Singapore Air Q2 net up 73 pct, warns on outlook 31 Oct 2007 20:33
Singapore Air Q2 net up 73 pct, warns on outlook 31 Oct 2007 20:33

(Adds quotes, details of fuel hedges, China Eastern acquisition)

By Daryl Loo

SINGAPORE, Oct 31 (Reuters) - Singapore Airlines <SIAL.SI>, the world's second-biggest carrier by market value, reported a 73 percent surge in quarterly net profit on Wednesday but cautioned against a slowing world economy and rising fuel costs.

The airline, 51 percent-owned by state investment agency Temasek Holdings [TEM.UL], said the business landscape remains "challenging" although advanced bookings on its flights were still holding up.

"Slowing economic growth sparked by tight credit markets and increasing volatility in financial markets cast a cloud of uncertainty over what has been a very bouyant revenue environment," CEO Chew Choon Seng told a press conference.

The carrier reported second-quarter net profit of S$508 million ($350 million), up from S$293 million from a year ago.

It carried 9.4 million passengers in the first half of its financial year, pushing its operating profit up 82 percent from a year ago, to S$982 million for the April-September period.

Singapore Airlines raised its fuel surcharges last week by 6-9 percent, citing jet fuel prices <JET-SIN> that rose 43 percent this year to a record $104.40 a barrel on Tuesday.

Jet fuel is the airline's single largest expense, contributing over 30 percent of expenditure.

Chew said Singapore Airlines has as of October hedged 47 percent of its jet fuel needs, and at an average price of $88 per barrel.

"But we're not out of the woods yet as far as fuel prices are concerned," Chew said, citing the continuing rise in crude oil prices.

Singaore Airlines started commercial flights of the double-decker Airbus A380, the world's biggest jumbo jet, last week with a Singapore-Sydney service.

But it may face competition between Singapore and Kuala Lumpur, monopolised currently by Malaysian Airline System (MAS) <MASM.KL> and Singapore Airlines, after the countries said last week they aimed to liberalise the route.

MAS said on Wednesday the government decision to open the lucrative route to competition ahead of time will hurt earnings.

But Chew said the impact of opening up the route on Singapore Airline's performance "is not material".

"The route represents much less than 5 percent of our total profits, so even if we open up the route to other carriers, the dent will be very small," he said.

Singapore Air and parent Temasek had also agreed in September to buy a 24 percent stake in China Eastern Airlines <0670.HK> for $918 million to gain access to China's fast-growing and lucrative air network.

"This is a strategic partnership where we will be able to participate actively on the board and management level of China Eastern," Chew said.

He said Singapore Airlines will have two seats on the China Eastern's board of directors, and 12 of its senior management staff will take up key positions.

The two airlines will also codeshare on all Singapore and Shanghai services, Chew said.

Shares in Singapore Airline -- valued at S$17 billion and ranked only behind Air China's <601111.SS> $28.6 billion -- are up nearly 12 percent this year, but lag the broader Singapore market's <.STI> 26 percent rise and gains of 18 percent by regional rivals Cathay Pacific Airways <0293.HK> and Qantas <QAN.AX>.

(Additional reporting by Sebastian Tong) ((Editing by Neil Chatterjee/Elaine Hardcastle; [email protected], RMe: [email protected], +65 6403 5669))

($1=1.450 Singapore Dollar)

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Keywords: SINGAPORE AIR/RESULTS

Singapore Cosco Q3 net up 37 pct, sees shipyard growth 31 Oct 2007 18:27
Singapore Cosco Q3 net up 37 pct, sees shipyard growth 31 Oct 2007 18:27

(Adds details, quotes)

By Chua Baizhen

SINGAPORE, Oct 31 (Reuters) - Shipbuilding and repair firm Cosco Corp (Singapore) <COSC.SI>, controlled by China's biggest shipping firm, said on Wednesday its third-quarter profit rose 37 percent thanks to booming business at its China shipyards.

Cosco, majority-owned by China Ocean Shipping (Group) Co, said turnover leapt on thriving marine businesses and higher dry bulk freight rates, and said an "excellent" shipbuilding industry was set to drive the firm's growth this year and further ahead.

"Our group expects our order book to build up over time...we expect this segment to contribute favourably to earnings going forward," said Ji Hai Sheng, president of Cosco Corporation, in a statement.

Since last year, Cosco has won a series of big orders for conversion and construction of offshore oil and gas drilling rigs and vessels. This brought its order book to $6.1 billion at the end of September, vice-president Li Jian Xiong told Reuters.

The firm said it will expand its ship repair capacity by expanding its Zhoushan shipyard with three new berths and three dry docks totalling one million deadweight tonnes docking capacity, for completion by 2010.

