2024-12-20 11:15

Nike expects Q3 sales to be down low double-digits Hill says refocusing business on sport & selling more items at premium prices Co beats Q2 revenue and profit estimates Dec 19 (Reuters) - Nike (NKE.N) , opens new tab offered a muted forecast on Thursday, reversing gains in its shares made earlier in the day after the embattled sportswear seller's quarterly results beat estimates. The Beaverton, Oregon-based sportswear company, which has been scrambling to regain market dominance in the face of intensifying competition, predicted revenue would fall by low double-digits in the third quarter. Analysts, on average, had expected revenue to fall 7.65% to $11.48 billion for the current quarter, according to data compiled by LSEG. New CEO Elliott Hill said Nike's efforts to regain lost market share would mean some short-term pain. The company had "lost its obsession with sport," he said in his first earnings call since taking the helm in October. Hill vowed to put Nike back on track by refocusing its business on sport and selling more items at premium prices, but added "the shift's gonna take time." Earlier in the day, Nike reported earnings per share of 78 cents, compared with estimates of 63 cents per share, according to analysts' estimates compiled by LSEG. Second-quarter net revenue fell 7.7% to $12.35 billion, less than the 9.41% fall analysts had expected, as newer versions of performance and running shoes attracted shoppers. Shares surged 11% immediately after the earnings report but gave up those gains after Hill and CFO Matthew Friend reined in expectations. Shares were last down about 0.5% in aftermarket trading. So far this year, Nike shares have slumped nearly 30%. "If you really look at (second quarter earnings), the numbers are not good. ... but it's better than most people feared," said Jane Hali & Associates senior analyst Jessica Ramirez. 'FAR TOO PROMOTIONAL' Hill, who began at Nike as an intern in 1988, said on the call he was prioritizing rebuilding Nike's retail partnerships, and ensuring that discounts and promotions are curtailed. "We’ve become far too promotional," he said. "The level of markdowns not only impacts our brand but disrupts the overall marketplace and the profits of our partners." Hill said he has met with many of the company's key retail partners since assuming his new role. Retailers such as Foot Locker have expressed confidence in his leadership and his ability to reignite partnerships. A key pillar of Nike's turnaround plan, he said, is reinvestment in on-the-ground teams in major cities and countries. "They’re the ones creating the emotional consumer connections" Nike will need to flourish, Hill said. With rivals launching more comfortable, better cushioned shoes, Nike has been fighting back, shelling out money to introduce new products such as Air Max 95 and to promote staple franchises such as Jordans and Pegasus to attract customers. Last month, the company announced it would double down on three running franchises - Pegasus, Structure and Vomero - by launching various iterations of each shoe next year, at different price points. Hill said on Thursday that other initial focuses for investment would include football, basketball, training and sportswear. (This story has been refiled to correct the spelling of the CEO's first name to 'Elliott' from 'Elliot,' in paragraph 4) Sign up here. https://www.reuters.com/business/retail-consumer/nike-posts-smaller-than-expected-fall-second-quarter-sales-2024-12-19/

