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AGL Energy, a power producer, beats profit expectations and narrows its annual forecast
AGL Energy, an Australian power company, reported a first-half profit that was ahead of analysts' estimates. However the company lowered its earnings forecast for the full year citing lower demand from customers in the second half. AGL Energy has lowered its outlook for fiscal 2025 post-tax net profits to A$580 ($364.88 millions) to A$710, down from its previous expectations of A$530 to A$730. This new range has a mid-point that is slightly lower than Visible Alpha's consensus profit estimate of A$657 millions, but substantially lower than fiscal 2024's underlying profit of A$812million. The power producer stated that the narrowing of forecast is due to a strong performance in the first half, and earnings are expected to moderate during the second quarter, due to lower gas and electric demand from customers, as well as continued customer competition. The company also lowered its forecast for annual operating earnings to A$1.94 billion - A$2.14 Billion, missing the consensus estimate of A$2.06 Billion. AGL, which generates nearly 20% of the total electricity in Australia's National Electricity Market NEM, is fighting with lower contract price -- as the normalisation high wholesale electricity prices in the previous financial year affects contract pricing. The company's bottom line was hurt by higher operating costs, due to inflationary pressures. The underlying profit for the first half of the year fell below last year's A$399 millions to A$373 ($234.80) million. It comfortably exceeded the Visible Alpha consensus of A$307,4 million. "As expected, the results were impacted by an increased Consumer margin compression due lower customer prices and increased market competition," stated Chief Executive Officer Damien Nicks. The company's losses were reduced by higher generation volumes and gross margins at its electricity and natural gas trading business and its coal-fired Bayswater Power Station in New South Wales. The Melbourne-headquartered firm, which counts tech billionaire Mike Cannon-Brookes as its top shareholder, declared an interim dividend of 23 Australian cents per share, below the 26 Australian cents declared last year. Reporting by Sameer Mukherjee and Rajasik Mukherjee, both in Bengaluru. Editing by Alan Barona & Shilpa Majumdar.
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Transport, infrastructure drag down mining giant Grupo Mexico's earnings
The mining giant Grupo Mexico announced a decline in its net profits during the fourth quarter, falling short of analysts' expectations. Losses in its infrastructure division as well as a lower profit in its transportation unit were to blame. The quarter's net profit fell by 6.5%, to $686.5 millions. Revenues were up 13% at $3.85 billion. Analysts polled at LSEG predicted a net income of $945 from revenues of $4.04 Billion. Grupo Mexico is controlled by German Larrea and is the largest copper producer in the world. It has mines located in Peru, Spain, the United States and Mexico. Copper production increased by 0.8% and zinc production nearly doubled. Grupo Mexico produced 1.086 million tons of copper in 2018, which is in line with the company's forecast. The miner said that it expects to produce 1.083 million tonnes in 2025. This is slightly less than its previous forecast. Transport saw a 3.5% drop in sales, and a net profit of 0.1% less than the same period last year. Infrastructure, on the other hand, reduced losses. (Reporting and editing by Sarah Morland; Kylie Madry)
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US Gulf refiners paying premium prices for Trinidad's Molo crude
Heritage Petroleum's CEO, who is the state-owned oil company of Trinidad and Tobago, stated on Tuesday that some U.S. Gulf Coast refining companies have paid recent prices above the Brent crude benchmark price for Trinidad and Tobago Molo heavy sour Crude. Some U.S. refineries have been forced to pay higher prices to obtain other grades due to the lower availability of popular Latin American heavy grades, such as regional benchmark Maya, from Mexico, and Merey, from Venezuela. This is in part because of prolonged production cuts by OPEC+. Trinidad and Tobago has been a marginal crude oil supplier to the Gulf Coast but its exports have increased in recent months. According to the Energy Information Administration, the U.S. imports Trinidadian crude at a rate of 44,000 barrels a day last year, compared with 36,000 barrels bpd by 2023. Erik Keskula, Heritage CEO, said on the sidelines Trinidad's Energy Conference that "we sometimes trade at a slight price premium to Brent because the crude mix we have is quite high in demand in the Gulf Coast region of the U.S." Keskula stated that Heritage will continue to market cargoes to various U.S. Gulf Coast Refineries in order to promote competition and firm prices in this region.
