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Canadian Pacific Railway soared Wednesday after it reported record earnings that handily beat expectations while improving its operating ratio despite lower volumes, particularly in several key areas of its business.
The Calgary-based company's net income grew nearly 45 per cent to $324 million for the period ended Sept. 30, up from $224 million a year ago. That translated to $1.84 per diluted share, up from $1.30 per share in the third quarter of 2012.
Excluding a one-time, $7-million tax item, adjusted profit was $331 million or $1.88 per share, compared with the $1.72 per share forecast by analysts.
Canadian Pacific's (
TSX:T.CP,
Stock Forum) revenue was $1.5 billion, up six per cent from $1.45 billion in the year-ago period.
“By all standards, this was an outstanding quarter,” said CEO Hunter Harrison.
Boeing (
NYSE:BA,
Stock Forum) third-quarter net income rose 12 per cent as the company delivered planes to customers at a quicker pace. It has already sped up the assembly of two of its planes - the 737 and 777 - and on Wednesday announced plans to boost production of its new 787 Dreamliner, too.
Boeing raised its profit guidance for the full year. Shares rose $5.29, or 4.3 per cent, to $127.77 in afternoon trading.
Profits from commercial planes rose 40 per cent, offsetting a 19 per cent profit drop in Boeing's defence division because of a sharp decline in deliveries of military planes.
Boeing earned $1.16 billion, or $1.51 per share, for the quarter. That was up from about $1 billion, or $1.35 per share, a year earlier.
WellPoint Inc.'s (
NYSE:WLP,
Stock Forum) third-quarter earnings fell 5 per cent but still topped expectations, and the nation's second-largest health insurer said it raised its 2013 forecast despite added expenses from the health care overhaul.
The Blue Cross Blue Shield insurer said Wednesday its performance so far this year helped prompt it to raise its forecast for 2013 adjusted earnings to at least $8.40 per share. That's up from its previous forecast for at least $8 per share and well beyond the $8.26 per share average that analysts surveyed by FactSet expect.
Company executives told analysts they are doing this despite making sizeable investments to get ready for upcoming coverage expansions under the overhaul.
The law aims to provide health insurance coverage to millions of uninsured people, and it took a major step toward that goal on Oct. 1, when enrolment started for coverage that begins Jan. 1. The overhaul calls for an expansion of the state-federal Medicaid program and also provides income-based tax credits to help people buy coverage on health insurance exchanges that are set up in each state.
WellPoint is selling coverage on several of these exchanges. Chief Financial Officer Wayne DeVeydt said WellPoint has spent about $300 million to prepare for the exchanges, and they expect to spend $70 million to $100 million on marketing for coverage the insurer sells on them.
Encana Corp. says cost-cutting measures under its new CEO are beginning to pay off, as it reported third-quarter profits that beat analyst estimates.
The natural gas giant (
TSX:T.ECA,
Stock Forum) said Wednesday its 2013 capital spending is expected to come in between $2.7 billion to $2.9 billion, down from a range of $3 billion to $3.2 billion.
Encana said earlier this year it was is aiming at between $100 million and $150 million in cost savings and efficiency gains over the next 18 months. By the end of this year, it expects to have realized about $110 million of that amount.
Former BP executive Doug Suttles became CEO in June, replacing Randy Eresman, who abruptly parted ways with the company at the beginning of the year.
Suttles has since pared down the company's management ranks and signalled sales of dry-gas natural gas assets are in the works. Encana plans to announce its long-term strategic plan and fourth-quarter dividend - which some have speculated could be cut - by the end of the year.
“Our goal is to make Encana a more focused, dynamic and efficient organization,” he said. “The changes we've made to date and the changes we will be making in the near term are positioning Encana to generate high quality returns for our shareholders.”
Caterpillar's (
NYSE:CAT,
Stock Forum) mining business is down in a hole.
Its third-quarter earnings plunged 44 per cent and it cut its forecast, again. It said revenue will be almost $11 billion lower than last year, a drop of 17 per cent. Most of the decline is in its mining gear business, where revenue is expected to fall 40 per cent.
“With $11 billion coming off the top line, it has been a painful year and has required wide ranging and substantial actions across the company,” Chairman and CEO Doug Oberhelman said in a statement.