2024-12-20 11:13

US has become world's biggest exporter of LNG Natural gas prices in Europe spiked after invasion of Ukraine New LNG export plants seen coming on line next year NEW YORK/HOUSTON Dec 20 (Reuters) - Demand for U.S. natural gas to produce liquefied natural gas (LNG) for export this year is headed for its first decline since the country started exporting the super-chilled fuel from the lower 48 states eight years ago. The U.S. is the world's largest exporter of the superchilled gas and a key provider of gas to Europe in the wake of Russia's invasion of Ukraine. Natural gas prices have remained relatively high in Europe as the expected U.S. growth in output in 2024 has not materialized and the continent is bracing for a new gas price shock as colder winter weather depletes stocks. Natural gas drillers have profited from robust demand from LNG export plants especially since sanctions on Russian gas boosted European demand for U.S. LNG. Producers have indexed some output to global LNG prices, so slowing flows of gas to LNG export plants means they have less incentive to grow output. Since 2016, when Cheniere Energy's (LNG.N) , opens new tab Sabine Pass export plant in Louisiana shipped its first cargo, feedgas to the plants increased every year, even in 2020 when lockdowns during the COVID-19 pandemic slashed demand for energy. LNG plant outages and delays in construction of new plants have reduced demand so far this year, LSEG data showed. With just 11 days left in 2024, the amount of gas flowing to the eight big U.S. LNG export plants eased to an average of 13.0 billion cubic feet per day (bcfd) from an average of 13.1 bcfd in 2023, LSEG data showed. One billion cubic feet of gas can supply about 5 million U.S. homes for a day. The annual decline in demand is projected even though the first new LNG export facility since 2022, Venture Global LNG's 2.6-bcfd Plaquemines export plant in Louisiana, started producing LNG over the past week or so. But the industry expects this year's decline to be just a blip, with U.S. LNG capacity seen more than doubling over the next four years. New plants coming online should lift capacity from around 13.8 bcfd now to 17.8 bcfd next year, 20.3 bcfd in 2026, 22.0 bcfd in 2027 and 24.2 bcfd in 2028. PLANT OUTAGES Among the biggest factors in this year's fall in LNG feedgas demand were numerous outages at Freeport LNG's 2.1-bcfd plant in Texas. At least one of the plant's three liquefaction trains shut every month in 2024, except October, with some of those outages lasting several weeks, according to LSEG data. Freeport LNG is the second largest U.S. LNG producer, but Venture Global's Plaquemines will probably move into second place once it is fully operating. Several large LNG projects under construction on the U.S. Gulf Coast have faced cost overruns due to labor shortages and supply chain challenges. Venture Global's Plaquemines is over budget by $2.3 billion even though it has remained on schedule. The 2.4-bcfd Golden Pass plant in Texas, owned by Exxon Mobil (XOM.N) , opens new tab and QatarEnergy, is more than $2 billion over budget and behind schedule. Golden Pass was expected to begin producing its first LNG in 2024 but that was pushed back to late 2025 after its main contractor, Zachry Holdings (ZHII.UL), filed for bankruptcy. Forecasts call for feedgas supplies to U.S. export facilities to rise by an average of around 2 bcfd next year, a significant step up, said Alex Munton, director of global gas and LNG research at consulting firm Rapidan Energy Group. "We see only limited downside given tight global market conditions, with performance issues at Freeport the main risk," Munton told Reuters. The decline is mainly because the U.S. is in between two generations of LNG build out, said Ira Joseph, an LNG market expert and senior researcher at Columbia University's Center on Global Energy Policy. "We are bullish on U.S. LNG and generally on natural gas demand growth with strong growth going forward in the next five years," Joseph said. Even with the decline in LNG feedgas supplies, U.S. LNG exports were expected to be up fractionally this year from 2023 due to improved efficiencies. LNG exports were on track to rise by 1% in 2024 after jumping 12% in 2023 and an average of 43% each year during the prior five years (2018-2022), according to the U.S. Energy Information Administration's (EIA) latest Short Term Energy Outlook. Faster growth should resume next year when new projects start. Gains could rise by around 14% to an estimated 13.7 bcfd in 2025, according to EIA. Sign up here. https://www.reuters.com/business/energy/natural-gas-demand-us-lng-export-plants-heads-first-decline-8-years-2024-12-20/

