Volkswagen profit jumps from Tiguan, cost cuts
German automaker Volkswagen has reported better-than-expected earnings for the first quarter thanks to cost controls and a stronger contribution from its core brand, which was boosted by new models including the Tiguan SUV.
The company said Tuesday that it made 4.4 billion euros ($4.7 billion) in operating earnings in the January-March period, up from 3.4 billion euros a year earlier. The figure excludes financial items such as interest and taxes.
The company said that the namesake brand contributed 0.9 billion euros. The statement credited success in holding down fixed costs as well as the successful launch of new vehicles including the Tiguan.
Most company profits in recent quarters have come from its Audi and Porsche luxury divisions while the core brand has lagged with high costs and low profit margins. Other brands include SEAT, Skoda, and Lamborghini.
Volkswagen’s sales have risen despite a scandal over cars rigged to cheat on diesel emissions tests. It passed Toyota last year to become the world sales leader with 10.3 million vehicles sold.
Volkswagen is scheduled to release full financial details including bottom-line net profit for the first quarter on May 3.
Yahoo earnings beat forecasts
Yahoo Inc. on Tuesday reported first-quarter net income of $99.4 million, after reporting a loss in the same period a year earlier.
On a per-share basis, the Sunnyvale, Calif.-based company said it had profit of 10 cents. Earnings, adjusted for one-time gains and costs, were 18 cents per share.
The results exceeded Wall Street expectations. The average estimate of six analysts surveyed by Zacks Investment Research was for earnings of 16 cents per share.
The internet media company posted revenue of $1.33 billion in the period. After subtracting Yahoo’s advertising commissions, revenue was $833.8 million, which also beat Street forecasts. Five analysts surveyed by Zacks expected $800.1 million.
Bank of America profits helped by interest rates
Bank of America’s first quarter profits grew nearly 40 percent, the bank said Tuesday, helped by higher interest rates as well as a strong performance in its investment banking division.
The Charlotte, N.C.-based consumer banking giant reported net income of $4.86 billion, compared with $3.47 billion in the same period a year earlier. On a per-share basis, Bank of America earned 41 cents per share, beating the 35 cents that analysts were looking for.
“The U.S. economy continues to show consumer and business optimism, and our results reflect that,” BofA’s CEO Brian Moynihan said in a prepared statement.
Like its major competitors, JPMorgan Chase, Citigroup and Wells Fargo, Bank of America benefited from higher interest rates. The Federal Reserve raised interest rates once in December and again in March, which has allowed the big retail banks to charge more for their loans. The bank said it had net interest income of $11.06 billion, compared with $10.49 billion in the same period a year earlier.
The bank expects that if interest rates continue to move higher, Bank of America could see its net interest income grow by $3.3 billion over the next 12 months.
Johnson & Johnson says competition trims profit
Increased pressure to cut medicine prices and an industry-wide slowdown in consumer health product sales is hurting health care giant Johnson & Johnson.
Those factors, along with a bigger tax bill than a year ago, trimmed J&J’s first-quarter profit slightly, but it still gave a rosier financial forecast for the year.
The world’s biggest maker of health care products cited its biggest-ever acquisition – the pending $30 billion purchase of Swiss biopharmaceutical company Actelion – for the raised forecast. That deal’s expected to close during the current quarter. J&J also benefited from several smaller acquisitions and from the ongoing restructuring of its medical device segment, begun in early 2016.
Revenue was crimped by slower growth in many consumer health product categories and by payers demanding bigger rebates off the prices of certain prescription drugs, Chief Financial Officer Dominic Caruso said in an interview. Caruso said drugs with significant competition, particularly cardiovascular, diabetes and other primary care drugs, were particularly hurt by the pricing pressure.