Volkswagen 1Q 2016 Earnings

German car-manufacturer Volkswagen AG swung back to profit in the first quarter of 2016 after reporting a record loss during FY 2015 as the absence of new provisions against earnings led to optimism that the company has absorbed the bulk of the impact of the diesel emission crisis.

Key takeaways from Volkswagen’s 1Q 2016 results:

  • Revenue during 1Q 2016 fell 3.4% y/y to €50.96bn.
  • Profit for 1Q 2016 declined 20% to €2.31bn ($2.57bn) from €2.89bn a year ago, and below consensus estimates of €2.45bn.
  • Operating profit excl. Chinese joint ventures, rose 3.4% to €3.4bn, led by a windfall of €309m, largely from foreign exchange adjustments to the €16.2bn that Volkswagen set aside in 2015 to cover the costs of the diesel crisis.
  • Operating earnings excl. currency gains for the company in 1Q 2016 were roughly at the same level as last year.
  • The company’s two Chinese joint ventures contributed €1.2bn in pretax earnings, down from €1.6bn a year ago. The earnings from China were booked as an equity gain by Volkswagen and appear in its net profit.

Source: WSJ

Seadrill 1Q 2016 Results

Offshore drillship operator Seadrill Ltd. reported its 1Q 2016 results today. Key takeaways of the release are as follows:

  • Revenues for the first quarter of 2016 were $891m, a 28% decline as compared to previous year’s revenues of $1.2bn. The decline in revenues was attributed to lower day rates on its fleet which failed to offset higher fleet utilization during the quarter of 97%.
  • EBITDA for 1Q 2016 was $528m, a 26% decline vs. $715m in 1Q 2015, translating into an EBITDA margin of 59% vs. 57% previously.
  • Net Debt for 1Q 2016 decreased to $9.6bn from $11.4bn in March 2015.
  • Cash flow from operating activities for 1Q 2016 declined to $294m from $499m a year ago.
  • Seadrill, as part of its broader plan to refinance and recapitalize its business, extended the nearest three maturing borrowing facilities and amended certain covenants across all its secured debt.
  • Seadrill agreed not to draw on any of the $467m available to it under its revolving credit facilities as part of negotiations with lenders and agreed to increase its minimum liquidity covenant contained in its secured credit facilities from $150m to $250m.
  • The company deferred delivery on its new vessels; 2 ultra-water drillships, West Aquila and West Libra deferred until 2Q’18 and 1Q’19 respectively and 5 jack-ups deferred until 2017 and 3 until 2018.

 Company Guidance

For 2Q 2016, EBITDA is expected to be around $510m in anticipation of lower day-rates on certain vessels (West Tellus, Sevan Brasil & West Cressida) and on contract culmination for West Prospero, West Castor and West Hercules which offsets commencement of operation or higher utilization on vessels West Eclipse & West Phoenix

For FY 2016, the company expects to achieve cash cost savings of about $340m, of which $305m would be attributed to sustainable cost savings, and $35m toward deferred spending.

Source: Company Press Release


Hercules Offshore reports net loss of $26.9m for 1Q’16

Offshore-drilling vessel-provider Hercules Offshore reported a net loss of $26.9m, or $1.35 per diluted share for the 1Q’16 period, vs. net loss of $57.1m a year ago.

Revenues declined to $50.9m for the same period vs. $122.6m a year ago.

Company CEO John T. Rynd attributed the loss to continued weakness in the offshore drilling markets as oil prices declined, making its customers reduce their drilling activities.

The company had filed for bankruptcy in August 2015 and had emerged from it in November 2016.

Separately, the company had entered into a forbearance agreement with lenders last month and continues to explore options such as a potential recapitalization, business combination or other alternative strategic transactions, including the potential sale of its vessel Hercules Highlander, and a restructuring of its term loan.

Post-bankruptcy, the company had raised a $450m term loan to utilize $200m of it to pay its remaining installment on the Hercules Highlander vessel. The forbearance agreement has led to the company to explore selling its yet-to-acquired vessel.

Source: PR Newswire

P.S. Kindly refer to the one-page credit report on Hercules Offshore highlighting the company’s progress through bankruptcy.

Calumet reports 1Q’16 loss of $67.7m; looks at asset divestments

U.S-based Calumet Specialty Products posted a 1Q’16 loss of $67.7m or 87 cents per share, as compared to a profit of $23.8m, or 27 cents per share, a year ago. The news comes on the company’s earlier announcement that it expected a net loss between $59 – 83m for the same period.

Revenues for the 1Q’16 period declined 29% yoy to $713m (1Q’15: $1bn).

The company, which owns 10 refineries across the U.S., attributed the dismal performance to the effect of collapsing oil prices as its fuel products business suffered due to weaker refining margins.

In light of the weak results, the company’s CEO Tim Go stated that the company would look to divest some of its assets, including the $430m refinery that opened a year ago in western North Dakota.

The refinery, with an operating capacity of 20,000 bpd, currently processed output worth 15,000 bpd. Calumet plans to operate the refinery at 75% of capacity due to the weakening commodity prices.

Source: IBJ