board application. Union Pacific announced last month that it would purchase smaller rival Norfolk Southern for $85 billion. This will create the U.S.'s first coast-to-coast rail freight operator, and transform the movement of goods across the nation from grains to automobiles. According to the companies, it is expected that both railroads will have a combined value of $250 billion. They would also unlock annualized synergies worth about $2.75 Billion. Norfolk Southern has not responded to requests for comment immediately. Earlier, the Transportation Division of SMART, International Association of Sheet Metal, Air, Rail and Transportation Workers, announced that it would oppose the merger at the Surface Transportation Board review. The major railroad unions are opposed to consolidation. They claim that such mergers could disrupt rail service and threaten jobs. Chuck Schumer, the Senate Democratic Leader, also criticised the merger. He said that the deal would "push us even further down the path of dangerous consolidation and power monopoly... This is an aggressive takeover of America’s infrastructure.
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Boeing's St. Louis workers will strike on Monday if they reject the latest offer.
The International Association of Machinists and Aerospace Workers, a union representing workers who assemble Boeing fighter jets around St. Louis, rejected Boeing's most recent offer on Sunday and are now planning to strike at midnight Monday. Tom Boelling, the Business Representative of the IAM District 837, said: "IAM members deserve a contract which reflects their skills, dedication and the crucial role they play in the defense of our nation." Boeing, according to its company, sent a new offer of a contract to the union last week. The company said that the minor changes in compensation would be beneficial to senior union members. Boeing also maintained the current overtime policies that it had originally proposed to modify in its last contract offer. The union rejected the previous offer because it was not sufficient. Boeing did not respond immediately to a comment request outside of regular business hours. Workers assemble Boeing fighter jets as well as the MQ-25 aerial refueling robot being developed for the U.S. Navy. Boeing's Defense Division is expanding its manufacturing facilities in St. Louis after winning the contract for the F-47 fighter aircraft. Reporting by Angela Christy, Bengaluru Editing and Sandra Maler.
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FT reports that rail customers are urging regulators to stop the Union Pacific-Norfolk Southern merger.
The Financial Times reported that U.S. railroad customers groups had demanded that regulators block the merger between Union Pacific and Norfolk Southern or impose onerous conditions. The report stated that seven associations of shippers expressed concerns about the proposed deal, stating it would increase the power of merged railroads to raise prices and reduce service standards. Union Pacific announced last month that it would purchase smaller rival Norfolk Southern for $85 billion. This will create the U.S.'s first coast-to-coast rail freight operator, and transform the movement of goods across the nation from grains to automobiles. According to the companies, it is expected that both railroads will have a combined value of $250 billion. They would also unlock annualized synergies worth about $2.75 Billion. Could not verify immediately the FT Report. Norfolk Southern and Union Pacific have not responded to our requests for comment. Earlier, SMART, International Association of Sheet Metal, Air, Rail and Transportation Workers, announced that it would oppose the merger at the Surface Transportation Board review. The major railroad unions are opposed to consolidation. They claim that such mergers could disrupt rail service and threaten jobs. Chuck Schumer, the Senate Democratic Leader, also criticised the merger. He said that the deal would "push us even further down the path of dangerous consolidation and power monopoly... This is an aggressive takeover of America’s infrastructure.
