FT : United Tech raises 2017 guidance as elevator and heating system sales climb

United Technologies has raised its 2017 sales and profits guidance as growth in its elevator and escalator business along with strong demand for its building heating and cooling systems helped boost second quarter results.

The US industrial conglomerate, which makes everything from jet engines to moving walkways, said it now expects organic sales to grow between 3-4 per cent this year, up from its previous forecast of 2-4 per cent growth.

Adjusted earnings per share meanwhile was projected to be $6.45-$6.60, compared to the $6.30-$6.60 range it was expecting.

The outlook upgrade comes as United Technologies delivered second quarter sales and profits that came in ahead of Wall Street estimates.

For the three months to end of June, sales rose nearly 3 per cent to $15.28bn, driven by gains in three of its four divisions. UTC climate, controls & security – the company’s biggest unit by revenue and which provides fire safety and security, building automation, heating and cooling and refrigeration systems and services, saw sales climb 5.6 per cent to $4.7bn during the period. Higher sales in its Otis elevator and Pratt & Whitney engine divisions all helped to offset continued sluggishness in United Technologies aerospace systems unit, where sales fell 2 per cent to $3.6bn.

Net income came in at $1.44bn, or $1.80 per diluted share.

Shares in United Technologies have gained more than 12 per cent this year amid a rebound in global growth and expectations that it would benefit from President Donald Trump’s promise to boost military spending. The stock hit a record high of $124.79 earlier this month and was trading 0.5 per cent lower in pre-market trading on Tuesday.

>>> Kimberly-Clark beats by $0.04, reports revs in-line; tempers FY17 guidance

Kimberly-Clark beats by $0.04, reports revs in-line; tempers FY17 guidance (123.81)
  • Reports Q2 (Jun) earnings of $1.53 per share, $0.04 better than the Capital IQ Consensus of $1.49; revenues fell 0.7% year/year to $4.55 bln vs the $4.56 bln Capital IQ Consensus. Organic sales were down 1 percent due to lower net selling prices.
  • Co issues guidance for FY17, sees EPS at low end of $6.20-6.35 vs. $6.29 Capital IQ Consensus Estimate; sees FY17 revs similar to or slightly up Y/Y from $18.2 bln vs. $18.43 bln Capital IQ Consensus (down from +1-2%). Net sales and organic sales expected to be similar, or up slightly, year-on-year (prior assumption up 1 to 2 percent). Volumes anticipated to be up slightly, while net selling prices and product mix, combined, are expected to be down slightly. Input cost inflation of $200 to $300 million compared to the previous estimate of $150 to $250 million. The update is driven by higher assumptions for pulp costs. Cost savings of $425 to $450 million from the company's FORCE program. The prior estimate was for savings of at least $400 million.
  • "Our second quarter results reflect a challenging environment. Nonetheless, we continue to manage our company with financial discipline, as we achieved $120 million of cost savings, improved working capital and returned more than $600 million to shareholders through dividends and share repurchases. We are focused on competing effectively in the near-term while we continue to execute our Global Business Plan strategies for long-term success."

>>> Caterpillar beats by $0.23, beats on revs; guides FY17 EPS above consensus,

Caterpillar beats by $0.23, beats on revs; guides FY17 EPS above consensus, raises revenue guidance above consensus (108.18)
  • Reports Q2 (Jun) earnings of $1.49 per share, excluding non-recurring items, $0.23 better than the Capital IQ Consensus of $1.26; revenues rose 9.6% year/year to $11.33 bln vs the $10.96 bln Capital IQ Consensus.
  • As a result of increased demand across many end markets and disciplined cost control, Caterpillar is raising its 2017 outlook. Some risks remain in the outlook, including weakness in the Middle East and Latin America, as well as geopolitical and commodity risk
  • Co issues upside guidance for FY17, sees EPS of $5.00 vs. $4.32 Capital IQ Consensus Estimate
  • Meanwhile, the co raised its FY17 sales guidance to $42-44 bln vs. $40.74 bln Capital IQ Consensus Estimate, up from $38-41 bln, which was given in April 2017
Back to the quarter...
  • The 10% in increase in YoY sales was primarily due to higher sales volume, with the largest increase in Construction Industries mostly due to higher end-user demand for construction equipment
  • Sales volume for Resource Industries increased due to improved end-user demand for aftermarket parts and the favorable impact of changes in dealer inventories. Energy & Transportation's sales were higher mostly due to increased demand for aftermarket parts for reciprocating engines. Favorable price realization in Construction Industries also contributed to the sales improvement. The unfavorable impact of currency was mostly the result of a weaker euro and British pound. Financial Products' segment revenues were about fla
  • Sales increased in Asia/Pacific, North America and Latin America, and were about flat in EAME
  • Caterpillar's financial position continued to strengthen. Machinery, Energy & Transportation operating cash flow was $2.0 billion during the quarter, and ME&T's debt-to-capital ratio improved to 38.6 percent, compared with 41.7% at the end of the first quarter of 2017