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Eversource Energy announces quarterly profit on increased electricity rates
Eversource Energy, a utility company, reported on Tuesday a profit for the fourth quarter. The higher electricity prices were to blame. Rate case proceedings are used by utilities to increase their rates. They base their appeals on the investments they have made or the expenses they have incurred in providing services. The company posted a profit for the quarter ending December 31 of $72.5m, or 20c per share. This compares to a loss in the previous quarter of $1.29bn, or $3.68/share. The fourth quarter earnings were however impacted by a loss of $298.3 millions on the sale of the water distribution business. Eversource sold its public water division in January for $2.4 billion. The utility company wants to reduce its debt and concentrate on its main businesses, electricity and natural gas. As part of its diversification strategy into the water business, the company purchased Connecticut-based Aquarion Water for $1.7 billion in 2017. Eversource Energy provides electricity and natural gas for about 4,000,000 customers in Connecticut, Massachusetts and New Hampshire. The company's fourth quarter 2023 loss was mainly due to a $1.62bn impairment charge on offshore wind investments. It divested a 50% stake in 3 wind projects in joint venture with Orsted. (Reporting from Tanay Dhumal, Bengaluru. Editing by Mohammed Safi Shamsi.)
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After Powell's comments, US yields rise and stocks recover from their early dip
Investors reacted to the latest U.S. trade war and Federal Reserve Chairman Jerome Powell's signal of a cautious approach for rate reductions. The yields on U.S. Treasury bonds rose as well. Donald Trump raised the tariffs on imports of steel and aluminum to 25%, up from 10%. He also eliminated product-specific exemptions and country exclusions. Trump said that he would consider an exemption for Australia, and that the steel-and-aluminum measures will only come into effect on March 4. This has led some investors to believe that the duties were being used as a negotiation tool. Mexico, Canada, and the European Union condemned the move on Tuesday, the EU stating that the 27-nation block would take "firm, proportionate countermeasures". S&P 500 index on Wall Street eked out an elusive gain, as it erased earlier losses. Powell said the Fed was not in a hurry to change its policy and that it would only react to the impact of tariffs or trade policies on the economy. Tariff talks are ongoing, and there is a high level of global tension. "Valuations have risen, company guidance has been measured, inflation persists, government policy remains uncertain, and tariff talks are continuing. "The level of uncertainty in the market is high which means that volatility will increase," said Terry Sandven. Chief equity strategist at U.S. Bank Wealth Management. Coca-Cola's quarterly results were released and the Dow Industrials gained nearly 5%. The Dow Jones Industrial Average rose by 123.24 or 0.28% to 44,593.65. The S&P 500 gained 2.06 or 0.03% to 6,068.50. And the Nasdaq Composite dropped 70.41 or 0.36% to 19,643.86. The MSCI index of global stocks rose by 0.2 points, or 0.02% to 873.99. The pan-European STOXX 600 rose by 0.23%, closing at a new record high. Bank stocks were the main contributors. Investors' attention now turns to Wednesday's latest consumer price reading, which will provide the latest information on Treasury yields. The yield on the benchmark 10-year U.S. notes has risen 4 basis points, to 4.535%. This is its longest streak of gains since a month. The markets have been reducing their expectations of rate cuts by the U.S. Central Bank this year. They are largely expecting that the Fed will hold rates at its meetings in March and May. According to CME's FedWatch tool, the markets have priced in a 51% probability of a rate cut in June. This is down from 63.6% one week ago. The dollar index (which measures the greenback in relation to a basket) fell by 0.41%, falling to 107.92. Meanwhile, the euro rose 0.53%, reaching $1.0361. The dollar gained 0.31% against the Japanese yen to 152.46, while the pound rose 0.62% to 1.2443. Helen Given, a FX trader with Monex USA in Washington, said: "We have seen a lot volatility in the headlines about tariffs over the past two weeks." But what we are seeing is that headlines and announcements do not necessarily indicate that tariffs will be levied at the time we thought they would. The oil price rose to its highest level in two weeks on the back of Russian and Iranian supply worries, but the announcement about tariffs curtailed gains a little. U.S. crude oil settled at $73.32 per barrel, an increase of 1.38% for the day. Brent crude closed at $77 a barrel, an increase of 1.38%.