Until this year, rising commodity prices had fueled a mining boom. But slower growth in China's economy hurt demand for mining gear there as well as in Australia. Revenue in its “Resource Industries” unit, which is mostly mining, plunged 63 per cent in the Asia Pacific region.
Caterpillar has already been shutting factories and cut its workforce by some 13,000 people, and temporarily laid off thousands of salaried workers. It said it has also cut its capital spending plans for the year. At the end of the quarter it employed 121,506 people full-time worldwide.
The Peoria, Ill., company earned $946 million, or $1.45 per share, in the quarter that ended Sept. 30. That was down from $1.7 billion, or $2.54 per share, in last year's quarter.
Revenue tumbled 18 per cent to $13.42 billion.
Higher taxes lowered
US Airways' (
NYSE:LCC,
Stock Forum) third-quarter profit, but the airline still beat Wall Street expectations on a combination of more traffic and higher average fares.
US Airways, the nation's fifth-biggest airline, pushed revenue higher by filling a larger percentage of seats. Including US Airways Express regional flights, passengers travelled nearly 5 per cent more miles and they paid 4.4 per cent more for every mile that they flew.
US Airways is attempting to merge with AMR Corp., the parent of American Airlines, but the U.S. government has sued the companies to block the deal.
On Wednesday, US Airways Group Inc. said net income was $216 million, or $1.04 per share, for the quarter ended Sept. 30. That's down 12 per cent from $245 million, or $1.24 per share, a year earlier.
The difference: In this year's quarter, US Airways owed $120 million in income taxes compared with just $1 million last year. The company used up its ability to reduce taxes by carrying over losses from previous years.
Excluding costs of the proposed merger with American, US Airways said it would have earned $1.16 per share, four cents better than analysts expected.
GlaxoSmithKline (
NYSE:GSK,
Stock Forum) says its sales of drugs and vaccines in China tumbled in the third quarter as it was hit by bribery investigations there.
Worldwide sales, it says, were flat as growth in the U.S. and Europe helped offset China's 61 per cent drop. Total revenue rose 1 per cent to 6.51 billion pounds ($10.5 billion).
The company was hit by allegations by the Chinese government that four of its employees paid bribes to doctors and hospitals to encourage them to prescribe medications.
Chief Executive Andrew Witty said Wednesday that the decline in China was disappointing but it was too early to judge the long-term impact of the probe.
The company said it expected earnings per share to grow between 3 per cent and 4 per cent this year.
Peugeot Citroen (
GREY:PEUGF,
Stock Forum) warned Wednesday that its headline alliance with U.S. carmaker General Motors may produce smaller savings than originally forecast, even as it posted lower third quarter revenue.
Peugeot Citroen said it was putting a planned joint development of vehicle platforms with GM under review, and that as a result, the $1 billion in savings that Peugeot Citroen had counted on from the alliance “may be readjusted downwards.”
Europe's number two carmaker and the U.S. auto giant sealed their alliance last year, with GM taking a 7 per cent stake in France's Peugeot Citroen, making it the second-largest shareholder behind the Peugeot family.
The two companies said the tie-up, with plans to share vehicle platforms and pool the purchasing of components and services, would save them a combined $2 billion a year within five years, split equally.
News of the alliance trouble came as Peugeot Citroen reported its revenue continued to fall in the third quarter due to shrinking European car markets and production disruptions by workers upset at a planned factory closure.
The French maker of the Peugeot 208, Citroen C4 and other hatchbacks and sedans said its revenue for the July-September period fell 3.7 per cent to 12.1 billion euros ($16.7 billion). The automobile division saw its sales fall by more, down 5.8 per cent to 8 billion euros.
Heineken NV (
OTO:HINKY,
Stock Forum) is warning that its core earnings this year will fall modestly as business conditions, especially in central and eastern Europe are worse than it expected.
Previously the Dutch brewer said underlying earnings, which strip out effects of acquisitions, would be “broadly in line” with a year earlier. Heineken's share price fell 3 per cent at the open.
The warning came as Heineken reported a 15 per cent fall in third quarter net profit to 483 million euros, due in part to the stronger euro.
CEO Jean-Francois van Boxmeer said Wednesday that the company will respond by cutting more costs.
The trading update also showed revenues, including acquisitions, rose 4 per cent to 5.18 billion euros during the period, and just 0.2 per cent without, as price hikes outweighed a fall in volumes.
