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tv   Countdown  Bloomberg  July 30, 2015 1:00am-3:01am EDT

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>> stand by for a major earnings morning has committee's report. we bring you the results, the big names include lufthansa. looking for liftoff, the fed sees solid growth in the u.s.. keeping the door open for interest rate hike. and the future of facebook, the social network the estimates on robust ad sales. mark zuckerberg says the biggest days are still to come as it invests in new features and products.
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welcome to countdown, i am anna edwards. it is 6:00 here in london this thursday morning. we have many companies reporting here in europe today. let's get to the first of those major names, and that is the german industrial giant reporting numbers. caroline has a breakdown for us. caroline: we are starting on a high note it would seem. the morning to you. it seems that the industrial profit is 1.8 billion euros a month that is more than expected. they are reiterating the four-year forecast to drive that profit up to 11% in terms of margin. they want to attain a target of 11% profit margin in the industrial business. they are seeing that being reiterated. also confirming the forecast for at least 15% next earnings-per-share growth. they have a backlog of some 110 billion euros.
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when you look at overall sales they are coming in line. 18.8 billion euros, that is in line for third-quarter sales. an net income is a big beat. we are seeing profits being sales. they are grossing an overall industrial business profit of 1.8 billion euros. this is a company that is up against it. it is europe's largest, they secured the biggest ever order. that is the gas powerplant and wind farm in europe, they have many ahead went. they have weak global growth the chief executive. sticking by the targets when it comes to profitability. anna: we are also getting numbers from the spanish banking business. first-half profits coming at
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3.14 billion. let's hone in on the second quarter, compared to the estimates. second-quarter net is 1.7 one billion, below the estimate of 2.6 billion. that does look to be below the estimate. let's go into more detail here the bad loans ratio is 4.64%. that is compared to march of 4.85%. that does seem to be moving in the right direction. let's look at the common equity tier one capital ratio, the measure of the safety -- of capital strength at least in the balance sheet. that is fully loaded, and describe it at 9.8%. a number in march that was 9.7%. the balance sheet strengthening and the bad loans number improving. over at santander, the spanish banking business. we are getting a lot of earnings
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coming through this morning, these numbers from santander are the first of these major banking numbers we are going to get to today. we are getting some out of deutsche bank and some out of rbs later. we have dozens of companies reporting. here are a few we will keep our eye on, deutsche bank and rbs are going to be reporting later on this morning. we just have those numbers from santander. we will get an update from the new ceo of deutsche bank, how is he managing to steer that business. and in terms of oil companies, we will get numbers from shell, all reporting this morning. what impact will the fall in crude have on bottom lines? we have seen diversified or integrated businesses refining operations, as well. they have managed to offset the price a little better than some of the more production relying businesses. all that the a story in today's
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earnings? hans nichols is watching deutsche bank. he has what we need to look for. the morning to you. hans: i have mostly excitement because as you said, we are going to hear from john crane -- is what his strategy is. where is he going to take the bank? he has been on the job less than a month, he started july 1. what is his strategy? as do the numbers, revenue up 7% year on year. income in the name of 29 million euros, they had a big tax charge. what we are looking for though in terms of the numbers, where are they on fixed income commodities? remember, the u.s. peers were down 12% year over year. and deutsche bank derives much more from their peers. equity revenue was up 20% deutsche bank is not that heavy on revenue. the numbers themselves might not
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be that exciting, that positive. but what does he say about cost-cutting? job cuts? he announced those cuts, but he did not say where they would be geographically. what about the return on equity the old goal for deutsche bank was percent. he dialed that back to 10%. they are at 3.9% on return on equity. all there be change there? crucially, on capital ratios he brought his bank up to 5% -- the new global standard ahead of his european peers. will mr. crane dialed back a bit? what will he say about that? crucially, anything on a potential capital increase? he rule this out, we will see what mr. crane says. i think the conference call is at 2:00. we get the top line numbers in about an hour. we will have an all for you. lots to do just. anna: fascinating to see how much we will have to wait until september.
