2024-07-30 23:31

MELBOURNE, July 31 (Reuters) - Rio Tinto (RIO.AX) , opens new tab reported half-year underlying earnings growth in line with market estimates on Wednesday as lower prices for its key commodity iron ore were offset by gains in its copper and aluminium businesses. Iron ore prices tumbled about 15% in the first half as top user China battled weak economic growth stemming from a years-long property crisis, but Rio Tinto said the outlook there should support solid demand for commodities. "We see the Chinese economy growing plus or minus 5 percent and that is very good for commodity markets. You also see the U.S. growing. Not fantastic, but absolutely underpinning good markets and good demand for our products," CEO Jakob Stausholm Stausholm told a media call. The world's largest iron ore producer reported underlying earnings of $5.8 billion for the six months ended June 30, compared with $5.7 billion a year ago and in line with a Visible Alpha consensus of $5.80 billion. The miner declared an interim dividend of $1.77 per share, in line with last year's payout, and below consensus estimates of $1.81 apiece. Like other miners, Rio Tinto has been focused on expanding its copper division, given strong demand expectations for the energy transition metal. Analysts at Macquarie previously said they expect Rio's copper and lithium growth to become "an emerging strategic focus" for investors. Stausholm said the firm's copper equivalent production was on track to grow by around 2% for this year. "Our ambition is to deliver around 3% of compound annual growth from 2024 to 2028 from existing operations and projects," Stausholm said in respect to Rio's copper output. Rio earlier in the month welcomed the Serbian government's reinstatement of its licence to develop Europe's biggest lithium mine, Jadar, in a potential boost to the continent's electric vehicle industry. If developed, the $2.4 billion Jadar lithium project in Western Serbia could cover 90% of Europe's current lithium needs and help make the company a leading lithium producer. Rio Tinto's net debt came in at $5.1 billion, around the higher end of analyst estimates, while its free cash flow was in line at $2.8 billion. It expects capital investment in its giant Simandou iron ore mine in Guinea to accelerate in the second half from $3.7 billion in the first half. Sign up here. https://www.reuters.com/markets/commodities/rio-tinto-reports-largely-flat-first-half-profit-2024-07-30/

2024-07-30 23:10

July 30 (Reuters) - Starbucks' (SBUX.O) , opens new tab store operation improvements helped the coffee chain meet Wall Street expectations for quarterly profit, even as its global sales declined on persistent weakness in consumer spending in its top markets of U.S. and China. The company's shares, down 22% this year, were up 5% in extended trading after executives reaffirmed its annual forecasts. Starbucks this year rolled out its Siren System plan, which included updating its equipment to increase the pace of service at its stores, as the company turns to discounts and promotions to appeal to cost-conscious consumers. The system was deployed across its U.S. company operated stores in the reported quarter, and Starbucks plans to have the equipment, such as a refit to its espresso machines, in less than 10% of its global stores by the end of year. "We are focused on what we can control in a consumer environment that can be best described as complex," CEO Laxman Narasimhan said on a post-earnings call. Starbucks' operating margin fell 70 basis points in the third quarter, a sequentially smaller drop. Profit of 93 cents per share was in line with LSEG estimates. "Quite possibly, investors are viewing this as not as bad as was feared potentially. We're kind of impressed that they were able to open 526 new stores in the quarter," said Greg Halter, director of research at Carnegie Investment Counsel. U.S. fast-food chains have rolled out limited deals and offers to bring back to stores thrifty consumers increasingly looking to cook at home in the face of sticky inflation. Known for its pricey lattes, Starbucks spent the summer offering uncharacteristic deals including bundled menus such as a coffee or tea paired with a butter croissant for $5 in June, as well as 50% off deals on Fridays in May. In China, the company grappled with weak consumer spending and stiff competition from local coffee chains such as Luckin' Coffee in a weak macroeconomic environment. Still, same-store sales tumbled 14% in China, following an 11% drop in the second quarter. Sales in international markets also missed expectations, echoing results from McDonald's(MCD.N) , opens new tab and Domino's (DPZ.N) , opens new tab. Starbucks continued to face weakness in the Middle East, South Asia and some parts of Europe as a result of boycotts related to the war in Gaza. The Seattle-based company reaffirmed its global and U.S. comparable sales in range of a low single-digit decline to flat, and annual profit in the range of flat to low-single digits. The coffee chain also confirmed on a post-earnings call that Elliott Investment Management was a shareholder and talks with the activist investor had been "constructive". Sign up here. https://www.reuters.com/business/retail-consumer/starbucks-quarterly-global-sales-drop-larger-than-expected-china-weakness-2024-07-30/