2024-12-20 11:10

Ecopetrol faces governance issues amid staff purges Petro's opposition to fracking affects Ecopetrol's deals Ecopetrol's contributions to national income set to decline Company faces March decision on Occidental partnership in Texas BARRANCABERMEJA, Colombia, Dec 20 (Reuters) - Alleged interference by Colombian President Gustavo Petro in majority state-owned Ecopetrol and purges of hundreds of staff to make way for pro-government replacements are fueling fears about the energy company's future profits and contributions to the economy. The worries, according to interviews with workers, ex-employees, a former board member and analysts, come ahead of a March deadline for Ecopetrol (ECO.CN) , opens new tab to renew - or end - its joint oil venture with Occidental Petroleum (OXY.N) , opens new tab in Texas. Petro halted a separate $3.6-billion deal with Occidental to buy 30% of shale producer CrownRock in August, because of his opposition to fracking and fears about the company taking on more debt, according to two former Ecopetrol board members who resigned over the decision. The leftist president has said he wants to increase Colombia's use of renewable energy and lessen its reliance on fossil fuels. Ecopetrol, Colombia's largest company, has let go hundreds of staff since CEO Ricardo Roa took over in April 2023, some of whom were unfairly fired to make way for pro-government replacements, half a dozen workers and former employees said. A former leader of Ecopetrol's technology and innovation section, who was dismissed in August, said about 600 people have been let go across operations, or 3% of the company's workforce. The magnitude of the turnover has not previously been reported. "There are governance problems at Ecopetrol, but the fundamental problem is that 88.5% of the company belongs to the government and President Petro and his ministers don't want oil or gas," Juan Jose Echavarria, one of the former board members, told Reuters. Ecopetrol shares have fallen 28% this year. Banks Citi, Santander, Goldman Sachs and JPMorgan have cut their target prices on Ecopetrol and American depositary receipts, a security that allows a foreign company's shares to trade in the U.S. JPMorgan, Ecopetrol's second-biggest shareholder, downgraded the stock to "sell" twice - in mid-September and late October. "The top worry is the deterioration of corporate governance," said Citigroup analyst Andres Cardona. Petro's office did not respond to questions. Ecopetrol said Roa had previously answered Reuters questions at press conferences. CEO DENIES ALLEGATIONS Roa has denied accusations of poor management and said Petro does not meddle in company affairs. "They want to discredit me, destabilize me and thereby destabilize the company," he said at a November press conference. Roa, who has separately faced scrutiny in an investigation into Petro's 2022 election campaign that he headed, has highlighted deals with Brazil's Petrobras and Canada's Parex Resources (PXT.TO) , opens new tab, as well as a 2025 spending plan of up to $6.4 billion, as evidence of the company's health. Echavarria said Ecopetrol's recent results have indeed been positive. Production of 752,000 barrels of oil equivalent per day is the highest in nine years, and though net profit fell 25.6% between January and September from the year-earlier period, profits in 2022, 2023 and 2024 are the company's highest ever. But Ecopetrol's contributions to national income are set to plunge in 2025, sources with knowledge of the company's inner workings and analysts say, as Petro's ban on new oil contracts - including the CrownRock deal - reduces revenue and reserves. The dividends paid by Ecopetrol to the government are set to fall 31% in 2025 to about $1.8 billion, according to an analysis by investment holding company Corfi. The biggest risk to Ecopetrol's production figures, Corfi added, is whether the Texas Permian Basin project with Occidental is renewed. Ecopetrol generated more than $13 billion for government coffers in 2023 – about 11% of the national budget - through dividends, royalties and taxes, according to the Finance Ministry. It pumped $5.2 billion more into the economy via contractors and purchasing. Petro's government has cut 2024 spending by $6.4 billion amid lower tax revenues and lawmakers this month blocked a $2-billion tax-reform proposal. 'A LOT OF FEAR' The former leader said her opposition to pressure from senior managers to change long-standing suppliers and hire people that appeared unqualified made her a target. "If you aren't on the same page as the government, then you don't fit in," she said. "There's a lot of fear," said one engineer who has worked at the company's refinery in Barrancabermeja for almost three decades, speaking on condition of anonymity. Ecopetrol did not respond to questions about turnover and Roa has said hiring practices follow the law. The company's joint operation with Occidental in Texas, in which Ecopetrol holds 49%, accounted in 2023 for a tenth of its earnings before interest, taxes, depreciation and amortization and much of the company's increased output in recent quarters. If Ecopetrol opts out of the deal, it could have a knock-on effect on Colombia's economy, via reduced income from the company, said Andres Duarte, financial analysis manager for investment holding company Corfi. Ecopetrol's board had already approved the decision to buy 30% of CrownRock before reversing course in August just 24 hours before the deadline, drawing sharp public critique from Occidental CEO Vicki Hollub. "They told us in an informal meeting ... that Petro had told Ricardo Roa and several members of the board that he didn't agree with the project because investing in fracking meant putting Ecopetrol in more debt and it involved sending resources from Colombia abroad," Echavarria and Luis Alberto Zuleta said in their August joint resignation letter. Weeks later, Roa said the deal fell through because of the debt, denying pressure from Petro. Petro has not commented publicly on the matter. "With these messages it's difficult for an investor to trust in Ecopetrol," Echavarria said in the interview. "It's not the current results, but the messaging about the future." Sign up here. https://www.reuters.com/business/energy/turmoil-colombias-ecopetrol-raises-profit-fears-ahead-us-investment-decision-2024-12-20/