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thank you very much, hans nichols in berlin. once again, let's get back to caroline as she has more num bers. caroline: we're talking beer, the biggest brewer in the world. organic sales for their second quarter of 4.1%, but the market is looking at 5.6%. in terms of organic sales volumes are down significantly down 2% in terms of organic volumes. many thought it would drop a bit by 2/10 of a percent. in terms of those stocks, there is something about the future in china. will it return to growth in the second half? mexico is going to improve, as well. the revenue up in the mid-to high single digits. overall, they have an effective catch rate of 22% -- slightly less than has previously been suggested. this time, it looks as though
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they missed the consensus when it comes to analysts in the second quarter. the second half, they are singing the song of industrial volume growth growing to china mexico, and the united states. anna: any company that seems optimistic about china is interesting. caroline with the latest sector numbers, we will have more as we get sales numbers out of that of the world's largest spirits company. the stern attention now to the fed, though. the daughter isollar is set, extending gains after the bank said barriers to interest rate hike are getting smaller. michael mckee has more on the announcement. michael: no change in monetary policy, but the fed did update the assessment of the u.s. economy. and wall street may take that as a sign a policy move is near. but officials still see risks to the economy as nearly balance.
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i also see solid job gains and declining unemployment. labor market indicators suggest underutilization of labor resources has diminished since early this year. no qualifiers, economic activity has been expanding moderately. that is a reference to slower growth earlier in the year. while inflation is still below the fed target, they blame that largely on transitory factors such as energy and not energy imports. they see inflation rising towards the target over the medium term. the committee they say will anticipate it is appropriate to raise the rate when they see some further improvements in the labor market. that word some is in addition to the statement. and it suggests that as far as the labor market is concerned they feel they are nearly there. finally, no dissent in the statement. there was no press conference they did not change their
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economic forecast. and there was no change to the chart. so now we look to the august 19 release of the minutes for any further clues of this meeting towards the direction of monetary policy. if you believe that september is the target, it certainly is still a live option. michael mckee, bloomberg washington. anna: so much excitement it seems around one word. paul donovan from ubs we talked to him in a moment. in china, the shanghai composite continues to wobble this morning. that is a very technical term. that is driving away investors trading volumes have half since june. juliette has the latest in hong kong. the morning to you. juliet: it certainly has the shanghai composite earlier today, after the lunch break, up by one third of 1%.
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five minutes ago, it was in the red. up by another 10th of 1%, positive movement in the asian rim. that is coming out of the rally that we did see in the u.s. market. although the cost is being weighed down by week earnings, particularly from samsung which makes up a large part of the index. we have weaker than expected numbers, expanding share prices down to 3.6% in korea. we have a lot of earnings coming out in japan, nintendo is one of the best performers, getting up the share price by more than a percent. in the rebound and commodities really helping players in the region, and listing australia to 2.6%. hoping to build the share market today. but we are really focusing on the shanghai composite and it has been another very interesting day. you can see that we opened lower, gains coming through, i
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significant gains coming through just below the lunch break. and we fell, now we are back again. the composite now at 3802. we will see if that three and a half percent gain yesterday can be maintained. mostly in the last 90 minutes or so, we do see those fluctuations. at the moment, the shanghai composite is in positive territory. anna: anything can happen in two hours it seems. thank you for joining us there in hong kong. we are going to take a short break here, coming up on the program, another round of gas earnings. we will see how shall are dealing with crude prices down 40% in the last year. we are back in two minutes.