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German Embassy asks Italy's Banking Union about M&A Battles
The German embassy in Italy asked the main Italian banking union Fabi on Tuesday to explain the takeover wars that are roiling the sector. Fabi released a statement saying that during a meeting requested by the embassy in Rome, Fabi's Lando Maria Sileoni, and Benedikt Grdau, the embassy's advisor for financial affairs, discussed ongoing deals, bank regulation, the role of the unions, and political implications. Fabi stated that Germany closely monitors the rapidly changing Italian finance sector and its impact on cross-border trade. Current M&A activity Italian banking includes UniCredit and Monte dei Paschi di Siena bidding respectively for Banco BPM and Mediobanca. Last year, UniCredit announced that it had acquired a large stake in Commerzbank. It then began to press for a merger. A source at the meeting said that the Italian bank's bid to acquire Commerzbank, was one of the topics discussed. The source did not provide any further details. UniCredit has to wait for approval from the European Central Bank for the 28% stake that it built up in the German lender - largely using derivatives. (Reporting and editing by Gavin Jones, Andrea Mandala)
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After Powell's comments, US yields are higher and stocks flat.
Investors reacted to the latest U.S. trade war and Federal Reserve Chairman Jerome Powell's signal of a cautious approach for rate reductions as they assessed the latest U.S. Tariff salvo. Donald Trump raised the tariffs on imports of steel and aluminum to 25%, up from 10%. He also eliminated product-specific exemptions and country exclusions. Trump said that he would consider an exemption for Australia, and that the steel-and-aluminum measures will only come into effect on March 4. This has led some investors to believe that the duties were being used as a negotiation tool. Mexico, Canada, and the European Union condemned the move on Tuesday, the EU saying that the 27-nation block would take "firm, proportionate countermeasures". Wall Street saw the S&P 500 almost unchanged, as the benchmark index reversed its previous declines. Powell said the Fed was not in a hurry to change its policy and that it would only react to the impact of tariffs or trade policies on the economy. Helen Given, FX Trader at Monex USA, Washington, said: "It appears that he is trying to encourage people not to trade on these headlines, not to make moves based on those headlines, and to wait and see what happens." In the last two week, we've seen headlines about tariffs become more volatile. What we are seeing is that headlines and announcements do not always indicate that tariffs will be imposed, or at least at the time we expect. Coca-Cola's quarterly results were reported and the Dow Industrials gained nearly 4%. The Dow Jones Industrial Average increased 39.40 points or 0.09% to 44,511.24. The S&P 500 dropped 0.64 points or 0.01% to 6,065.80. And the Nasdaq Composite declined 43.80 points or 0.22% to 19,670.47. The MSCI index of global stocks fell by 0.28 points or 0.03% to 873.51. The pan-European STOXX 600 rose by 0.23%, closing at a new record high. Bank stocks were the main contributors. Investors' attention now turns to Wednesday's latest consumer price reading, which will provide the latest information on Treasury yields. The yield on the benchmark 10-year U.S. notes increased 3.4 basis points, to 4.529%. The markets have been reducing their expectations of rate cuts by the U.S. Central Bank this year. They are largely expecting that the Fed will hold rates at its meetings in March and May. According to CME's FedWatch tool, the markets have priced in a 51% probability of a rate cut in June. This is down from 63.6% one week ago. The dollar index which measures the greenback against a basket currencies fell by 0.28%, to 108.06; the euro rose 0.38%, at $1.0345. The dollar gained 0.3% against the Japanese yen to 152.45, while the pound rose 0.47% to 1.2422. The oil price rose to its highest level in two weeks on the back of Russian and Iranian supply worries, but the announcement about tariffs curtailed gains a little. U.S. crude climbed 1.31% to $73.27 per barrel. Brent rose to $76.95 a barrel, an increase of 1.42% for the day.