>>> US Early premarket gappers

Early premarket gappers
Gapping up:
  • GNCA +7.2%, CLLS +5.2%, BIIB +4.5%, ACRX +4.1%, CNC +3.3%, RMBS+2.8%, CDNS +2.7%, JCP +2.4%, PHM +2.4%, TEAR +2.1%, ST +2.1%,SWFT +1.9%, MC +1.8%, KORS +1.7%, UTX +1.5%, JD +1.3%, AMD +1%,GRFS +0.8%, DD +0.8%, AVY +0.8%, SVU +0.6%, MBRX +0.5%
Gapping down:
  • TISI -20.8%, NVAX -18.5%, SANM -9.9%, FTI -8.2%, CLB -6.1%, CLB-6.1%, LOGI -5.3%, CRY -4.6%, EDU -4.3%, INCY -3.8%, HSII -2.9%,GOOG -2.7%, APC -2.7%, MU -2.6%, HXL -1.4%, SLNO -1.2%, SRPT -1%,WWD -0.6

>>> General Motors beats by $0.17, misses on revs; reaffirms FY17 EPS guidance

General Motors beats by $0.17, misses on revs; reaffirms FY17 EPS guidance (35.82)
  • Reports Q2 (Jun) earnings of $1.89 per share, excluding non-recurring items, $0.17 better than the Capital IQ Consensus of $1.72; revenues fell 1.1% year/year to $36.98 bln vs the $37.67 bln Capital IQ Consensus, driven primarily by decreased wholesale volumes in North America partially offset by strong mix and continued growth of GM Financial.
  • Global deliveries were flat Y-O-Y, driven primarily by the strategic reduction of less profitable daily rental sales in North America offset by increased volumes in GMSA due to the strength of the Chevrolet brand. Q2 market share is flat Y-O-Y, driven primarily by our strategy to reduce volumes into the daily-rental channel in GMNA offset by increased share in GMSA.
  • GM delivered 725,000 total vehicles in the United States, driven by a 24-percent increase in retail crossover sales. The Q2 crossover results are the best in GM history. NA EBIT $3.5 bln from $3.7 bln; Improved mix and cost efciencies largely ofset lower volumes, price and FX, and drove strong EBIT-adjusted and an EBIT-adjusted margin of 12.2 percent. In China, GM deliveries of 852,000 vehicles set a second-quarter record, up 1.6 percent compared to Q2 2016. Strong sales of Cadillac and Baojun vehicles led the way, up 62 percent and 66 percent, respectively.
  • Co reaffirms guidance for FY17, sees EPS of $6.00-6.50, excluding non-recurring items, vs. $6.08 Capital IQ Consensus, with adj. EBIT and rev greater to or equal 2016 levels.
  • "Strong results in North America and China, solid improvement in South America and continued growth of GM Financial drove another strong quarter. With an aggressive launch cadence still ahead this year, we are on track to meet our fnancial commitments for 2017."

(Bernstein) Apple PT Raised to $170, Buy On Any 3Q Weakness

Apple PT Raised to $170, Buy On Any 3Q Weakness: Bernstein

Apple PT raised to $170 from $160 by Bernstein analyst Toni Sacconaghi (outperform) ahead of FY3Q earnings scheduled for Aug. 1, saying that investors should use any weakness after results to add to positions.
  • Sees potential for “very weak” FY4Q guidance, with revenue guidance potentially $6b-$10b below Street expectations
    • Bernstein ests. FY4Q revenue at $42.7b vs Bloomberg consensus est. of $49.4b and notes that many analysts haven’t yet lowered ests. to factor in a delay for iPhone 8 models
  • Says weak guidance unlikely to matter unless iPhone 8 availability is pushed out past early November, in which case some customers may switch away from the iPhone
  • Says weakness after results would be a buying opportunity, given large installed base for iPhone 8 cycle and attractive valuation
  • Raises FY18 EPS est. to $10.79 to reflect an increase in iPhone ASPs and pushed out iPhone unit sales from 2H