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anna: welcome back. it is 6:15 in london, 7:15 in
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frank for. there are the stories you need to know. progress towards full employment yesterday, policymakers said they want to see some additional gains in the labor market. before raising the rates. meanwhile, they failed to provide clear guidance on whether they plan to hike rates for the first time since 2006 they meet in september or wait until the summer. the imf managing director says it she is pleased the fed is taking an approach to monetary policy. she spoke yesterday from washington, d.c. >>in fact, she says the two are not always on the same page though. that is the fed and the imf. the imf have recommended that the fed delay interest rates increases. back to corporate agenda ziemann's reporting gains that the estimates. the offsets set the detrimental
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effect of oil on business. excluding currency effects ziemann's would have declined. let's talk about commodities, a week of earnings from gas continues. with numbers from shell to the hour, they come as the oil has four his biggest monthly losses december. speculation that the global glut will persist, here is our chief energy correspondent joining us on set. and paul donovan, good morning to you. javier, let's start with you. beating market estimates, they have the ball rolling really in terms of refining. his refining going to be key for shell? as you are telling me yesterday integrated businesses that have refining are some extent cushioned from this. the air: it was clear with the results that the integrated
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model is working. we had expecting that shall would increase quarter and quarter and that would be coming on the refining unit. shell was making i guess the net income of $3.25 billion, we are looking at $35 billion this quarter, certainly the number at the moment is looking up. not as good as the total, but let us not forget that in the second quarter of the year, it made as much money as it was making a year ago. in spite of the price drop by 50%. anna: why has shell underperformed since the bg group deal? javier: they thought that the price was going to recover quickly to $90 by 2018. the market took that as an indication that the plan
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particularly the integration would only work in places that recovered to $90. i think that the management of shell has tried to dispel that view on a conference call. saying that the deal would make money for shareholders a much lower prices, potential he as low as $70. anna: we will be speaking to an expert later in the program and $90. paul, a $90 oil price -- is that what some are looking for to make deals? does that look like it is likely right now? paul: it is possible, but not right now. and a couple of years, it would be above what we are expecting. from my perspective, what you were saying about the refining making more profits, that is actually a key part of the story. if you look at the gasoline price in the states, this is not
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falling the way the oil price is. when i'm looking at consumer price inflation, consumer spending ability, i am not getting a picture that is driven by crude oil, i am getting a different picture coming through. where the prices are not falling that much in the real world. anna: is that why it experienced the negative impact of the lower price in the extracting business, but not the net from price? paul: some positives they come through, the oil benefits of the price to crude went to higher income groups who are more inclined to save money. someone to low income groups. but fewer americans are driving, remarkably. the younger generation is less inclined to drive. the people who would normally be spending more money have had less of a reaction to the oil price. basically. anna: back to the shell earnings javier that is
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another scenic him a yesterday. an earlier in the week. javier: we saw more overnight, the canadian oil producers also mounting another reduction -- about $400 million canadian. and we expect the same from shell this morning, not really sure how much guidance there will be in terms of the numbers, but certainly we are expecting the ceo and the cfo will indicate they are willing to do more trying to do more synergies with the deal. the net result will be more money for potential he be returned to shareholders. anna: you talk about dividends if i ask whether over his dead body he would cut the dividend when he say yes? javier: i think it would be a big yes. every ceo is saying they would do what it takes to protect the dividend. if the stock price continues to fall, they will be able to achieve that.
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but we need higher oil prices for ceos to be able to keep that promise. if not, some of them may need to cut the dividend. and they may no longer be in the company. any deep cut this year, it was the first company this year to do the right thing. if you view the dividend -- he has more room to maneuver and navigate the deal. he thinks that they need to continue investing. future production for any continuous role. anna: you actually think commodities are relatively unimportant markers, and many developed economies in terms of their impact on inflation. run that by me. even if they are small, some economists an expert continue to point to tertiary effects on the economy. paul: including all those, oil is about 6% of the economy in
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the u.s. which is quite inefficient in consumption. it is 3% in an economy like the euro zone. we take the entire commodity complex, including the second round of facts -- the transport costs, airfare, they comes in at about 50% of the inflation basket. the main driver of inflation in the developed economy for the fed last night is a messick labor costs. 65% of inflation is domestic labor costs. that is why labor is getting so worked up. anna: we cannot get too excited about the drop in oil prices whether that is going to prompt further deflation or disinflation in the u.s. or the yuanu.k. paul: why is it that we are seeing gasoline prices fail to come down in the way that the
