2024-07-23 15:18

Strong air travel demand drives up GE Aerospace profit Supply constraints hurting new engine output LEAP engine deliveries estimated to be flat to up 5% this year July 23 (Reuters) - GE Aerospace (GE.N) , opens new tab on Tuesday raised its full-year profit outlook for a second time in four months, but trimmed its revenue outlook and estimates for LEAP jet engine output this year due to persistent supply constraints. Its shares were up more than 6% at $172.87 in morning trade. The company said shortages of materials have hit shipments of engines for both narrowbody and widebody jets. Deliveries of LEAP engines, which power Airbus (AIR.PA) , opens new tab and Boeing (BA.N) , opens new tab narrowbody aircraft, were down 29% in the June quarter from a year ago. It scaled down estimates for LEAP output this year for a second time since March, and now expects production to be flat to up 5% this year, against 10%-15% growth estimated in April. Lower production will add to the headache for airlines, which are grappling with a shortage of new planes and spending billions on repairs to keep flying older, less fuel-efficient jets. Airbus last month delayed a multi-year hike in narrowbody production, cut profit forecasts and trimmed its 2024 delivery target, blaming shortages of engines and other parts. In an interview, GE Aerospace CEO Larry Culp said that while the company has made progress in improving supplies, it is not enough to satisfy all of its customers. Culp said two-thirds of the 15 supplier sites to which GE Aerospace had previously attributed the bulk of delivery challenges have shown a "significant" step up in output, but the improvement was not across the board. "Our suppliers are getting better at problem-solving and collaboration," Culp told Reuters. "We need to do more." The company trimmed its full-year revenue outlook, citing lower engine output expectations. PARTS AND SERVICES GE Aerospace has a dominant share in the engine market for narrowbody jets and enjoys a strong position in widebodies. More than 70% of its commercial engine revenue comes from parts and services. A lack of new planes has led to a surge in demand for its after-market services. It reported a double-digit increase in commercial engine services revenue in the second quarter from a year ago. Services orders were up more than 30%. The company said shop visits for maintenance and repairs of CFM56 engines, which have been the workhorse in the narrowbody market, are now expected to peak much later than in 2025. Booming services demand amid labor and parts shortages has put pressure on it to reduce repair turnaround time. GE Aerospace has set a goal to improve that by 30% from a year ago, and in the June quarter, turnaround time for LEAP shop visits fell to 86 days compared to roughly 100 days in 2023, it said. "We have seen a lot of progress," Culp said. "(But) the airlines would clearly want it to be better." GE Aerospace expects adjusted profit in the range of $3.95 to $4.20 per share in 2024, compared with its prior forecast of $3.80 to $4.05. Adjusted profit for the second quarter came in at $1.20 per share, higher than 99 cents a share expected by analysts in a LSEG survey. Sign up here. https://www.reuters.com/business/aerospace-defense/ge-aerospace-lifts-2024-profit-view-strong-demand-engine-parts-services-2024-07-23/

2024-07-23 14:27

ABUJA, July 23 (Reuters) - Nigeria's central bank on Tuesday raised its benchmark interest rate for the fourth time this year, as inflation surged to a 28-year high and the naira came under renewed pressure on both the official and parallel markets. Central Bank of Nigeria Governor Olayemi Cardoso said the rise in the bank's main lending rate to 26.75% from 26.25% (NGCBIR=ECI) , opens new tab was needed to tackle inflation. "While monetary policy has been moderating aggregate demand, rising food and energy costs continue to exert upward pressure on price development," Cardoso told a press conference. Tuesday's decision by the bank's Monetary Policy Committee to hike the rate by 50 basis points comes after increases of 150 bps in May, 200 bps in March and 400 bps in February, its largest in around 17 years. Analysts polled by Reuters had predicted a 50 bps hike, as inflation rose for the 19th straight month in Africa's most populous nation to 34.19% in annual terms in June (NGCPIY=ECI) , opens new tab. "For now, we think that today's decision marks the final act in this hiking cycle," David Omojomolo, Africa economist at Capital Economics, said. "But there's clearly a risk that further inflation surprises prompt the (central bank) to tighten monetary conditions further, either through outright rate hikes or by tweaking liquidity provision," he said, adding that rate cuts were unlikely until next year. Last week, President Bola Tinubu's government agreed to raise the minimum wage to 70,000 naira ($44) a month after asking lawmakers to approve 6.2 trillion naira in additional spending to plug shortfalls in this year's budget, possibly stoking inflation further. Price pressures have been spurred by Tinubu's administration slashing petrol and electricity subsidies and twice devaluing the local naira currency . Cardoso has indicated that rates will stay high for as long as needed to bring down inflation. The International Monetary Fund in May maintained its growth forecast of 3.3% for Nigeria's economy for 2024, up from 2.9% last year, citing a pick up in services and trade sectors. It has welcomed central bank's recent rate hikes to curb galloping inflation and called for a data-driven approach to further rate tightening while urging the bank to build up its forex reserves. ($1 = 1,585.0000 naira) Sign up here. https://www.reuters.com/markets/rates-bonds/nigerias-central-bank-raises-benchmark-rate-2675-2024-07-23/