It said its net profit for the quarter ending September rose to S$97.7 ($67.38 million) from S$71.5 million a year ago. Revenue grew 72 percent to S$547 million.

Cosco said it was not exposed to foreign exchange bets because it conducted all its business in U.S. dollars.

"We don't do forex, we don't have any forex losses," Ji Hai Sheng told the results briefing.

The statement comes after two Singapore firms, Sembcorp Marine <SCMN.SI> and Labroy Marine <LABR.SI>, in the past week disclosed losses in hundreds of millions of dollars on foreign exchange bets that went wrong.

Cosco is expected to post a 47 percent rise in full-year net profit to S$302 million, according to the average forecast of 10 analysts polled by Reuters Estimates.

The firm has sold most of its bulk shipping business to focus entirely on repairing ships and building offshore oil rigs, as well as converting oil tankers into floating production, storage and offloading vessels.

Demand has surged for rigs and ships to explore for and store oil, with U.S. oil prices hitting a record over $93 this week, while the Baltic dry freight index <.BADI> for shipping commodities such as coal and grains has hit records since May.

Cosco shares have more than tripled this year as investors welcomed its move into rig building, and on market speculation that the stock would receive a boost from Chinese funds under the Qualified Domestic Institutional Investor scheme in China.

The stock trades at 57 times forecast 2007 earnings, commanding the same multiple as Chinese peer Yangzijiang Shipbuilding <YAZG.SI>, but hefty compared to the 18 times ratio for Singapore shipbuilder Labroy Marine <LABR.SI> -- for which Dubai Drydocks World has made a $1.63 billion buyout offer.

The world's top two offshore oil rig makers Keppel Corp <KPLM.SI> and SembCorp Marine <SCMN.SI> trade at forward PEs of 22 and 29 times respectively. ((Editing by Neil Chatterjee; [email protected]; Reuters Messaging: [email protected]; +65 64035658))


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[E-SG-RES] Singapore company earnings news

[E-SHP-MAC-RES] World shipbuilders' earnings news


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Keywords: COSCO RESULTS/

US Q3 GDP growth 3.9 pct, core PCE price index 1.8 pct (zt)
US Q3 GDP growth 3.9 pct, core PCE price index 1.8 pct

http://uk.biz.yahoo.com/31102007/323/q3-gdp-growth-3-9-pct-core-pce-price-index.html

WASHINGTON (Thomson Financial) - The US economy showed surprisingly strong growth in the third quarter, but with inflation that remained within the Federal Reserve's informal target range.

Third-quarter GDP growth was at a 3.9 pct annual rate, the Commerce Department reported today, with the overall GDP price index rising at just a 0.8 pct annualised rate.

That is a tenth of a point higher than the Q2 GDP, and was the fastest economic growth since the 4.8 pct rate in the first quarter of 2006. Year-over-year, the US economy was up 2.6 pct in the third quarter.

Inflation measured by the GDP price index rose at a 1.6 pct rate excluding food and energy. Compared with Q3 of last year, the GDP price index was up 2.3 pct vs a 2.6 pct expectation and the core index, excluding food and energy, up 2.1 pct.

Measured by the core Personal Consumption Expenditures index -- the Fed's favourite gauge -- prices rose at a 1.8 pct annual rate last quarter. That was up from the 1.4 pct rate in Q2 but still below the 2.0 pct upper limit of the Fed's so-called comfort zone. Overall PCE inflation was 1.7 pct.

Analysts were forecasting a 3.0 pct annual GDP growth rate, but the basic story in the economy was what they had predicted, with growth in consumer spending and exports overcoming the drag from housing.

Personal consumption was the biggest contributor to growth. It rose 3.0 pct, adding more than 2 points to the GDP rate. Consumer spending included a 4.4 pct increase for durable goods driven by heavy auto dealer sales incentives.

Exports were up 16.2 pct overall and exports of goods rose 23.0 pct. While imports rose 5.2 pct, slightly higher than the previous quarter, net exports still contributed almost a point to the GDP growth rate.

The housing contraction subtracted more than a point from Q3 growth as residential investment fell 20.1 pct. Business construction was down to a 12.3 pct, less than half its Q2 rate, but still providing a counterweight to housing.

Business added 15.7 bln usd to their inventories in the third quarter, adding more than a third of a percentage point to GDP growth. Equipment and software spending rose 5.9 pct. Overall private domestic investment was up 0.8 pct.

Government spending rose 3.7 pct, including a 9.7 pct rise in defence outlays, and added not quite three quarters of a point to the growth rate.