TheChek News Flow

Saudi Aramco profits fall by almost a fifth

Group reports net income of $32bn as oil prices decline but pledges to pay $19bn dividend next quarter

First-quarter profits at oil group Saudi Aramco dropped by almost a fifth after oil prices slumped, according to a filing on Tuesday.

The company reported $31.9bn in net income for the period, 19 per cent lower than the same period last year, although it said it would pay a $19.5bn dividend in the next quarter.

Aramco made record profits of $161bn in 2022 and increased its quarterly payout to shareholders to almost $20bn as oil prices soared after Russia’s full invasion of Ukraine.

The company said it remained well positioned despite the decline in prices.

“Global crude oil prices declined in the first quarter of 2023 mainly driven by macroeconomic events contributing to market volatility. Aramco believes it is well positioned to withstand fluctuating commodity prices through its low-cost upstream production and strategically integrated downstream operations,” it said in a statement.

Glencore plans Europe’s biggest electric car battery recycling plant

Commodity trader and mining group aims to extend its business to take advantage of big demand for EVs

Glencore has plans to build Europe’s largest battery recycling plant as it seeks to grow its natural resources business on the back of the switch to electric cars.

The Swiss-based company, one of the world’s largest diversified natural resources groups with commodity trading and mining arms, is launching a joint study with Canada’s Li-Cycle into building the facility in Italy by 2027.

The London listed company, which has a 10 per cent stake in Li-Cycle, aims to repurpose its zinc and lead smelter in Sardinia to produce lithium, nickel and cobalt, key metals used to make batteries for electric cars.

Converting the 94-year-old site would extend Glencore’s control over the supply of critical raw materials needed by carmakers.

It would also give it a leading role in battery recycling, while bolstering its portfolio of copper, nickel and cobalt mines. It has already established itself as one of the world’s largest metal recyclers.

Glencore chief executive Gary Nagle has said that recycling already contributes $200-250mn of the company’s earnings before interest, taxes, depreciation and amortisation, which was $34.1bn in total in 2022.

He added that the unit’s growth is expected to be “exponential” because tens of millions of EVs worldwide will be due for recycling in anywhere between eight to 15 years time.

Tim Johnston, co-founder and chair of Li-Cycle, said: “This is a landmark project for Europe’s battery recycling industry.” He added: “These assets are needed soon.”

The plans at the Sardinia site involve recycling disused portable electronics, scrap from battery manufacturing and old EV batteries to create lithium, nickel and cobalt supplies.

The plant will be capable of processing up to 50,000 to 70,000 tonnes of black mass, shredded batteries that would undergo hydrometallurgical processes to extract the raw materials.

That would be enough to recycle batteries from 600,000 used electric cars.

Recycling is set to play an important role in easing the demand for primary raw materials from mines, especially given Europe’s lack of domestic mining supply.

Battery recycling firm Li-Cycle predicts that 10 per cent of Europe’s lithium demand will be satisfied by recycled supply by 2030.

EU legislators have proposed that batteries in EVs must contain above a certain threshold of recycled raw materials from 2030, rising to 20 per cent for cobalt, 10 per cent for lithium and 12 per cent for nickel five years later, as well as setting recycling recovery rate targets.

Kunal Sinha, head of recycling at Glencore, said the group intended to meet growing demand from automakers for circular metal supplies.

“We will do a study and then could subsequently develop the largest battery recycling hub in Europe,” he said.

However, recycling is fraught with risk because it is difficult to predict when large volumes of EV batteries can be processed because of difficulties in forecasting their lifespan in EVs and second use in industries such as energy storage.

In North America, Li-Cycle has built a large black mass processing hub in Rochester near New York. The site is half the size of the planned facility in Sardinia and cost $485mn.

While the cost of the Sardinia plant is yet to be fixed, the two companies said it is less capital intensive than Rochester because they can use existing infrastructure in Italy to help keep prices down.

The site marks a key expansion in Europe for Li-Cycle. It has a shredding site in Germany set to open in mid-2023 with further sites to follow in Norway and France.