2024-12-20 11:04

A look at the day ahead in U.S. and global markets from Mike Dolan U.S. government shutdown fears and fresh trade war threats cast another cloud over Wall Street as a bruising final full trading week of the year comes to a close and dampens what had been a stellar year for U.S. stocks. Already sideswiped by what was seen as a 'hawkish cut' in Federal Reserve interest rates on Wednesday, where the central bank lifted both its 2025 policy rate and inflation projections, the S&P 500 (.SPX) , opens new tab was in the red again late Thursday and futures were down almost 1% before Friday's bell. A spending bill backed by Donald Trump failed in the U.S. House of Representatives late Thursday as dozens of Republicans defied the President-elect, leaving Congress with no clear plan to avert a fast-approaching government shutdown that could disrupt Christmas travel. Government funding is due to expire at midnight on Friday. If lawmakers fail to extend that deadline, the U.S. government will begin a partial shutdown that would interrupt funding for everything from border enforcement to national parks and cut off paychecks for more than 2 million federal workers. "Congress must get rid of, or extend out to, perhaps, 2029, the ridiculous Debt Ceiling. Without this, we should never make a deal," Trump said on social media. The combination of Fed hawkishness and government funding concerns sent long-term Treasury yields to their highest since May, with the 10-year benchmark coming close to 4.60% - a climb of almost 50 basis points in just two weeks. Tracking the climb in yields, the dollar index (.DXY) , opens new tab hit its highest in two years on Thursday. With November inflation readings from the Fed's favored personal consumption expenditures gauge due out on Friday, Treasury yields and the dollar stepped back a notch. But the cost of buying insurance against a potential U.S. sovereign default crept higher on Friday due to the shutdown fears. Credit default swaps on six-month U.S. bills nudged up to a four-week high of 11 bps, according to S&P Global. Japan's yen strengthened somewhat as data showing accelerating core Japanese inflation kept speculation of a new year interest rate hike from the Bank of Japan alive. Top Japanese finance officials also said on Friday the government is "alarmed" by recent foreign exchange moves and is ready to intervene if speculative moves were deemed excessive, as the yen resumed its rapid downturn. The warnings came as many emerging economy central banks from Brazil to South Korea intervened in recent days to halt the dollar's steep rise. A retreat of U.S. crude oil prices back below $70 per barrel also provided some solace for inflation worriers. But Trump's other broadsides on Thursday hit overseas stock markets as investors close out the year parsing what his new administration will do when it takes office next month. European shares were on course to post their worst week in three months on Friday after the President-elect warned of trade tariffs on the European Union. Trump said that the EU must purchase U.S. oil and gas to make up for its "tremendous deficit" with the world's largest economy. "Otherwise, it is TARIFFS all the way!!!," he added. The pan-European STOXX 600 index (.STOXX) , opens new tab fell 1.1% to its lowest in nearly a month and was on course for its biggest weekly decline since early September. And trade war and interest rate concerns saw stocks fall across Asia (.N225) , opens new tab, (.CSI300) , opens new tab too. Sterling was another big loser on Friday, falling to its lowest since May against the dollar. Even though the Bank of England held its interest rates steady as expected on Thursday, the 6-3 split among its policymakers showed two more council members in favor of a cut than had been assumed. Adding to the pressure, Friday data showed British retail sales rose by a weaker-than-expected 0.2% in November. Back on Wall Street there was better corporate news to digest, with shares in FedEx (FDX.N) , opens new tab jumping 8% in out of hours trading after the delivery firm announced the much-anticipated spinoff of its freight trucking division as it restructures its operations. Key developments that should provide more direction to U.S. markets later on Friday: * US November personal consumption expenditure (PCE) inflation gauge, December University of Michigan household sentiment survey * U.S. corporate earnings: Carnival Sign up here. https://www.reuters.com/markets/us/global-markets-view-usa-2024-12-20/