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crude price is coming down? if you look at what is going on in terms of wages in gasoline stations, they are raising about 5%. this is not skilled labor, 5% deserve the growth. if you are a retailer in the united states, about half your costs are going to be wages. the oil is not a big part of oil. when it comes down to it. anna: that was your excited voice. thank you very much, told donovan will stay. we will see hobbie air later -- we will see javier later. samsung is on the slide after coming below estimates having missed the mark on the galaxy s six. sherry, how disappointing were these numbers? sherry: the numbers were worst than the estimates. even more than the parliament very figures we got earlier this month. the net income coming at $4.9 billion in the months ending in
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june. falling below analyst estimates. anoperating prices slumped to 2.4 billion dollars, the result of both a strategy miscalculation as long in the market share, there is demand for the smartphone lineup in april. it failed to produce enough screens for the popular edge model. the traditional model struggled to challenge apple's iphone. but the key challenge is defending market share from competition from cheaper chinese rivals. samsung doesn't really make much of a profit in the low end. in the market analysts say this is still very important in terms of volume, which leads to samsung giving them the competitive at. they have and struggling to keep the market share in china, to 8.6% in the quarter from 9.8% in
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the first quarter. anna: not as many people wanted to see the messages on the side of their smartphone as in some thought. let's talk business, how is that then? sheeryrry: that was the one bright spot. profits there rose more than 40% to $2.9 billion. the chip that version benefiting from the launch. but it was not all in-house demand. more than two thirds of sales came from outside samsung as they sold to apple, xiaomi and they have orders for the main processors in the iphone, as well. back to you. anna: thank you very much there in hong kong. coming up, facebook posted revenues of over $4 billion for the first time. why is mark zuckerberg asking investors to be patient and
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investing? he has a history of asking investors to be patient, we will explore that a little further with caroline, coming up. ♪
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anna: welcome back to the program. you are watching countdown, it is 6:30 in london. we are just getting breaking numbers from a number of businesses. less talk about what is happening at alcatel lucent being taken over by nokia -- they posted 5% increases in second-quarter sales and says cash flow is positive for the first time in that. since 2006. they have agreed to purchase nokia and april. that was the ability to compete with technology and eric sends competitive business. between those asian players, a
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big market in china that is being fought over, as well as security concerns. they can dictate winners and losers. with what we have seen with the cfo of all caps lucent, he will be joining us in about 45 minutes. stay tuned for that conversation. we have numbers from lufthansa, group profits have come in at 950 4 million euros, that is what they describe as a group result. that was against a loss of 79 million euros. in terms of forecast, concerning the forecast, they are talking and more details. they say second-quarter passenger margins were a percent. sales in the first half were 15.4 billion against the previous first half where we saw sales of 14.2 billion. sales are up, it seems the group results as they describe it were considerably higher than the
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last time around. adjusted earnings reports that is considerably higher than the previous time. we will be talking here of bloomberg television with lufthansa's cfo shortly after 10:00 u.k. time. you can catch that conversation about the european airline sector. here are the stories you need to know. samsung has posted a profit decline, the company signals price cuts for the high-end galaxy six smartphone. they are up against a market slowdown and surging sales in the iphone. shares are down some 3%. the french government says it will send police reinforcements to break up migrant camps in response to a growing crisis there. the channel operator has appealed to the french and british government to intervene as a record numbers credit break in through the terminal. an undocumented migrant was
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killed tuesday at the tre ied to board a truck. investigators are trying to do determine if the debris belongs to the missing malaysia and aircraft. they are studying what appears to be a wing from a boeing 777 plane, it has been discovered for the longest search since it disappeared in march. 6:33 in london, facebook reported earnings yesterday. the social network continues to grow users and revenues. profits took a tumble after a sharp increase in cost. here's a look at the numbers and caroline hyde -- after we talked on twitter yesterday, it be estimates on metrics in the business. caroline: if you look at sales and users, they are beating significantly. this is why the company
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continues to perform where analysts didn't want sales up 39%. this is the third time we have seen quarterly revenue in excess of $4 billion. they are still ringing in more users, you now have a 30% uptick in those every month. 1.4 9 billion across the world about 88% of them are doing that on mobile. people are also doing this every day 65% of all users check every day. those are amazing stat. how long do you tune into facebook for every day? how long do you think you spend on the application? the average user in the u.s. spends almost an hour -- 46 minutes is how much they tend to spend on facebook. think of the things the companies they are managing to embrace and a time, some of the marketing messages they are getting. this is music to advertising years, one in every five minutes
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is spent in facebook on your mobile phone. clearly, 20% of your time on a mobile facebook has cachet. the costs are rising, too. this is something we have not been prepared about, mark zuckerberg said that will ramp up in the second quarter -- that is double the growth in sales. is that a little bit of a cause for concern to investors? they are seeing them plow money into data centers in marketing the forecast though for the year, they will increase. they will increase 60% not the 82% we saw this particular quarter. if you look at the share price, why did we fall off? probably because of how far we have, the last six months, if you look at the shares, this is the fastest company ever to reach a quarter of a trillion dollars in evaluation.
