HONG KONG - HSBC on Monday said profits for the first half of 2020 plunged by 69 percent on year as the banking giant was hammered by the coronavirus pandemic and spiralling China-US tensions.
The lender reported post-tax profits of $3.1 billion while pre-tax profit was $4.3 billion, a 64 percent drop on the same period last year. Reported revenue was down nine percent at $26.7 billion.
Chief executive Noel Quinn described the first six months of the year as "some of the most challenging in living memory".
"Our first-half performance was impacted by the COVID-19 pandemic, falling interest rates, increased geopolitical risk and heightened levels of market volatility," he said in a statement to the Hong Kong stock exchange,
Even by the standards of the current economic maelstrom engulfing global banks, HSBC has had a torrid year.
Before the coronavirus crisis it was beset by disappointing profit growth, ground down by US-China trade war uncertainties and Britain's departure from the European Union.
The Asia-focused lender embarked on a huge cost-cutting initiative at the start of the year, including plans to slash some 35,000 jobs as well as trimming fat from less profitable divisions, primarily in the United States and Europe.
The coronavirus upended some of that cost-cutting drive with banks hammered by market volatility and the economic slowdown caused by the pandemic.
But HSBC has a further headache -- geopolitical tensions via its status as a major business conduit between China and the West.
HSBC makes 90 percent of its profit in Asia, with China and Hong Kong being the major drivers of growth.
Caught in crossfire
As a result it has found itself more vulnerable than most to the crossfire caused by the increasingly bellicose relationship between Beijing and Washington.
The bank has tried to stay in Beijing's good graces.
It vocally backed a draconian national security law that Beijing imposed on Hong Kong in June to end a year of unrest and pro-democracy protests.
The move sparked criticism in Washington and London but analysts saw it as an attempt to protect its access to China, which has a track record of punishing businesses that do not toe Beijing's line.
But that has not shielded it from Beijing's wrath.
Last month the bank was a subject of multiple reports in China's state-run media claiming that it had helped to provide the evidence that led to the arrest in Canada of Huawei executive Meng Wanzhou on a US arrest warrant.
HSBC released a statement on its Chinese Weibo accounts saying it had not "framed" telecom giant Huawei or "fabricated evidence" that led to the arrest of Meng.
China's internet censors blocked access to HSBC's statement within hours of publication, without offering an explanation.
Quinn referenced the bank's growing political vulnerability in Monday's statement.
"Current tensions between China and the US inevitably create challenging situations for an organization with HSBC's footprint," he said.
"However, the need for a bank capable of bridging the economies of East and West is acute, and we are well placed to fulfil this role," he added.
The bank's Asia operations continued to show "good resilience", Quinn said, with profit before tax of $7.4 billion.
Earlier this year Quinn put some of the job cuts on hold as the pandemic struck.
But in Monday's statement he vowed to press ahead with the cost-cutting.
"As we seek to accelerate our transformation in the second half of the year, I am mindful of the impact it will have for some of our people, particularly those leaving us," he said.
Agence France-Presse
FRANKFURT -- German sportswear maker Adidas said Wednesday it was confident of hitting full-year financial targets after a profit slip in the third quarter, buoyed by fast-rising sales.
In July-September, Adidas' bottom line fell back 1.8 percent year-on-year, to 646 million euros ($715 million), slightly beating forecasts from analysts surveyed by Factset.
But revenues surged 9.1 percent to 6.4 billion euros.
Double-digit growth in China and North America was Adidas' biggest sales driver, while Europe inched up more tentatively.
Its flagship brand with the three stripes sold 6 percent more even in a year without mammoth sporting events, while struggling US subsidiary Reebok also lifted sales slightly.
Meanwhile growth in online sales slowed to 14 percent in the third quarter, compared with 76 percent a year before.
Despite the growth, operating, or underlying profit at Adidas also fell back, shedding 0.3 percent to reach 897 million euros.
The operating result was weighed down by advertising costs as the company looks to rev up sales in the second half of the year.
"We confirm our full-year outlook and remain confident about a significant top-line acceleration during the fourth quarter," chief executive Kasper Rorsted said in a statement.
The Bavarian group expects to make net profits between 1.88 and 1.95 billion euros this year, up between 10 and 14 percent on 2018's result.
source: news.abs-cbn.com
SAN FRANCISCO - Facebook on Wednesday reported that its profit in the recently ended quarter plummeted due to costs of a US privacy settlement in a quarterly update that was largely better than expected.
Profit in the second quarter fell 49 percent from a year ago to $2.6 billion while revenues increased 28 percent to $16.9 billion.
The lower profits were due in part to setting aside an extra $2 billion to cover the cost of a massive settlement with US regulators on privacy and data protection in addition to monies already placed in reserve.
The $5 billion settlement announced by the Federal Trade Commission calls to revamped federal oversight of the social network's privacy policies.
Facebook also will be required to conduct a privacy review of every new or modified product, service, or practice before it is implemented, including for its WhatsApp and Instagram services.
In the earnings report, the leading online social network beat market expectations regarding revenue and user growth, and shares rose slightly in after-hours trades that followed release of the earnings figures.