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ArcelorMittal is considering shifting European support to India
ArcelorMittal, the second largest steelmaker in the world, said that it is looking at a possible shift of some European business support to India as the steel sector of the region faces increasing pressure due to high costs and increased imports. However, the company said that no steel production would be transferred from Europe to India. The steel industry in Europe has struggled against the oversupply of steel from China. Now, like all other exporters, they face 25% tariffs on imports of steel and aluminum that President Donald Trump announced on Monday "without any exceptions or exclusions". Officials from the government said that India, whom Trump referred to as a "very large abuser" of trade, plans to offer tariff reductions in different sectors, which could increase U.S. exports and earn tariff concessions. The Prime Minister Narendra Modi is visiting the United States for talks with Trump this month. In an email statement, ArceloMittal said that the steel industry in Europe faces several major challenges. These are threatening to the future of the steelmaking on the continental continent. It said that it had been studying the expansion and centralisation of certain support functions in India. This was revealed during a European Works Council meeting held on Tuesday. The group said that the initiative was part of its ongoing efforts to optimize processes and align itself with similar moves made by companies in various industries. ArcelorMittal spokesperson said it is too early to give details about which functions or jobs might be affected. The European unit of the company is increasing efforts to reduce non-production costs in response to mounting pressures on the region’s steel industry. Already strained by China’s overcapacity, this sector faces an increased level of stress. Eurofer, Europe's largest steel industry group, has requested a 50% reduction in steel import quotas as part of the EU's protection system. (Reporting and editing by Emelia Sithole Matarise; Anna Peverieri)
Pentagon's Hegseth sees growth in defense spending despite Musk review
U.S. Secretary of Defense Pete Hegseth stated on Tuesday that he wished to increase the overall U.S. military spending. He also played down any concerns about an audit pending by Elon Musk, which is aimed at identifying billions in waste within the Pentagon.
Hegseth, speaking in Germany on his first overseas trip, said that he was already in contact with Musk. He also expressed confidence in efforts to cut costs by billions of dollars and make the Pentagon more effective.
Hegseth, speaking of Musk's Department of Government Efficiency, said: "There are plenty of places at the Pentagon where we would like the DOGE to keep a keen eye on things. But we will do this in coordination."
We won't do anything that would compromise the operational or tactical capability of America.
Hegseth, however, said that he had already been "intimately involved" with key committees of Congress regarding the bolstering of the U.S. Military.
Musk's companies like SpaceX also have major contracts with Pentagon, raising significant concerns about conflict of interest.
Donald Trump, the U.S. president, has stated that Musk's DOGE will target the Pentagon first. The DOGE will then review U.S. defence spending after it completes cutting spending at the Department of Education. Musk is expected to uncover hundreds of billions in fraud and abuse within the Pentagon, according to Trump.
Leaders across the political spectrum criticize the waste and inefficiency of the Defense Department.
Democrats and civil servant unions claim that Musk does not have the expertise needed to restructure Pentagon and that their efforts could expose classified programs.
Hegseth downplayed concerns about broad cuts to Pentagon agencies like those seen in the U.S. Agency for International Development by saying: "The Defense Department does not U.S. AID."
"U.S. AID is having a lot problems... pursuing globalist policies that have no connection with America First. This is not the Defense Department."
Hegseth said Musk could target Pentagon efforts related climate change without providing specifics.
Hegseth stated, "I look forward to welcoming Elon at the Pentagon in the near future." Look at all the climate programs the Defense Department has pursued. The Defense Department's business is not to solve the problem of global warming. "We're in business to deter and win wars."
Mike Waltz, Trump's National Security Advisor, suggested over the weekend that DOGE could have a particular interest in the Pentagon's processes for shipbuilding.
The Pentagon budget is close to $1 trillion per annum. In December, the then-President Joe Biden approved $895 billion of defense spending for fiscal year ending on September 30.
Hegseth said that defense spending should be increased, but he also acknowledged his concerns about the growing U.S. national debt which he called "a liability for national security."
Hegseth stated, "I believe the U.S. should spend more than what the Biden Administration was willing to do. They historically underinvested into the capabilities of our Military."
"The president, just as he did in his first term, is committed to investing in America's military."
Hegseth stated that the U.S. defence spending should at least not fall below 3% GDP. According to the World Bank, which cites data from the Stockholm International Peace Research Institute (SIPRI), the United States will spend about 3.4% on defense by 2023. (Reporting and editing by Franklin Paul, Marguerita Choy and Idrees Al)
(source: Reuters)