BMW, the world’s biggest luxury carmaker, said investment in technology and new models such as the i3 electric car would hold back fourth-quarter earnings, after it reported a bigger than expected drop in third-quarter profit.

The German group, which is spending heavily in a bid to stay ahead of rivals Mercedes and Audi, also said yesterday quarterly profits were weighed down by discounts to lure cash-strapped European buyers and warned demand for cars in the region might not rebound until the second half of next year.

BMW said earnings at its main autos division might take an extra €500mn ($676mn) hit in the fourth quarter due to the cost of upgrading technology and expanding production.

The additional outlay could push the division’s quarterly margin on earnings before interest and tax (EBIT) to the lower end of BMW’s target range of between 8 and 10%, finance chief Friedrich Eichiner said during a conference call.

Third-quarter operating earnings at the autos division, which accounts for over 90% of group revenue, dropped 6% to €1.55bn, missing analysts’ average forecast of 1.59bn in a Reuters poll.

That reduced the division’s EBIT margin by half a percentage point to 9% in the quarter, compared with 9.4% at Volkswagen’s Audi and 7.3% at Daimler’s Mercedes-Benz.

“Once BMW’s i start-up costs are diminishing, focus will return to growth,” Arndt Ellinghorst, head of automotive research at London-based ISI,  said.

“BMW is trading on 9.7 times our 2014 earnings forecast which is attractive relative to Daimler on 11.2 times. Indeed, we expect BMW’s 2014 group margin to be 270 basis points higher than Daimler, yet BMW (stock) is 13% cheaper.”

BMW stood by its forecast for a full-year autos EBIT margin of 8-10% and a group pretax profit similar to last year’s 7.82bn euros, though it cautioned car market conditions might remain “volatile and challenging” in coming months.

The carmaker is counting on new models including the overhauled 5-Series saloon, the next generation of the X5 SUV and the 4-Series coupe to keep up its sales momentum.

Global deliveries, also including Rolls-Royce and MINI brand cars, may post a single-digit percentage gain to a new record this year, BMW said, reaffirming targets.

 

 

Marks & Spencer

British retailer Marks & Spencer posted a ninth straight quarterly fall in clothing sales yesterday, ratcheting up the pressure on chief executive Marc Bolland who has pinned his recovery plan on higher quality and more stylish fashions.

Bolland, who joined Britain’s biggest clothing retailer in 2010 with a package worth up to £15mn ($24mn), said new ranges were starting to have an impact just weeks after being introduced.

M&S, which also sells upmarket food and homewares, reported a 9% fall in first-half profit - down for a third year running, though in line with expectations and cushioned by a strong performance from its food business.

M&S, which serves 21mn customers a week from nearly 770 British stores, said sales of non-food products — including clothes — at stores open over a year fell 1.3% in the 13 weeks to Sept 28, its fiscal second quarter.

That compared with analyst forecasts of down 0.4-2.5% and a first quarter decline of 1.6%.

While some of the autumn/winter ranges — the first from a new clothing team led by John Dixon, the former boss of M&S food — hit stores on July 25, the full launch together with an advertising push featuring some of Britain’s biggest female celebrities, including actress Helen Mirren and artist Tracey Emin, did not kick off until Sept 12.

M&S said its overall expectations for the 2013-14 year were unchanged after first-half profit before tax and one off items fell to £261.6mn, on sales of £4.9bn.

The group’s food business, which contributes over half of group sales, saw second-quarter like-for-like sales up 3.2%, at the top end of analysts’ forecasts.

 

 

Holcim

Holcim, the world’s largest cement maker by market value, said yesterday it does not expect 2013 sales volumes to reach last year’s levels, due in part to sluggish demand in some key emerging markets.

Third-quarter net sales fell 8% to 5.29bn Swiss francs ($5.81bn), missing the average estimate of 5.47bn in a Reuters poll, hit by weaker demand for building materials in India, Mexico, Canada and Brazil.

Sales in Asia were hurt by weaker demand in its biggest market, India, where a slowdown in home building and rising input and energy costs continued to weigh. On a brighter note, the company said demand in Europe had stabilised.

Despite subdued demand, net profit after minorities jumped almost 20% to 469mn francs, beating the average forecast for 428mn, as cost cuts bore fruit.

Holcim said cost cuts and a focus on pushing higher-margin services had added 626mn francs to operating profit so far this year.

The company confirmed it was on track to achieve its target of boosting operating profit by at least 1.5bn francs by the end of 2014.

It also stuck to its forecast for organic growth in operating earnings before interest, taxes, depreciation and amortisation and operating profit this year.

