- Glencore is contributing to the resource dividend frenzy
- Lack of chips continues to bother automakers
- Rolls-Royce – has it bottomed out?
Resource-Dividend-Generosity continues
Another day, another significant payoff from the booming commodity sector. This time it’s the raw material giant Glencore (GLEN) that plans to take some of the spoils from the price hike across the commodity complex last year in the form of dividends and share buybacks valued at 2.8 billion with adjusted earnings of nearly 80 percent to $ 8.7 billion.
After Glencore received dividends of 1.6 billion earlier this year, it also cut net debt by a third to $ 10.7 billion.
Read Alex Hamer’s analysis of the results here.
Glencore’s cash distributions follow announcements of record dividends and share buybacks by other commodity companies in the past two weeks. BHP (BHP) is the next big miner to release its fiscal year numbers on August 17th.
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Chips and Ketchup: International Summary of Results
General Motors (USA: GM) is the The latest automaker names the global shortage of chips as one of the reasons for production problems in 2021. That, plus the $ 1.3 billion cost of recalls mostly tied to the electric Chevrolet Bolt, kept profits below expectations. But quarterly net income of $ 2.8 billion is still an improvement on 2020, when the company reported a loss of $ 0.8 billion.
The results are shown along with new UK vehicle registration details showing how difficult it is for automotive companies on the demand side as well. New registrations of gasoline and diesel vehicles fell by 70 and 46 percent respectively in July.
Over night Uber (USA: UBER) took an unexpected gain in the second quarter, but this was partly due to equity gains in the order of Didi (USA: DIDI)whose stocks have recently fallen sharply. Revenue in the Mobility and Delivery segments of the business both rose compared to the pandemic-ravaged second quarter of 2020, but adjusted earnings were still at a loss of $ 509 million. Uber’s rival earlier this week Elevator (USA: LIFT) achieved a sales and profit jump of 125 percent from 23.8 million US dollars.
On the supply side, the problem for automobile manufacturers is that their chips are usually cheaper than these used in the high-tech sectorwhich means they are less of a priority for semiconductor companies and their jobs are falling to the bottom of the pile. GM expects the shortage to continue to plague the numbers through next year. but Taiwan Semiconductor (TPE: 2330) – one of the world’s largest chip suppliers – is optimistic that production will have recovered by the end of 2021.
Meanwhile in Japan Sony’s (TYO: 6758) Figures show that it is not only the car manufacturers who are struggling with a shortage of chips. The gaming giant’s numbers were better than expected in the first quarter, but predictions for the PS5 have been hampered by the lack of those pesky chips.
Kraft Heinz (US: KHC) needs a different kind of chips. Improved demand for snacks and prepackaged meals drove second-quarter sales above expectations, but growth is still not spectacular – first-half sales rose just 1.6 percent year over year.
Robinhood is rising
One company that surprisingly has a larger market cap than Kraft Heinz is an online broker Robinhood (HOOD). After a lackluster IPO last week was marked by a drop on the opening day, trading has seen a complete U-turn in the past few days, with Robinhood shares skyrocketing – yesterday they were up 80 percent on that day – Eerily reminiscent of the meme-share frenzy witnessed earlier this year, fueled in part by the deluge of new retail investors brought into the market by trading apps like, you guessed it, Robinhood. By the end of yesterday’s trading day, the stock finally closed at $ 70.39, up 50 percent from the day and about twice the level it slipped to on the day it went public.
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Rolls-Royce recovery is imminent?
Half-year figures for Rolls-Royce (RR.) back towards seriousness due to improved trade in the defense and energy systems segments. The aerospace giant posted an underlying operating profit of £ 307 million, up from a loss of £ 1.63 billion in the first half of 2020.
Adjusted sales decreased 2 percent, although the core commercial aerospace business benefited from a partial recovery in business aviation. Flight hours with long-term large engine service contracts (LTSA) were 43 percent of 2019 levels, compared to 34 percent in the second half of 2020. That is kind of progress.
The cost base of the civil aerospace business has been reduced by a third due to the restructuring program, and the Group expects free cash flow to turn positive sometime in the second half of the year. There is plenty of headroom with £ 7.5bn liquidity including £ 3.0bn in cash. The defense business continues to impress, although much depends on how quickly international travel rates recover.
Ashley loosens up Frasers?
Mike Ashley, the founder of Sports Direct and architect of the Fraser (FRAS) Group of retail brands used their earnings announcement this morning to confirm plans to step down as CEO in 2022, despite intending to remain on the board. Ashley has been chief executive since longtime right-wing husband Dave Forsey stepped down in 2016.
But those investors who hope Frasers could get a little more conventional if Ashley steps back might be a little disappointed today with the news that his likely successor is his daughter’s fiancée, Michael Murray, who is currently not on the board or even a full-time employee from . is the company. Murray is currently in an advisory capacity as Head of Elevation and is also heavily involved in real estate transactions, from which he is receiving a hefty cut. Today the company announced it was working on a package for Murray when he takes over on May 1, 2022.
Meanwhile, the results showed a dramatic drop in profits to $ 8.5 million.
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