Under an expected 50-50 joint venture agreement, Glencore would provide low-cost capital to Li-Cycle, which would take the lead on the engineering of the plant and repay its Swiss partner through the asset’s cash flows.

The feasibility study is due for completion in mid-2024 with operations set to begin at the end of 2026 or early 2027, if a final investment decision is taken.

The reports come after the beauty giant once again lowered its full-year outlook.

The Estée Lauder Cos.’ share price closed up just a touch above 1 percent following a day of confusion over whether it could soon face pressure from a billionaire activist investor.

The beauty giant, whose brands include Jo Malone, Bobbi Brown, MAC, The Ordinary and most recently Tom Ford, saw its share price rise above $209 in early-morning trading after The New York Post reported Sunday that fresh from making a splash with Walt Disney Co., Nelson Peltz is considering making Lauder his next activist play. That could include pushing a sale and ousting president and chief executive officer Fabrizio Freda, according to the report.

But it soon lost some of those gains after Jim Cramer, a CNBC host, said the report was “not true” during an appearance on the business network Monday.

“It’s a controlled stock. You’d have to have 90-year-old Mr. Lauder say that it’s for sale, but this a move that should be repealed rather quickly,” Cramer said.

The stock closed up $2.52, or 1.24 percent, to $206.01.

The Lauder family has around 84 percent of voting control and four of 17 board seats. No filings have been made through the SEC to show Peltz has bought stock, meaning that if he holds any, it would be less than 5 percent.

Neither Peltz’s Trian Fund Management nor Lauder responded to request for comment.

Nevertheless, analysts at Stifel Finance concluded that a Peltz involvement could be a win-win for Lauder shareholders.

“While we have no knowledge of discussions, should the family seek a sale, the company would generate considerable interest from strategic entities, in our view. This in part reflects its positioning as the largest pure-play global prestige beauty company with a superior collection of brands relative to most peers,” said Mark Astrachan in a note. “We also think Peltz’s potential involvement creates a win-win for EL shareholders. Should he become involved and advocate for a sale or management change, and is coupled with productivity and operational improvement, EL shares are likely to outperform.”

It also noted that Lauder’s sales growth has modestly underperformed large prestige beauty peers since 2018, with more significant underperformance since early 2022.

Last week, the beauty giant and new owner of Tom Ford once again slashed its full-year forecasts for both the top and bottom lines due to a slower-than-expected recovery in travel retail in Asia, causing the company’s share price to tumble around 18 percent to $202.70 that day.

Lauder’s overall net sales for the full year are now forecasted to decrease between 10 percent and 12 percent, greater than the previously expected 5 percent to 7 percent drop. Adjusted diluted earnings per common share are anticipated to slide between 50 percent and 51 percent, compared with the previous forecast for a 27 percent to 29 percent decline.

“As the shape of recovery from the pandemic for Asia travel retail comes into better focus, it is proving to be both far more volatile than we expected and more gradual relative to what we experienced in other regions,” Freda said Wednesday.

Lauder, which has a much bigger travel retail business than some of its competitors, saw its Asia travel retail business continue to be pressured by the slower-than-anticipated recovery from the COVID-19 pandemic, with global travel retail organic sales declining 45 percent in the third quarter, compared with a year earlier.

While there had been speculation that Freda, who has been in the top job for close to 14 years, might retire, he stressed at a banking conference last year that he is “completely committed to continue leading this company for the foreseeable future.”

According to its latest annual report, Freda’s total pay package for the fiscal year 2022 was $25.48 million, compared with $65.9 million in 2021. Some of this will be made up of stock options, the full value of which might never be realized due to fluctuations in stock prices and vesting schedules.

While his base salary increased from $1.6 million to $2.1 million, the decrease in the total package was mainly due to 50,429,620 stock awards he received in 2021.

Measure for people with common ailments intended to cut waiting times to see a GP in England

Rishi Sunak has announced plans to cut the time it takes to see a GP in England as the prime minister hurried to deliver on his promise to cut NHS waiting lists before voters go to the polls in a general election expected by late next year.