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they had to be a big bee if you keep up the pace of growth. that is what happened after hours. but now we are looking at what mark zuckerberg is demanding -- patients. he has demanded it before. back in 2007, he said i am not going to thrust 101 banners on my facebook. that would take off the unit sers. messenger, what's aopp, don't force me to start advertising to quickly. focus therefore on expanding the user base. $700 million, 300 million on instagram. twitter has 300 million itself. it does not get interesting into you have a billion users, that is a big he made at twitter. the rival across silicon valley. the question is, give him time,
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let him build up, and the organic interaction between people using the product and the business is where i want to see it. the numbers could be phenomenal though. if you look at instagram, you see the odd advert coming up in your feed. that will be $600 million this year, could go up fivefold in terms of money. anna: thank you, with some depressing though staggering numbers. how much time we spend on social media apps this morning. now 6:37 in london, spanish data due later this morning. they could show the fastest rise in seven years, one man hoping for a strong performance is a prime minister. he is fighting an election this year on an economic platform. joining us now is maria from a dread. the to see you. what are we expecting from this number? maria: we are expecting to see another quarter of strong growth here in spain. the second quarter gdp is
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expecting to come at around 1% the spanish economy gaining momentum. we are not going to get a detailed breakdown today, but data points to recovery that has been driven by internal recovery. it seems the nature of the recovery is now about consumption and investment here in spain. it is important to note that the economy is doing better, the government has cut taxes twice this year. this means people are more willing to spend money. anna: it is an election year what does this growth mean for the prime minister? maria: that is incredibly important. the government has been hit by corruption allegations, by austerity, it all comes down to the economy for him. he is leading in the polls, and he could win the election with a simple majority. it could be a coalition of left-wing parties, the socialists and the
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anti-austerity party coming together to kick them out. they have been very clear about this, the fact that they want to get hrid rid of him. anna: thank you very much. maria with the latest on the growth situation in spain and what it could mean for the political situation. let's continue our conversation about spain slightly tangentially. let's go to has information. caroline: the biggest telephone company in spain coming in line with analyst estimates, operating income coming at 3.7 billion euros. that is in line with growth of 7.7% sales growth as well across the board. we are seeing them at 11.8 billion euros. this is finally the turning point for telefonica. they want to see how they do in spain, spain is driving the growth. you heard about consumer spending, they are starting to
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spend on mobile, as well. back to you. anna: let's get back to paul donovan. let sneak in a quick conversation about the fed. it has been such a big focus, never have so many been focused on such a small word. the fed is now talking about how they want to see more games in terms of the job picture. in the u.s., they talking about reasonably confident inflation? do you think the market is right to focus on that job sentiment coming from the fed? paul: we have to employment reports from september, we have one coming through for august. the time we get to september, they have another employment report. they have the employment cost index, which is both labor market and inflation bundled up into one statistic. absolutely, we have that coming up on friday. this week, i think the fed will get a body of opinion it can use to move toward i think a
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september rate hike. the pressures in the u.s. economy are sufficient to justify an increase in the fund rate. if they do not start raising soon, they are going to be offering more accommodation. because the real inflation-adjusted rate is good to be falling until the end of this year as inflation picks up and the oil affects drop away. labor costs are starting to build, housing costs are building, inflation in the states is quite a serious issue. if we start looking into 2016 it is not going to be run away. but it is differently not a disinflation environment. anna: let's talk about china and the impact it might have. i ask because lots of sensible people coming there is not going to be much wealth affects in the stock market in china, not the way the economy works. at the same time, i read reports that the u.s. consumer is being put off spending with headlines
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about china. we saw the wealth effect, but it was in the united states. paul: always saw was a drop in the index of confidence. there is an issue with all confidence data. i would be very critical about the media. it is all your fault. basically what has been happening over the last few years, as we had more media available on social network sites like we have been hearing, all this time spent on media, all this has led to confidence data significantly overreacting. and so the volatility of confidence has been rising relative to the volatility of the economy. what that means is, you guys report 24 hours a day that there is a problem in china. and everybody in america throws up hands and says it is bad news. when someone calls up and says how have you been feeling about life, i have just been watching bloomberg. i feel awful. but in reality, and they go down to the shopping malls the
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following day, what do they do? they do what any red blooded american does, they spend money on things they don't have that they do not want. we still get consumer spending coming through. i am not too concerned about the damage being done by china in the united states. i think it is noise, volatility and sentiment not in reality. anna: i know you too well to suspect that economist are no way to blame. we get gdp later out of the u.s., it should show the third quarter was an abomination. paul: it was weird data. there was a problem with the quality, you are starting to get more questions about this. the numbers are a bit weird, but generally ok i think. anna: thank you very much. little bit more with paul after a very short rate. we talk company results with a leading telecom's ceo. do not go away. more on that will make him back. i should point out on santander
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the net profit came at 2.5 4 billion. that was free much in line with the 2.6 billion estimate, just to correct that number again on the spanish bank earlier. 2.5 4 billion euros for santander. ♪
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anna: welcome back, 6:47 in london. and i tell you that because italy has reported second-quarter numbers. adjusted operating profit coming below efforts, the estimate was 1.5 2 billion euros. that does look to be below the net level there, the net adjusted is 139 million. delayed the estimates, but he gives us interesting guidance. they are rising before your production growth to over 7% versus their previous guidance of 5%.