 

 

Hertz

Hertz Global Holdings Inc’s quarterly adjusted profit beat analysts’ estimates, helped by higher off-airport car rentals and strong performance of Dollar Thrifty, which it bought last year.

Hertz reaffirmed its reduced full-year forecast, however the car rental company said it is seeing an improvement in US airport rentals in its Hertz brand, after the conclusion of the US government shutdown in mid-October.

It had lowered its full-year earnings forecast in September as cuts in government spending hurt US airport rentals.

The No 2 US car rental company also said it initiated a $300mn share repurchase programme.

Hertz Global’s adjusted net income rose to $337.7mn, or 73¢ per share, in the third quarter, from $280.3mn, or 63¢ per share, a year earlier.

On a GAAP basis, net income fell to $214.7mn or 47¢ per share, from $242.9mn or 55¢ per share, a year earlier.

Hertz, which primarily serves corporate customers, is also benefiting from the acquisition of smaller rival Dollar Thrifty — a big player in the leisure and lower-priced rental market.

Quarterly worldwide revenue rose 22% to $3.1bn. US car rental revenue rose 32.6% to $1.76bn, primarily due to its acquisition of Dollar Thrifty.

Analysts on average were expecting quarterly earnings of 71 cents per share, excluding one-time items, on revenue of $3.06bn, according to Thomson Reuters I/B/E/S.

Revenue from worldwide equipment rental for the third quarter rose 10.7% to $401.8mn.

The company’s revenue per transaction day, an indicator of pricing, increased 2% in the US and 2.9% overseas during the quarter ended September 30.

Airport rentals account for about half of revenue at Hertz, the largest US car rental company after privately owned Enterprise Holdings. Together with Avis Budget Group, the trio control about 95% of the country’s car rental market.

 

 

IntercontinentalExchange

IntercontinentalExchange, which is awaiting final approval for its purchase of NYSE Euronext, reported an 8% rise in third-quarter profit yesterday, helped by higher market data revenues.

Net income attributable to ICE, the Atlanta-based derivatives exchange and clearing house operator, was $141.3mn, or $1.92 a diluted share, up from $131.1mn, or $1.79 a diluted share, a year earlier.

Excluding costs related to the more than $10bn NYSE deal and other one-time items, earnings were $1.97 per share, topping the average analyst estimate of $1.83 per share.

Revenue rose 5% to $337.9mn, with market data revenues up 12% to $40.2mn.

Transaction and clearing fee revenue was almost flat at $279.9mn. Revenue from its credit default swap trade execution, processing and clearing business increased 15% to $38mn.

Futures average daily volume fell 1% in the quarter to 3.1mn contracts.

ICE said in December it would buy the operator of the New York Stock Exchange in a deal that would give it control of Liffe, Europe’s second-largest derivatives market, to help expand into the interest rate futures business.

Shareholders of both ICE and NYSE have signed off on the deal, along with the European Commission and the US Securities and Exchange Commission. Approval is still needed from national regulators in Europe.

ICE’s board declared a quarterly cash dividend of an aggregate $75mn for the fourth quarter, contingent on the closing of the NYSE deal.

ICE said it expects 2013 adjusted consolidated expenses to increase by 1% to 2%, versus its prior forecast of 2% to 3%.

Earlier yesterday, NYSE reported that third-quarter profit rose 21%, helped by higher revenues at its cash listings business.

 

 

AOL

AOL reported higher-than-expected third-quarter revenue on increased advertising sales, but earnings fell sharply because of challenges at its network of community news websites known as Patch.

The digital media and entertainment company said yesterday it took a pre-tax restructuring charge of $19mn and an impairment charge of $25mn, both related to Patch, sending operating income down 61% to $16.7mn.

Chief executive Tim Armstrong made a big bet on Patch, spending more than $150mn on the network of local news sites dotting communities throughout the US. But in recent quarters AOL has retreated, making deep cuts in the money-losing operation, and in August it cut the Patch staff by half, to about 500 employees.

Still, the troubles at Patch did not hurt the company’s ability to increase advertising revenue, an important metric for AOL as it moves away from dwindling but lucrative subscription dollars for its dial-up Internet service. Ad revenue rose 14% to $386mn.

At its Brand Group, which includes the Huffington Post and TechCrunch, display ad revenue increased 11%. The group’s adjusted operating income was $11mn before depreciation and amortization, compared with a loss of $10mn a year earlier.

Total revenue in the third quarter rose 6% to $561.3mn, topping analysts’ average forecast of $531.7mn. The rise included the results of Adap TV, an electronic exchange for video advertising that AOL bought in August.

Net income attributable to AOL fell to $2mn, or 2¢ per share, from $20.8mn, or 22¢ per share, a year earlier.