The measures will allow people suffering from a range of common ailments to get prescription medication directly from a pharmacy, rather than having to see a family doctor first. These will include drugs to treat conditions such as earache or a sore throat.

Sunak, who is under pressure after the Conservatives lost about 1,000 seats in the local elections last week, made the commitment to reduce queues for treatment at the start of the year, one of five priority policy areas that he said on Tuesday he was “getting on with delivering”.

Transforming primary care “is the next part of this government’s promise to cut NHS waiting lists”, he added.

NHS England said that the new arrangements, which would also allow women to obtain oral contraception direct from a pharmacist, would be in place by the winter.

The changes will be backed by £645mn to expand community pharmacy services and are intended to ease pressure on surgeries by releasing about 15mn GP appointments over the next two years, the government said.

The difficulty in securing an appointment to see a family doctor is one of the most common complaints about the UK’s taxpayer-funded health service.

Dissatisfaction with the NHS is at an all-time high and in the annual British Social Attitudes survey published in March, more than two-thirds of respondents identified long waiting times to get a GP or hospital appointment as one of the biggest reasons.

The Health Foundation, a research organisation, last year estimated there was a shortage of about 4,200 full-time equivalent GPs, which was projected to more than double to almost 9,000 by the end of the decade. The government has previously admitted that a 2019 manifesto pledge to recruit an additional 6,000 GPs by 2025 will not be met.

In another step to reduce demand on health practices, up to half a million people a year will be able to self-refer for services including physiotherapy, hearing tests and podiatry without first seeing a GP. The government also promised to end “the 8am rush for appointments” by investing in better phone technology.

Amanda Pritchard, chief executive of NHS England, said GPs were “working incredibly hard to deal with unprecedented demand for appointments”. But with an ageing population, “we know we need to further expand and transform the way we provide care for our local communities”.

Mark Lyonette, chief executive of the National Pharmacy Association, described the move as “a long overdue step” that could “set us back on track for a sustainable, clinically focused future after years of decline”.

However, Professor Kamila Hawthorne, who chairs the Royal College of GPs, said while all the initiatives were positive “none are the silver bullet that we desperately need to address the intense workload and workforce pressures GPs and their teams are working under”.

Labour MP Wes Streeting, the shadow health secretary, said millions of patients were waiting a month to see a GP “if they can get an appointment at all” and said the government’s move was “merely tinkering at edges”.

Beccy Baird, senior fellow at the King’s Fund, said not all pharmacies would be able to offer the additional clinical services and it would “be really frustrating for patients to be bumped from pillar to post, only to end up back at the GP”.

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Credit Suisse chief executive Ulrich Körner to join UBS’s executive board as part of shake-up

UBS has said Credit Suisse chief executive Ulrich Körner will join its executive board as part of a shake-up ahead of the Swiss bank completing the takeover of its domestic rival.

In a series of appointments announced on Tuesday, UBS also said Todd Tuckner, currently finance chief of its wealth management division, would succeed Sarah Youngwood as chief financial officer.

All existing Credit Suisse executive board members who are also division heads will report to Körner and their respective UBS executive board members, UBS said.

The new appointments will come into effect when the transaction closes, which is expected in a matter of weeks.

The revamp comes as UBS is preparing for a costly integration of Credit Suisse, a deal that combines two systemically important financial institutions in one of the most significant banking deals since the 2007-08 financial crisis.

Körner, who was drafted in as CEO of Credit Suisse last year to help revive the bank’s fortunes, has previously worked at UBS. Körner will be “responsible for ensuring Credit Suisse’s operational continuity and client focus”, UBS said.

UBS chief Sergio Ermotti said on Tuesday the combined group would “solidify and represent the Swiss model for finance around the world, one that is capital-light, less reliant on taking risk and anchored by stability and high-touch service”.