2024-07-30 23:06

July 30 (Reuters) - Advanced Micro Devices (AMD.O) , opens new tab on Tuesday increased its 2024 forecast for artificial intelligence chip sales by $500 million and said supplies would remain tight through 2025, sending shares of the Santa Clara, California-based company up 7.5% in extended trading. The AI chips designed by AMD are largely bought by cloud computing giants. Industry insiders and Wall Street view AMD's line of AI chips as one of the few potentially viable competitors to Nvidia (NVDA.O) , opens new tab, which dominates the market. Shares of Nvidia rose 4.7% following the AMD report. AMD counts Meta Platforms (META.O) , opens new tab as a customer, and Microsoft (MSFT.O) , opens new tab launched access to a cluster of AMD chips for AI via its cloud platform earlier this year. Because of surging demand, AMD CEO Lisa Su said, the company boosted its 2024 AI chip revenue forecast to $4.5 billion from a previous target of $4 billion. The supply of such chips will remain tight through 2025, Su said during a quarterly results conference call late Tuesday. In the second quarter, AMD's data center revenue, its biggest segment, jumped 115% to $2.8 billion, just topping estimates of $2.79 billion, according to Visible Alpha. For the first time its quarterly AI chip revenue - which is largely concentrated in the data center segment - rose above $1 billion. "We are in the picks and shovels cycle which is more about hardware infrastructure right now," Creative Strategies CEO Ben Bajarin said, making an analogy to the California gold rush, where suppliers of mining tools profited more than some miners. "Most enterprises are spending on AI software but only to trial and pilot programs, (and have) not fully deploy them yet," he said. Such massive spending has not yet generated substantial returns. And on Tuesday, shares of Microsoft fell 6% as growth in its cloud-computing services missed targets, indicating it may take longer for some Big Tech firms to benefit from hefty spending on AI technology. PC BUSINESS RECOVERY Overall, AMD forecast revenue of $6.7 billion, plus or minus $300 million, for the third quarter, compared with analysts' average estimate of $6.61 billion, according to LSEG data. On an adjusted basis, the company forecast gross margin of about 53.5% for the third quarter, compared with estimates of 53.6%. Total revenue in the second quarter rose 9% to $5.8 billion, which came in above estimates of $5.72 billion. AMD, which is among the largest providers of PC chips, also benefited from a recovery in the personal computer market after its worst slump in years. Computer makers hope new AI features will revive consumer demand. "(The) PC business actually is going to do better in second half, especially, typically seasonally," AMD finance chief Jean Hu said. In the second quarter, AMD reported revenue for PC chips of $1.5 billion, compared with estimates of $1.43 billion, according to Visible Alpha. The company had adjusted second-quarter earnings of 69 cents per share, topping analyst estimates of 68 cents a share. Sign up here. https://www.reuters.com/technology/amd-forecasts-third-quarter-revenue-above-estimates-2024-07-30/