2024-07-23 13:44

July 23 (Reuters) - Kleenex tissue maker Kimberly-Clark (KMB.N) , opens new tab on Tuesday raised its forecast for full-year profit after beating Wall Street estimates for second-quarter earnings, betting on higher prices and steady demand for its personal care products. Demand for Kimberly-Clark's products such as skin health and hygiene held steady, on the back of double-digit volume growth in China that helped lift volumes in its personal care business, a major revenue contributor. The company continues to see resilient purchase patterns and healthy volumes in its product categories without a lot of trade down, Chris Jakubik, head of Kimberly Clark's investor relations told Reuters. The company's overall volumes in the quarter ended June 30 rose 1%, while its prices were up 2%. However, the company posted quarterly sales of $5.03 billion, missing analysts' estimates of $5.10 billion as some retailers pared back on orders. Consumer goods companies have been struggling with increasing competition from private label brands eating into their shelf space at retailers. "In the second quarter, we had some inventory destocking that actually held back our volume growth in the quarter and in the first half," Jakubik added. Shares of the company, which maintained its annual organic sales forecast, were down about 3% in early trading. In North America, the company's sales declined for its consumer tissue and Kimberly-Clark professional businesses. The company's gross margins for the April-to-June quarter expanded by 290 basis points to 36.9%. The Huggies diaper maker's quarterly profit of $1.96 per share topped analysts' estimates of $1.71 per share. The company also expects annual earnings per share to grow at a mid-to-high teens percentage rate, up from the previously expected low-teens percentage rate. Sign up here. https://www.reuters.com/business/retail-consumer/kimberly-clark-raises-annual-profit-forecast-beats-q2-eps-higher-prices-2024-07-23/

2024-07-23 12:47

PARIS, July 23 (Reuters) - French utility EDF signed an agreement with Italian subsidiary Edison (EDNn.MI) , opens new tab, equipment firms Ansaldo Energia and Ansaldo Nucleare, and steelmakers industry body Federacciai to consider joint investment opportunities in nuclear energy, it said on Tuesday. The memorandum of understanding would promote the construction of small modular reactors (SMRs) and the transmission of nuclear energy in the mid to long term from French reactors to Italy over the coming decade, it added. WHY IT'S IMPORTANT Several European countries are looking into building nuclear reactors in order to meet 2050 climate goals. SMRs, or small reactors that can be hosted at specific sites, are being developed to offer less costly and more targeted options for heavy emitters such as steel plants. EDF recently said it was switching to using existing technologies for the design of its SMRs rather than continuing to develop its own to lower costs and meet deadlines. BY THE NUMBERS The steel industry was responsible for around 5% of carbon emissions in the European Union in 2022, data from the European Commission showed. Italy imports about 15-20% of its energy from neighbours, and the development of a national supply chain for the production of new nuclear energy will provide the country with greater independence, the statement on Tuesday cited Edison as saying. KEY QUOTES "We will work to ensure that this first important agreement can set an example for all hard-to-abate industrial sectors: this is the only viable way to meet the most ambitious decarbonisation targets," said Antonio Gozzi, president of Federacciai. Sign up here. https://www.reuters.com/business/energy/frances-edf-italian-steel-makers-consider-joint-nuclear-energy-investments-2024-07-23/