>>> McDermott misses by $0.02, misses on revs; reaffirms FY17 EPS guidance, revs

McDermott misses by $0.02, misses on revs; reaffirms FY17 EPS guidance, revs guidance
  • Reports Q2 (Jun) earnings of $0.13 per share, $0.02 worse than the Capital IQ Consensus of $0.15; revenues rose 11.5% year/year to $788.2 mln vs the $856.54 mln Capital IQ Consensus.
  • Co reaffirms guidance for FY17, sees EPS of ~$0.42 vs. $0.41 Capital IQ Consensus Estimate; sees FY17 revs of ~$3.2 bln vs. $3.19 bln Capital IQ Consensus Estimate.
  • As of June 30, 2017, the Company's backlog was $3.3 billion, compared to $3.9 billion at March 31, 2017. Of the June 30, 2017 backlog, approximately 85% was related to offshore operations and approximately 15% was related to subsea operations.
  • Order intake in the second quarter of 2017 totaled $188 million, resulting in a book-to-bill ratio of 0.2x.
  • At June 30, 2017, the Company had bids and change orders outstanding and identified target projects of approximately $1.4 billion and $15.4 billion, respectively, in its pipeline that we expect will be awarded in the market through September 30, 2018.
  • In total, the Company's potential revenue pipeline, including backlog, was $20.1 billion as of June 30, 2017.

>>> 3M misses by $0.01, reports revs in-line; guides FY17 EPS in-line; raises lo

3M misses by $0.01, reports revs in-line; guides FY17 EPS in-line; raises low end of guidance
  • Reports Q2 (Jun) earnings of $2.58 per share, $0.01 worse than the Capital IQ Consensus of $2.59; revenues rose 1.9% year/year to $7.81 bln vs the $7.86 bln Capital IQ Consensus.
  • Co raises the low end of guidance for FY17, sees EPS of $8.80-9.05 vs. $8.98 Capital IQ Consensus Estimate and vs $8.70-9.05, previously; raises mid-points sales guidance, now forecasts organic local-currency sales growth to be 3 to 5 percent, up from previous guidance of 2 to 5 percent.
  • Total sales grew 7.5 percent in Electronics and Energy, 2.5 percent in Industrial, 1.8 percent in Health Care, and 0.5 percent in Consumer; total sales declined 0.9 percent in Safety and Graphics. Organic local-currency sales increased 8.4 percent in Electronics and Energy, 3.8 percent in Industrial, 3.2 percent in Safety and Graphics, 2.5 percent in Health Care, and 0.7 percent in Consumer.

>>> Interpublic misses by $0.07, misses on revs

Interpublic misses by $0.07, misses on revs
  • Reports Q2 (Jun) earnings of $0.27 per share, excluding non-recurring items, $0.07 worse than the Capital IQ Consensus of $0.34; revenues fell 1.7% year/year to $1.88 bln vs the $1.95 bln Capital IQ Consensus.
  • "Applying these capabilities across our client roster positions us to achieve the low end of our 3% - 4% organic growth target for the year. We will also stay highly focused on costs, in order to build on our strong record of driving margin improvement, and we remain committed to delivering 50 basis points of operating margin expansion in 2017. Combined with the strength of our balance sheet and our commitment to capital return, that means there is significant potential at IPG for further value creation and enhanced shareholder value."

FT : Acacia falls 17% as Tanzanian government demands $190bn in tax dispute

Acacia falls 17% as Tanzanian government demands $190bn in tax dispute

Shares in Acacia Mining touched a more than three-year low on Tuesday morning after its battle with Tanzanian authorities escalated as the government demanded Acacia pay almost $200bn worth of unpaid taxes and fines.

Acacia has been locked in a dispute with Tanzania’s president John Magufuli since March, when he banned the export of unprocessed ores in an effort to boost the country’s domestic smelting industry.

The government has since accused Acacia, one of Africa’s largest gold producers and one of Tanzania’s largest private employers, of illegally under-reporting the amount of metal in its shipments and evading billions of dollars of taxes.

Acacia warned last week that it will be forced to mothball its flagship mine if it can’t reach an agreement with the government by the end of September, having burned through almost half its cash pile in the past six months.

Shares in the company had already fallen more than 60 per cent since the start of the dispute, and they tumbled as much as another 17 per cent on Tuesday morning after it said it had received a series of notices from the Tanzania Revenue Authority relating to the alleged missed tax payments.

The revenue authority’s assessments said Acacia owes the government a total of approximately $40bn in unpaid taxes plus a further $150bn in penalties and interest. Acacia has consistently denied any wrongdoing, and said it disputes the tax assessments. It added that it “is considering all of its options and rights and will provide a further update in due course”.

Acacia revealed the news shortly before markets closed on Monday, prompting the sharp share price drop as markets opened on Tuesday. The shares hit a low of 152.8p, though by publication time they had pulled back some of their losses and were down 7.8 per cent at 170p.