2024-07-30 23:02

LONDON, July 31 (Reuters) - Britain has increased the budget for its current annual renewable power auction by 50% to 1.5 billion pounds ($1.92 billion), the government said on Wednesday. The new Labour government, which won power earlier this month, aims to decarbonise the electricity sector by 2030, which will require a rapid increase of renewable power capacity such as wind and solar. To spur investment, the government invites renewable project developers to bid for government-backed price guarantees for the electricity produced, called Contracts for Difference (CfDs). The addition of 500 million pounds to the 1 billion pounds assigned by the previous Conservative government took the budget for this year’s sixth such auction to a record high. A higher budget means more projects can be selected and offered contracts that guarantee a minimum price of electricity. When wholesale electricity prices are lower than the minimum, the budget covers the difference, if they go above, producers pay back the difference to the government. “This will restore the UK as a global leader for green technologies and deliver the infrastructure we need to boost our energy independence, protect billpayers, and become a clean energy superpower,” Energy Secretary Ed Miliband said in a statement. Some 1.1 billion pounds of the budget will be dedicated to offshore wind, 185 million pounds are earmarked for other established technologies, such as onshore wind and solar, and 270 million for emerging technologies, such as floating offshore wind and tidal power. Renewable power developers and industry groups had called on the new government to increase the available funding saying a bigger budget was required for the country to have any chance of meeting goals to expand the country’s fixed offshore wind capacity to 55 gigawatts (GW) by 2030 from around 15 GW now. Iberdrola(IBE.MC) , opens new tab , Orsted(ORSTED.CO) , opens new tab , Equinor(EQNR.OL) , opens new tab , RWE(RWEG.DE) , opens new tab , SSE(SSE.L) , opens new tab and TotalEnergies (TTEF.PA) , opens new tab are among the companies with projects eligible to bid for the sixth auction round. “This will unlock billions in private investment, support thousands of jobs, strengthen our energy security and produce the green and affordable power needed for decades to come,” Keith Anderson, CEO of ScottishPower said in a separate statement. Analysts at Bernstein said the increased budget might still not be enough to achieve the goal. “While the potential budget increase would be a step in the right direction, it may still prove short of what is required to achieve the UK Government’s target ... especially given the failure of AR5, project cancellations and re-bidding capacity,” the analysts said. The fifth auction (AR5) held in 2023 failed to attract any offshore wind projects as the incentives offered were deemed too low by developers. ($1 = 0.7798 pounds) Sign up here. https://www.reuters.com/world/uk/britain-ups-renewable-power-auction-budget-15-bln-pounds-2024-07-30/