2024-07-23 12:43

HUALIEN, Taiwan, July 23 (Reuters) - Financial markets will close and people given the day off work as Typhoon Gaemi barrelled towards Taiwan on Tuesday bringing strong winds and torrential rain, with the annual Han Kuang war games curtailed and emergency equipment readied. Gaemi, the first typhoon of the season to affect Taiwan, is expected to make landfall on the northeast coast early evening on Wednesday, according to the island's Central Weather Administration. Currently categorised as a medium-strength typhoon by Taiwan, it is then likely to move across the Taiwan Strait and then hit the southeastern Chinese province of Fujian on Friday. Capital Taipei, as well as the neighbouring cities of New Taipei, Keelung and Taoyuan, will close schools and give people the day off on Wednesday, with the financial markets also closed. "Tomorrow, please stay at home," Taipei Mayor Chiang Wan-an wrote on his Facebook page. "Gaemi, the first typhoon to make landfall this year, continues to strengthen." However, TSMC (2330.TW) , opens new tab, the world's largest contract chipmaker, said it expected all its factories would maintain normal production during the typhoon, adding it had activated routine preparation procedures. Some mountainous central and southern Taiwan counties are expected to see total rainfall of up to 1,800 mm (70 inches) during the typhoon, the weather administration said. The government put more than 1,000 rubber boats on standby for possible flooding across the island, which will see the storm coincide with the annual high tides, and rushed emergency food, water and communications equipment to remote areas. Taiwan's annual Han Kuang military drills taking place this week have been curtailed, including cancelling fighter jet exercises on the east coast, the defence ministry said. "The impact from the typhoon at present on the east coast is rather obvious," ministry spokesman Sun Li-fang told reporters at the Hualien air base. "So we will adjust some of the air and naval elements given the typhoon situation." Mandarin Airlines and Daily Air cancelled all domestic flights for Wednesday, while Eva Air (2618.TW) , opens new tab announced at least 12 international flights were cancelled for the same day. Gaemi passed by to the east of the Philippines but did not make landfall, though still brought heavy rain. While typhoons can be highly destructive, Taiwan also relies on them to replenish reservoirs after the traditionally drier winter months, especially for the southern part of the island. Sign up here. https://www.reuters.com/world/asia-pacific/taiwan-curtails-annual-war-games-typhoon-gaemi-barrels-towards-island-2024-07-23/

2024-07-23 12:40

July 23 (Reuters) - Porsche AG (P911_p.DE) , opens new tab cut its sales and profit outlook on Tuesday due to an unexpected aluminium alloy supply shortage, sending the German company's shares down 4% to the bottom of Frankfurt's blue-chip index. Flooding at an unspecified European contractor has hurt supply of aluminium alloy, the luxury sports car maker said, affecting production of all its models and possibly leading to shutdowns for one or more vehicle series. The alloy shortage also impacted the supply chains of German premium carmaker BMW (BMWG.DE) , opens new tab and Mercedes-Benz (MBGn.DE) , opens new tab, but both were able to find alternative suppliers. Spokespeople for BMW and Mercedes-Benz declined to give further details. Porsche said the alloy supplier, which it did not name, had declared force majeure in writing, meaning it was unable to meet its contractual obligations due to events outside its control. Body components made of aluminium are used in all vehicle series manufactured by Porsche, and reliance on the supplier has exposed the company to particular risk. The aluminium alloy shortage adds to other challenges for Porsche in recent months, including software issues, product delays, supply chain problems and a sales slump in China. 'BIBLICAL FLOOD' "It's been a biblical flood that's wiped away the gains from the IPO," said Stephen Reitman of Bernstein Research. He was referring to Porsche's initial public offering in September 2022, when shares closed at 82.50 euros in Germany's second-biggest market debut. Shares were down 4.1% at 69.66 euros on Tuesday. Bernstein analysts said the flooding occurred at a Swiss supplier, and would lead to the production loss of at least 10,000-17,400 vehicles in the second half of 2024. At the high end, that figure is equivalent to over 11% of Porsche's first-half deliveries. Porsche SE (PSHG_p.DE) , opens new tab, the holding firm of the Porsche and Piech families that control Volkswagen (VOWG_p.DE) , opens new tab and holds a blocking minority in Porsche AG, confirmed its 2024 earnings forecast despite the alloy supplier's warning. U.S.-based Novelis, which delivers to a joint venture producing body parts for cars and co-owned by Porsche, was reported to have shut down a Swiss site due to floods. Novelis did not immediately respond to a request for comment. Aluminium maker Constellium , which is U.S.-listed but headquartered in France, earlier this month warned that its Swiss facilities had been impacted by flooding but said it did not supply Porsche from Switzerland. Both companies name Porsche or firms affiliated to the automaker among their customers. RESULTS DUE WEDNESDAY Porsche AG now expects sales between 39 billion and 40 billion euros ($44 billion) as a result of the flooding in the aluminium supplier's production facility. It previously expected revenue between 40 billion and 42 billion euros. The company said it was to be expected that the delays in the production and delivery of vehicles would not be fully compensated for in the rest of the year. Porsche now sees a return on sales between 14% and 15% for the year, down from its previous expectation of 15% to 17%. The company reports first-half results on Wednesday. It faces muted demand in China, driving global deliveries down 7% in the first half of the year. Porsche is also struggling with low electric vehicle sales this year. It watered down its EV ambitions on Monday, citing customer demand and developments in the sector. ($1 = 0.9183 euros) Sign up here. https://www.reuters.com/business/autos-transportation/porsche-adjusts-fy-outlook-warns-impairments-due-alloy-supply-shortage-2024-07-22/