Nikkei +1.04% Hang Seng -0.58% CSI +0.20% Shanghai +0.07% Shenzen -0.41%

Eur$ 1.0991 CNH 6.9260 CNY 6.9218 JPY 134.94 GBP 1.2615 CHF 0.8894 RUB 77.7250 TRY 19.5080 WTI$ 72.84 -0.44% Gold 2,028 +0.33% BTC 27,605 +0.16% ETH 1,842 +0.02%

S&P -0.05% Nasdaq -0.10% EuroStoxx +0.09% FTSE +0.30% Dax +0.06% SMI +0.00%

Macro :

- Goldman Sachs Joins Barclays in Bet Against Fed Cuts This Year

- ECB’s Lane Says There’s Still Momentum in Euro-Area Inflation

- Fast-Money Quants, Human Traders Most Split on Stocks Since 2019

- Hedge Funds Rose 0.4% in April, Led by Macro Funds

- Yellen Warns CEOs About Impact Of Possible Debt Default: Reuters

- MSCI to Apply Special Treatment for Egypt in Equity Indexes

- Britons Will Get Poorer as They Fall Behind Peers: MLIV Pulse

- JPMorgan Lowers Euro-Zone Equities to Underweight

Keep an eye on :

- A2A IM : A2A Announces Mutually Agreed Interruption of Talks With EGEA

- AGFB BB : Agfa-Gevaert 1Q Revenue Misses Estimates

- AIR FP : Ryanair Close to Signing Major 737 Max Order With Boeing: Rtrs

- ALKB DC : ALK-Abello Maintains FY Ebit Margin Forecast

- AMS SM : Amadeus 1Q Adjusted Net Income Beats Estimates

- AMUN FP : Amundi Says China Wealth Business Is Rebounding From Setbacks

- BAKKA NO : Bakkafrost 1Q Operating Ebit Beats Estimates

- BAMI IM : Banco BPM 1Q Net Income Beats Estimates, Raises FY Guidance

- BAVA DC : Bavarian Nordic Maintains FY Revenue Forecast

- ADE GY : Bitcoin Group: No Longer Pursuing Bankhaus Von Der Heydt Deal

- AFX GY : Carl Zeiss Meditec 1H Ebit Margin 14.8% Vs. 20.7% Y/y

- BOL FP : CMA CGM Agrees to Buy Bollore’s $5.5 Billion Logistics Unit

- BHL LN : Bradda Head Lithium Rated New Buy at Panmure Gordon

- DUE GY : Duerr 1Q Adj. Ebit Misses Estimates, FY Outlook Confirmed

- ZIL2 GY : ElringKlinger 1Q Ebit Beats Estimates

- ELE FP : Endesa 1Q Net Income Beats Estimates

- EAPI FP : Euroapi, L’Oréal’s Novéal Sign 4-Year CDMO Agreement

- EVK GY : Evonik Sees FY Adjusted Ebitda Low End of EU2.1B to EU2.4B

- FLS DC : FLSmidth Pauses Investments in China as Tensions Mount: Borsen

- FME GY : Fresenius Medical 1Q Op. Income Misses Ests, Outlook Confirmed

- FRE GY : Fresenius SE 1Q Adj. Ebit Beats Estimates, FY Outlook Confirmed

- HAG GY : Hensoldt 1Q Revenue Beats Estimates

- HHC US : Howard Hughes 1Q Revenue Beats Estimates

- IPAR US : Inter Parfums Maintains FY EPS Forecast

- IVG IM : Iveco Group to Assume Ownership of JV With Nikola (1)

- SDF GY : K+S Cuts FY Ebitda Forecast, Misses Estimates

- MBTN SW : Meyer Burger & Magog Sign Pact for Slate Roof Solar System

- AERO SW : Montana Aerospace 1Q Net Sales EU353.1M

- BMPS IM : Monte Paschi Profit Beats Estimates as Rates Boost Revenue

- NHH SM : Minor International Seeks to Buy Up NH Hotel Shares at a Premium

- NOEJ GY : Norma 1Q Adjusted Ebit Misses Estimates

- OCI NA : OCI 1Q Adjusted Ebitda Misses Estimates

- OCI NA : OCI Strategic Review Includes Evaluation of Netherlands Listing

- ORK NO : Orkla 1Q Adjusted Ebit Beats Estimates

- PHIA NA : Philips Workers to Strike Over Pay Dispute: FNV Union (May 8)