2024-07-30 22:48

BOJ raises short-term policy rate to 0.25% from 0-0.1% BOJ to halve monthly bond buying to Y3 trln in Q1 2026 Broadening wage hikes, rising services prices behind move Governor Ueda does not rule out another rate hike this year BOJ will keep raising rates if inflation on track - Ueda TOKYO, July 31 (Reuters) - The Bank of Japan raised interest rates to levels unseen in 15 years and unveiled a detailed plan to slow its massive bond buying, taking another step towards phasing out a decade of huge stimulus. The rate hike, which dashed dominant market expectations for no change, was the largest since 2007 and came just months after the BOJ ended eight years of negative interest rates as the bank's chief seeks to dismantle his predecessor's unorthodox policies. BOJ Governor Kazuo Ueda did not rule out another hike this year and stressed the bank's readiness to keep raising borrowing costs to levels deemed neutral to the economy. The hawkish comments pushed the dollar below 151 yen for the first time since March, as markets awoke to the reality that Japan was finally eyeing a full-fledged rate hike cycle. Japan's shift to tighter monetary policy contrasts sharply with the broad swing to lower interest rates by other major economies, with the Federal Reserve expected to signal later on Wednesday that it will cut rates in September as U.S. price pressures moderate. "If data shows economic conditions are on track, and if such data accumulates, we would of course take the next step," Ueda told a news conference, when asked about the chance of another rate hike this year. "By raising rates from very low levels and adjusting the degree of stimulus gradually, we can avoid the risk of having to make big adjustments in a short period of time," he said. At the two-day meeting ending on Wednesday, the BOJ's board decided to raise the overnight call rate target to 0.25% from 0-0.1% in a 7-2 vote. The short-term policy rate is now the highest since 2008. The BOJ under Ueda has so far hiked rates by a combined 35 basis points in just four months. Wednesday's hike was the largest since a 25 basis point increase in February 2007, which was the last major policy tightening before a long era of massive monetary stimulus aimed at reflating sluggish consumer demand. In a sign Ueda was drawing a line under the ultra-loose policies of the past, the BOJ also decided on a quantitative tightening (QT) plan that would halve monthly bond buying to 3 trillion yen ($19.6 billion) as of January-March 2026. The measure would diminish the BOJ's $3.9 trillion balance sheet by up to 8%, the central bank said, a sign it was stepping back from a controversial era of bond buying that began in 2013 and is often blamed for distorting Japan's markets. The stakes are high for the BOJ. After buying bonds aggressively to reflate growth, the BOJ now owns roughly half of total Japanese government bonds (JGB) sold in the market. The central bank must tread cautiously in tapering to avoid upending markets accustomed to its huge presence, and triggering a spike in yields that would boost the cost of financing Japan's huge public debt. YEN PRESSURES The BOJ's decision comes as the Fed looks increasingly set on cutting rates, reversing the aggressive tightening cycle that drove up the dollar and caused a painful yen sell-off for Japan. Ueda identified the weak yen as a risk to the BOJ's inflation projections and said the 0.5% threshold posed no barrier to rates going even higher, if needed. His comments helped pushed the yen up more than 1% to an intraday high of 150.61 per dollar on Wednesday. Short-term bond yields scaled 15-year peaks and Japanese bank shares soared, helping the Nikkei share average (.N225) , opens new tab reverse earlier declines. "Despite sluggish consumer spending, monetary officials sent a decisive signal by raising interest rates and allowing for a more gradual balance sheet reduction," said Fred Neumann, chief Asia economist at HSBC. "Rising inflation expectations also open the path for ongoing monetary policy normalisation by the BOJ. Barring major disruptions, the BOJ is on course to tighten further, with another interest hike by the start of next year," he said. In a quarterly outlook report released on Wednesday, the BOJ roughly maintained its projection made in April that inflation would stay around 2% through fiscal 2026. But the BOJ said import prices were again accelerating despite some recent moderation, stressing the need to be vigilant to the risk of an overshoot in inflation. The BOJ also warned that inflation may be more affected by yen moves than before, signaling its alarm over building inflationary pressure from the currency's declines. "Although the BOJ had explained all along that monetary policy was not about targeting currencies, the weak yen must have been a major factor behind today's decision given that it was dealing a blow to small firms in rural regions," said Izuru Kato, chief economist at Totan Research. ($1 = 152.7500 yen) Sign up here. https://www.reuters.com/markets/rates-bonds/bank-japan-outline-bond-taper-plan-debate-rate-hike-timing-2024-07-30/

2024-07-30 22:45

SEOUL, July 31 (Reuters) - Over 4,000 homes in North Korea's city of Sinuiju and Uiju County near the border with China have been flooded due to heavy rainfall, state media KCNA said on Wednesday. Around 3,000 hectares (7,400 acres) of farmland along with numerous public buildings, facilities and roads were also flooded, prompting a two-day emergency meeting by the ruling Workers' Party's powerful politburo earlier this week, the report said. Leader Kim Jong Un chaired the meeting and expressed grave concern over the damage and urged strong measures to restore the affected areas, KCNA added. Kim inspected the flooded areas on Sunday. The region has been affected by heavy rainfall from Tropical Storm Gaemi in recent days, which caused a landslide killing 12 people in southern China and flash floods elsewhere. North Korea's state media have been raising the alarm in recent weeks about the monsoon season and have issued several reports on efforts to offset damage from extreme weather. The month of July is annually the monsoon season in the Korean peninsula, but the region has experienced extreme weather in the summer months in recent years. In South Korea, heavy rain caused landslides, train delays and heavy damage to infrastructure earlier this month. Sign up here. https://www.reuters.com/business/environment/north-korea-says-thousands-homes-hit-by-flooding-2024-07-30/