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they are proposing an interim dividend in line with estimates at 0.4 percent. it was one of the first oil majors to increase dividends. one of the only ones to suggest they will not do that. despite the fact we have seen that 40% reduction. we are watching through all of this to look at the refining and marketing business to see how much they can compensate for weakness in the oil price. and the second quarter adjusting profit is coming at 105 million. stay with bloomberg, we will be taking a closer look at those numbers. eni ceo will be here at 10 past 9:00 u.k. time. let's go to caroline. caroline: we have breaking news. this is a government held french nuclear sector. saying it will buy 51% of the
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reactor units, 2.7 billion euros. this is a plan to help save them. a nuclear company within france needed recapitalization. this is something the president of france had push towards, the prime minister had push for it. it employs a lot of people. and there is a government mandated deal, it was going to be announced today. the day the two government held companies report their earnings. certainly we have a deal -- 2.7 billion euros coming from electricity in france the of the reactor unit. anna: shell giving us numbers now, not the full kopelman. but we are getting numbers on their operating costs. they see 2015 operating cost reduction of 4 billion u.s. dollars. and they see job cuts of the
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business sector working on the acquisition. they're are continuing to review their ongoing projects on deck construction. clearly this is a strategy update coming through the company. they say that they -- in terms of the details here, capital investment reduction totaling 7 billion. ac further reductions in 2016 6500 jobs in 2015. staff and direct contractor reduction, they describe those as. in terms of asset sales, upstream and downstream after the deal are complete. they say they have reduced spending after the deal, and that is now complete. they're continuing to review their ongoing projects. a bit of a strategy of day, we wait for more details from shell. around 10 minutes time, we will be speaking to the ceo of shell. that is a bit later in the next
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hour. that is around 7:30 u.k. time. 20 to talk to him about, the bg deal amongst other things. the fed expressed satisfaction with progress towards full employment yesterday. policy makers say they want to see additional gains in the labor market for raising rates. meanwhile, they failed to provided clear guidance on whether they will raise rates. when they meet in december or they will wait until later. lufthansa says profits more than doubled the group benefited from lower fuel costs which fell by 309 million euros. and lufthansa also saw its passenger airline improve with the start of the season. they are considering a reorganization of securities that may bring a financial crisis. france's largest bank has enlisted a consulting group to
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work on the rebound, according to three people with knowledge of the matter. let's talk about some results we have had out this morning. those numbers coming through from alcatel lucent and the telecom network space. let's get over to the management of the business, the cfo of alcatel lucent. he joins us now. good morning to you, take us through the earning results this morning. what are the highlights? >> good morning. the experts summarize it into two elements. when we launched in 2013, it was about refocusing will be called generation technologies in the height of the transformation network. the cloud as well as structural improvements and profitability. when you look at the results today, three quarters of revenues are in generation technologies, impaired to below 50% before launch.
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more importantly, you see the results today in the structural improvements in the profitability we have made. we are showing again in improvements in margins. and in cash flow, despite a tough spending environment in north america. allow me to be a bit granular here, our gross margin is increasing again by 220 basis points compared to the previous quarter. operating income is up. 5.1% to 175 million euros and the in the medic target -- the emblematic target for the first time ever since the merger, we are cash flow positive. we are generating 65 million euros of free cash. when you look at the last thomas, we nearly break even. all in all, we feel these results -- anana: just before you execute on
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another merger, you are referring to the often tell lucent one. stalk management changes. your business is in the process of being taken over. can you tell us what your plans are? are you staying on the board when your business becomes part of nokia? >> for my perspective, my main responsibility is to close the transaction with nokia. that will be my focus, along with of course continuing to take care of our are financial and legal affairs. if it is determined to i'm going to be a part group presumably but not before the closing of the transaction with nokia. that is my priority. anna: you do think you will leave the business upon the completion, or at some point around the completion? >> at some point, though i remain open to various opportunities. it is undetermined right now. anna: now that you've said that
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who knows what could happen. let's talk about the underlying performance. erickson showed the network equipment market is improving. you talk optimistically already, you see signs of improvement as well? how is customer demand? jean: as we look towards the second half, we do see a pickup in demand -- a pickup and investment. that is concerned by the clients who indicated a spending environment which would be more favorable than the second half of the year, as opposed to the first cap. it is a bit of a rebirth what we have seen in 2014. we do -- we are optimistic about the market as a whole going into the second half. notably, north america we continue to see signs of rebound in europe. and in asia. a bit contrast the, but there are geographies that are quite positive notably in australia. as well as southeast asia.