Nordic banking group
Nordea AB (
GREY:NRDEF,
Stock Forum) says its net profit rose by 13 per cent in the third quarter to 776 million euros ($1.06 billion) from 688 million euros a year earlier.
CEO Christian Clausen said Wednesday results were primarily boosted by cost savings, lower loan losses and savings-related incomes, while interest rates remained low.
Total revenue for the quarter increased by 1 per cent to 2.43 billion euros from 2.41 billion, while the key net interest income slipped by 1 per cent.
Clausen said consumers in the Nordic countries have been cautious, with an exceptionally high savings ratio and low consumption, but said he believes the “worst is now over” and that he expects an improved macro environment in the region in 2014.
The DuPont Co. (
NYSE:DD,
Stock Forum) said strong demand for agricultural products in Latin America offset weak pricing for a key industrial pigment in contributing to an increase in third-quarter earnings.
The Wilmington chemical company reported net income of $285 million, or 30 cents per share Tuesday, on revenue of $7.8 billion. Removing one-time tax and pension costs, earnings were 45 cents per share, up from 43 cents per share last year and topping the 41 cents Wall Street analysts were expecting, according to a FactSet poll.
For the same period last year, DuPont reported net income of about $5 million, and break even on a per-share basis.
The latest quarter saw sales increase 5 per cent, and overall volume was up 9 per cent, reflecting volume growth in all geographic regions.
DuPont shares rose 71 cents, or 1.2 per cent Tuesday, to close at $60.17, near their 52-week high of $60.86.
Notwithstanding strong performance in agriculture, photovoltaics and personal protection markets, the latest results underscore concerns about DuPont's performance chemicals unit, whose products include titanium dioxide, or TiO2, a whitening pigment used in a wide range of products, from paint to toothpaste.
DuPont chairwoman and CEO Ellen Kullman said the company is exploring several strategic alternatives for the performance chemicals unit, a commodities business that generates significant cash but also is subject to highly volatile markets. She declined to provide details or a timeline for deciding the future of the unit, which could be sold or spun off.
Biotech drugmaker
Amgen Inc. (
NASDAQ:AMGN,
Stock Forum) said Tuesday that its third-quarter profit jumped 24 per cent, trouncing analysts' expectations, as sales of more than a half-dozen of its drugs increased by double digits, one of them helped by a big government purchase.
The steady performance came just before Amgen closed its $9.7 billion purchase of Onyx Pharmaceuticals on Oct. 1. That deal is part of Amgen's strategy to expand beyond its medicines for easing side effects of some cancer treatments and become a major player in the market for pricey cancer drugs.
Amgen has also just begun joint ventures to sell colorectal cancer drug Vectibix in China and to develop and then sell five medicines in Japan. Japan is the world's second-biggest medicine market, after the U.S., and China is spending more on health care, making its huge, aging population a growth target for most pharmaceutical and biotech companies.
Executives on a conference call with analysts laid out a multipronged strategy to expand sales into more countries and new disease areas, particularly heart disease. The company is best known for arthritis treatment Enbrel and Prolia for osteoporosis.
“Our pipeline now includes 10 late-stage programs set to generate pivotal data” within several years, CEO Robert Bradway noted.
Amgen said its third-quarter net income was $1.37 billion, or $1.79 per share, up from $1.11 billion, or $1.41 per share, a year earlier.
Contract electronics manufacturer
Celestica Inc. (
TSX:T.CLS,
Stock Forum) has reported an increase in third-quarter net earnings despite a decline in revenue as a result of last year's loss of its manufacturing contract with BlackBerry (
TSX:T.BB,
Stock Forum).
Excluding the BlackBerry contract, Celestica says revenue would have increased five per cent as net earnings improved to US$57.4 million or 31 cents per share from $43.7 million or 21 cents in the prior-year period.
Revenue slumped to US$1.49 billion from more than US$1.57 billion in the 2012 quarter.
“Celestica delivered a solid third-quarter with revenue and adjusted EPS above the midpoint of our guidance range, driven by strong demand in our communications and storage end markets,” president and CEO Craig Muhlhauser said Tuesday in an earnings release issued after markets closed.
Celestica wrapped up manufacturing services for RIM as part of a decision by the struggling smartphone maker to cut supplier costs.
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