"We had a strong quarter and our business and community continue to grow," said Facebook chief executive Mark Zuckerberg.
The number of people using Facebook monthly grew eight percent to 2.41 billion in the quarter that ended June 30.
"This company has repeatedly shown that it can grow both its ad revenue and its user base, even in the face of enormous challenges," said eMarketer analyst Debra Aho Williamson.
"Today's earnings release demonstrates that it still has that power."
Williamson said that for the moment, advertisers "remain dedicated to Facebook despite its problems. However, they are also paying more attention than ever to those problems."
The number of monthly users topped 2.7 billion people when taking into account Instagram, WhatsApp and Messenger along with the main social network, according to Facebook.
Ranks of Facebook employees had grown 31 percent to 39,651 by the end of the quarter. The Silicon Valley-based company has been hiring aggressively, particularly workers focused on security, privacy and eliminating content deemed unacceptable.
Also factored into the quarterly results was a tax expense of $1.1 billion stemming from a court decision on treatment of stock-based compensation.
Facebook shares gained 1.1 percent during Wednesday's trading session and swung slightly higher in after-hours exchanges following the earnings release.
source: news.abs-cbn.com
SAN FRANCISCO -- Facebook said Wednesday its profit took a hit from setting aside billions of dollars for an anticipated fine from US regulators, in a quarterly report that sent shares higher.
The leading social network logged a profit of $2.4 billion -- down 51 percent from a year earlier -- on revenue that climbed 26 percent to $15.1 billion in the first 3 months of this year.
The number of monthly active users of Facebook at the end of March was 2.38 billion, up eight percent from a year ago.
Facebook estimated that it will be hit with a fine of $3 billion to $5 billion by the US Federal Trade Commission for "user data practices," and factored that into its earnings report.
"The matter remains unresolved, and there can be no assurance as to the timing or the terms of any final outcome," the California-based company said in the release.
Facebook shares rallied more than 7 percent in after-hours trade following the results.
Profits would have topped Wall Street forecasts if not for the money put aside for the expected FTC fine.
"We had a good quarter and our business and community continue to grow," Facebook chief executive and co-founder Mark Zuckerberg said in a statement.
"We are focused on building out our privacy-focused vision for the future of social networking, and working collaboratively to address important issues around the internet."
The FTC announced last year it was reopening its investigation into Facebook for potential violations of a 2011 settlement over privacy practices.
'SOLID' RESULTS
Over the past year, the social network has come under fire following revelations on the hijacking of personal data of tens of millions of users by Cambridge Analytica, a consultancy working for Donald Trump's 2016 campaign.
A series of other revelations showed Facebook may have also shared more private data with business partners and advertisers than it had reported, and may have exposed some personal information that should have been secured.
At the same time, Facebook has been hiring thousands of additional employees to deal with issues such as hate speech, incitement to violence and manipulation aimed at voters.
Facebook said its employee count was 37,773 as of March 31, an increase of 36 percent over the past year.
Despite the controversies, some 2.7 billion people use at least one of the "family" of the company's applications including the core Facebook network, Instagram, and messaging applications WhatsApp and Messenger.
The latest results showed "solid performance in revenue and user growth," said analyst Debra Aho Williamson of the research firm eMarketer.
Williamson said advertisers are staying with Facebook despite controversies that have plagued the social networking giant.
"While marketers may say privately that they do worry about Facebook's problems with fake news, election meddling, privacy and more, they worry more about their own financial health, and Facebook is still a major partner in that regard," Williamson said.
She advised advertisers to view the FTC fine revelation as a significant development that could bring about changes effecting the way they can use the social network for marketing.
source: news.abs-cbn.com
SAN FRANCISCO, United States - Facebook shares took a hit Wednesday after the world's biggest social network reported weaker-than-expected user growth in the first full quarter since being rocked by a series of scandals on data privacy.
The company said profit was up 31 percent in the second quarter at $5.1 billion as revenues rose 42 percent to $13.2 billion.
But shares slumped 7 percent in after-hours exchanges after hitting record levels in official trading, with the quarterly report largely weaker than had been expected.
"Our community and business continue to grow quickly. We are committed to investing to keep people safe and secure, and to keep building meaningful new ways to help people connect," chief executive Mark Zuckerberg said.
Zuckerberg has said he did not expect a meaningful impact from the uproar over data hijacked by political consulting firm Cambridge Analytica, but the last quarter's figures suggested some cooling.
The key metric of monthly active users rose 11 percent to 2.23 billion, below most estimates of 2.25 billion, while daily active users grew a weaker-than-expected 11 percent to 1.47 billion.
Almost all of Facebook's revenue -- $13 billion of the total $13.2 billion -- came from online advertising, a sector dominated by the California social network along with Silicon Valley rival Google.
Although Facebook shares were in a slump after the Cambridge Analytica scandal broke earlier this year, the stock had risen sharply and hit record levels this month.
According to the research firm eMarketer, Facebook is expected to hold an 18 percent share of the $273.29 billion worldwide digital ad market, behind Google's 31 percent.
According to the research firm, Facebook-owned Instagram is making up for some of the slowdown in growth at social network and will generate $8.06 billion in worldwide ad revenue this year.
source: news.abs-cbn.com