2024-12-20 10:09

MUMBAI, Dec 20 (Reuters) - The Indian rupee slipped to its all-time low on Friday before turning course to end modestly higher, aided by likely dollar inflows, although its losing steak persisted into a seventh straight week. The rupee closed at 85.0150 against the U.S. dollar, up from its close at 85.07 in the previous session, after hitting a low of 85.10 earlier in the session. The currency declined 0.2% week-on-week. Intervention , opens new tab by the Reserve Bank of India supported the rupee early in the day, traders said, and it was also aided by strong dollar offers from foreign banks in the latter half of the session, likely related to the rebalancing of FTSE's equity index. Routine interventions by the central bank curbed sharp depreciation pressure on the rupee this week as it weakened below the psychologically important 85 level. Tepid capital flows and concerns about India's slowing economic growth have hurt the rupee and its troubles were compounded by a hawkish shift in the Federal Reserve's policy outlook on Wednesday. On the day, the dollar index was down 0.2% at 108.2, retreating from an over two-year high, while other Asian currencies were mixed as investors awaited U.S. personal consumption expenditure (PCE) inflation data due later in the day. Focus on the print was heightened after the Fed in its policy decision scaled back its 2025 rate cut projections to 50 basis points from 100 bps forecasted in September, pointing to stubbornly high inflation. The data is likely to show that month-on-month core PCE inflation was at 0.2% month-on-month in November, down from 0.3% in the previous month. "The prospects certainly remain positive for the US dollar over the short-term as investors continue to view the US economy as best positioned going into 2025 for continued resilient growth," MUFG Bank said in a note. Sign up here. https://www.reuters.com/markets/currencies/rupee-hits-record-low-before-recovering-slightly-weekly-losses-persist-2024-12-20/

2024-12-20 08:18

JOHANNESBURG, Dec 20 (Reuters) - South Africa's rand recovered some losses on Friday after a slight improvement in risk sentiment. At 1406 GMT, the rand traded at 18.355 against the dollar , about 0.3% stronger than its previous close. Trade in the rand, like most emerging market currencies, has been volatile this week after the U.S. Federal Reserve on Wednesday struck a hawkish tone in its interest rate outlook for the year ahead. Andre Cilliers, currency strategist at TreasuryONE, said liquidity constraints during the holiday season could amplify swings in the local currency. "Near-term volatility (is) likely to persist," Cilliers said. There are no major local economic data releases scheduled for next week. On the stock market, the Top-40 (.JTOPI) , opens new tab index was little changed. South Africa's benchmark 2030 government bond was weaker, with the yield up 2 basis points to 9.135%. Sign up here. https://www.reuters.com/markets/currencies/south-african-rand-recovers-some-ground-against-dollar-2024-12-20/