- ROG SW : Roche: FDA Accepts Application for Third Use of Vabysmo Eye Drug

- RVRC SS : RVRC Holding 3Q Adjusted Operating Profit Misses Estimates

- RYA ID : Ryanair Close to Signing Major 737 Max Order With Boeing: Rtrs

- SAF FP : Boeing Closes In on Mega Ryanair Deal in 737 Endorsement

- SBBB SS : *SBB TO REVOKE RIGHTS ISSUE, POSTPONE DIVIDEND PAYMENT

- UBSG SW : UBS: Todd Tuckner to Succeed Youngwood as CFO at CS Deal Close

- UNVR US : Univar 1Q Adjusted EPS Beats Estimates

- VGP BB : VGP ‘Optimistic’ in Outlook for Upcoming Months

- VOLVB SS : Volvo’s Nova Bus Wins Up to 1,229 Quebec Electric Bus Contract

- WAC GY : Wacker Neuson 1Q Ebit Margin 13.2% Vs. 7.5% Y/y

Tesla CEO Elon Musk has laid out a rough plan for expanding access to Full Self-Driving (FSD), the company’s advanced driver assistance system (ADAS), throughout North America and the rest of the world.

“Once FSD is super smooth (not just safe), we will roll out a free month trial for all cars in North America,” Musk tweeted Monday. “Then extend to rest of world after we ensure it works well on local roads and regulators approve it in that country.”

Despite what its name suggests, FSD does not actually allow a car to drive itself fully. The newest version of the beta software automates some driving tasks on both highways and city streets, but it still requires the driver to stay alert and take over control of the vehicle at any time.

Musk did not provide a specific timeline for extending access to FSD beyond North America, where the $15,000 add-on has been available to “anyone who requests it” since November. Nor did the executive elaborate on why Tesla would roll out a free one-month trial for all Tesla vehicles on the continent, but the reason is likely twofold.

FSD, which is powered by deep neural networks, is technically still in the beta stage. That means it requires reams of data to train and improve. By rolling FSD out to every Tesla in North America, even if it’s just for one month, the automaker can collect another hefty chunk of driving data while simultaneously drumming up hype for the software and its capabilities — the Tesla equivalent of giving out a free taste of ice cream to get you to buy a scoop.

“We test as much as possible in simulation and with [quality assurance] drivers, but reality is vastly more complex,” Musk tweeted over the weekend, alongside news that the latest version of FSD would ship to Tesla employees this week.

The executive also teased capabilities for the next version of FSD, which Musk said would have “end-to-end AI.”

Outside of North America, Tesla has been limited in its ability to give drivers access to FSD due to stricter regulations. Drivers only have access to Autopilot, Tesla’s standard ADAS, which includes features like automatic steering within a lane, automatic braking and automatic navigation to highway on- and off-ramps, but it’s a dialed-back version. FSD is still not yet allowed on public roads.

However, there have been some moves over the last month by the European Commission to speed up regulation on ADAS. The Commission aims to have new regulation submitted in full by September 2024, with the option available both for an earlier deadline and for pre-deployment testing of systems.

Meanwhile in Asian markets like China, where Tesla Autopilot is available to drivers, there have been recent reports that the automaker will soon begin large-scale FSD testing.

The potential widespread rollout comes as FSD and Autopilot have gotten the automaker into hot water in recent years. The systems have been the subject of numerous lawsuits and federal investigations, including a criminal investigation from the U.S. Department of Justice. The family of an Apple engineer who died in a car crash while Autopilot was allegedly activated is currently underway, and Musk will likely have to take the stand to defend comments he made about the capabilities of the system.