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Berkshire takes $3.8 billion Kraft Heinz write-down, operating profit falls
Warren Buffett’s Berkshire Hathaway announced on Saturday that it had written down its Kraft Heinz stake by $3.76 billion during the second quarter. This is an admission that the investment, which dates back a decade, has not worked out. Berkshire reported a 4 percent decline in operating profit for the quarter as premiums on insurance underwriting fell. Overall net income dropped by 59% due to the write-downs and lower gains on common stocks. Buffett's company signaled that it is still cautious about the market valuations amid uncertainty over tariffs and economic growth. For the 11th consecutive quarter, it reported a cash holding of a record $344.1 billion and sold more shares than it purchased. Berkshire had not repurchased its own stock as of mid-July. Buffett has been the leader of Omaha, Nebraska based Berkshire, since 1965. He plans to retire at the end of this year. Analyst Kyle Sanders at Edward Jones said that investors are becoming agitated and seeking activity. But nothing is happening. "Buffett will wait and see what happens. He believes the market is overvalued." The uncertainty about trade policies and tariffs has led to a decline in revenue for most Berkshire consumer businesses. Jazwares, the company that makes popular Squishmallows toys, saw its revenue drop 38.5% during the first half of the year. Analysts found the overall results disappointing. CFRA Research analyst Cathy Seifert said that "Berkshire, and the economy, are at an inflection-point." "I do not think that the market will accept the combination of Berkshire's recent underperformance, the lack of stock-buybacks and the mediocre results." Seifert and Sanders give Berkshire a "hold" rating. KRAFT HEINZ Operating income for the second quarter fell from $11.6 billion to $11.16 Billion, or $7,760 per class A share. This is a drop of $1 billion. The results included $877 millions of currency losses due to the weakening U.S. Dollar. Net income including gains and losses from stocks like Apple and American Express fell to $12.37 Billion, down from $30.35 Billion. Revenue dropped 1% to $92.52 Billion. Buffett believes that unrealized gains and losses on investments, such as stocks Berkshire does not plan to sell, are often irrelevant to his understanding of the company. Berkshire wrote down its Kraft Heinz 27.4% stake for $3.76 billion, or $5 billion, after taxes. This was in response to the announcement by Kraft Heinz that it would be considering strategic alternatives including a breakup. Berkshire had carried Kraft Heinz on its books at above-market value but said economic and other uncertainties, and its longer-term plans to remain an investor, made the gap "other-than-temporary." Berkshire has written down Kraft Heinz twice, the second time in 2019. The first was a $3 billion writedown. Buffett admitted at the time Berkshire had overpaid for the merger between Kraft Foods in 2015 and H.J. Heinz was one of Buffett's biggest investments mistakes. Kraft Heinz is suffering as consumers prefer healthier private label alternatives. Its 200 brands include Oscar Mayer and Kool-Aid. Berkshire has another large investment: its 28,1% stake in Occidental Petroleum, valued at $5.3 billion over fair value. However, the company reported that it did not need to write down this amount. Lagging the Market Since Buffett announced his resignation as CEO at the end of the year on May 3, Berkshire shares have dropped more than 12% and are about 22 percentage points behind Standard & Poor’s 500. Buffett, who will remain as chairman, will be succeeded by Vice Chairman Greg Abel (63). Analysts say the premium in Berkshire stock due to the presence of Buffett - arguably the most famous investor in the world - has diminished, and growth in the insurance industry, which is a major Berkshire profit centre, may slow. Lack of new investment has also been a drag. Analysts think Berkshire's BNSF could purchase CSX in order to create a second transcontinental railroad after Union Pacific bought Norfolk Southern on July 29. Buffett transformed Berkshire in six decades from an ailing textile company that had closed down into a conglomerate worth $1,02 trillion. Berkshire is the owner of several insurance companies and reinsurers as well as electric utilities and renewable energy companies. It also owns several chemical and industrial businesses and consumer brands like Dairy Queen Fruit of the Loom, See's Candies and Dairy Queen. BIG BEAUTIFUL BANK Berkshire stated that the 12% decline in quarterly insurance underwriting profits was primarily due to reinsurance and smaller insurance businesses. Geico, the company's best-known insurer, saw its pre-tax profit increase 2% as a rise in premiums of 5% offset a rise in accident losses that was smaller. State Farm and Progressive have gained market share from Geico, which has focused on underwriting technology and quality while cutting jobs. Analysts believe that higher tariffs may be a negative for Geico, if auto parts costs rise. This could increase the number of accident claims. BNSF also cuts expenses. Fuel costs were lower, which helped to boost the quarterly profit by 19%. Revenue and cargo volumes barely changed. Berkshire Hathaway Energy's energy division posted a profit increase of 7%. Berkshire Hathaway Energy is evaluating how the One Big Beautiful Bill Act signed by U.S. president Donald Trump last month will impact the "economics" and "viability" of their renewable energy, storage, and technology-neutral project.
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Documents show that India's unfinished renewable energy projects have doubled to more than 50 GW.
India's stranded solar power capacity, which is the amount of renewable energy that has been awarded but not yet installed, has more than doubled in nine months due to delays with transmission lines and other legal and regulatory issues. South Asia aims to double its non-fossil energy capacity to 500 gigawatts by 2030. However, the rapid acceleration of projects has led to a lack of firm agreements for power supply. The number of renewable projects in India that have won power generation tenders but still need to sign power purchase contracts with buyers has risen to more than 50 gigawatts, India's Sustainable Projects Developers Association said on June 27, in a note to the Ministry of New and Renewable Energy. Another letter sent on 4 October by the SPDA showed that stranded project of more than 20 GW was compared to another. Both letters were examined by. Two industry officials who are familiar with the situation said that projects worth billions of dollar awarded to JSW, NTPC, Adani Green and ACME Solar as well as Renew, Sembcorp, Renew, Renew, Renew, Renew, Sembcorp, have been left stranded. In a letter sent to the Ministry of Renewable Energy on June 27, the SPDA stated that "Energy Transition is not only about building solar and winds capacity. It is also about making sure clean power is delivered at the lowest possible cost in the shortest time frame." The SPDA reported that India has stranded over 50 GW of solar and wind power without buyers. This is roughly a quarter of the current renewable energy capacity installed in India, which is 184.6 GW. Requests for comment from the companies were not answered. The SPDA stated in a letter dated June that delays in critical transmission infrastructure, especially in sun-drenched States such as Rajasthan and Gujarat, have caused many solar plants not to meet their commissioning deadlines. The federal power ministry has announced that construction of interstate transmission lines to connect renewable energy projects with the grid is being accelerated. Compensation for landowners who allow power cables to be installed on their property will also increase. India is planning to connect 230GW of renewable projects to the grid via interstate transmission lines. Of these, 20% are completed, 70% under construction, and the remaining portion is being offered for bids, according to the ministry. The SPDA reported that renewable projects have also been stalled due to long-running legal disputes regarding land and environmental permits. Several developers had halted their operations because of unresolved cases. (Reporting and editing by Frances Kerry, Louise Heavens and Sudarshan Varadhan)
Thai Airways shares surge after resuming trading
Thai Airways International stock prices surged up to 231% when shares resumed trading Monday, before dropping back down later.
At 12:50 pm (0550 GMT), the stock price was up 186% to 9.5 Baht ($0.2872). In 2020, the national carrier entered a bankruptcy-protected restructure at the start of the pandemic.
It was in trouble long before the pandemic. The airline has been reporting losses almost every year since 2012. This is because low-cost carriers have been eroding its market share in Southeast Asia, particularly on short haul routes. Thai Airways received a debt restructuring of 400 billion baht when COVID hit. The company brought in senior executives to its restructuring committee, which was chaired the former energy minister Piyasvasti Amranand. Amranand was also the chief executive of Thai Airways from 2009-2012 when it was profitable. The committee began debt-to-equity plans, and then reduced its support staff by half to 16,000 people. The committee also announced plans to reduce its fleet of 103 aircraft to 85 and to eliminate its budget airline, Thai Smile.
In five years, starting in 2020, the airline will have reduced its debt by 190 billion Baht and achieved operational profit in 2023. In the first three months of this year the airline's net profit reached $9.8billion, up by 300% compared to the same period in the previous year.
The airline currently operates 78 jets, and the cabin factor (the percentage of seats occupied by passengers) is 83.3%.
The carrier has an option to purchase 35 additional Boeing 787-9 widebody jets. It said in July that it would be able to exercise its option as part the Thailand-US tariff negotiations.
(source: Reuters)