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on a long-term basis, the fundamental rationale with nokia remains at the forefront of the evolution of the network. notably, the g5 which is accelerating. anna: are you finding the fact that you are not a u.s. business means you are having an easier time winning contracts in china? jean: you know, in china we are very well-established. we have been established for more than three years. we have a joint venture partner with whom we are very closely contacted. we work collaboratively with that partner. we do believe in china we are well-positioned, with a combination in nokia, that will strengthen that aspect of our business. anna: jean thank you so much for joining us. the ceo of all the tellers and. coming up in the next hour, we hear from big oil and also big
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banks. we heard a bit from shell earlier, we will hear a bit more. deutsche bank also reporting this hour. stay with us. ♪
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anna: shell of flesh is six and a half thousand jobs and cuts off the head of its earning report -- earnings report. it is one company to report today. we will hear from deutsche bank and rbs. looking to list off, the fed seeing solid growth in the u.s., keeping the door open for a an interest rate hike. global equities rally. the future of facebook. mark zuckerberg says the company's biggest days still come as it invests in new features and products. ♪
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a warm welcome back to "countdown." i am anna edwards. it is 7:00 here in london. we are waiting for news out of shell. anglo dutch oil giant that they are cutting 6500 jobs. a constant supply of q2 net profit coming in at 3.4 billion. items coming in at 3.8 billion. adjusted profit is something we can compare against. due to excessive profits, 3.8 billion u.s. dollars. that is ahead of 3.4 billion. it looks to be ahead of estimates on that adjusted basis. oil and gas, 2.7 3 million barrels a day. that is against an estimate of
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2.86. that looks to be a bit lower. we have already heard from shell this morning. they are cutting their jobs by 6500. they are planning a share buyback around $25 billion. an interesting thing to talk about the ceo -- thing to talk to the ceo about. they are continuing to review ongoing projects that are under construction right now. that is the expenditure side of things. strategy side of things is big business. it continues with its acquisition of the bg group. that bg deal out some time ago. we got these adjusted numbers that show the q2 adjusted profit is better than had been estimated at $3.8 billion. will be speaking to the show ceo on this program.
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first -- you don't want to miss that. bg group, their number is coming out. caroline, let's get to you. karen: this is a very small group. -- caroline: 1%, to 1.4 5 billion pounds. first quarter sales matching some estimates. we are seeing confidence in the four-year outlook they say that ee purchase. they are buying the biggest -- they are on track for that by years's end. the revenue is down to 4.2 8 billion pounds. that is in line with analyst estimates. this is a company that is targeting underlying revenues. they are pushing to win customers. it is all about fiber optic broadband. they're luring more thing and
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sports channels. they don't want just your landline, you want your gold band. you also want your tv and mobile phone. this is what they are banking on. this is why they are making that huge acquisition. it is on track to be complete by the -- i am just getting that headline. earnings up 1%. they ceo purchase on track at the end of the year. that's they say ee purchase on track at the end of the year. anna: let's get the underlying performance. rbs adjusted profits, 1.8 billion pounds. if you look at the net profit it is 2090 3 million pounds. analysts happy -- 293 million pounds. analysts happy. cet one that is equity tier one
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ratio. 12.3 percent at the end of june. that is higher than it was at the end of march. it is about 12%. before asking it was going to go above 12% this go around. we heard from them that they are selling down that state. they said there were going to raise another $1.9 billion from the sale. they are going to own a 6.8% of that u.s. business. that is helping with their capital buffers. deutsche bank in focus. we have the q2 numbers coming through deutsche bank. the headline here seems to be around litigation expenses. they are taking charges there on conduct and litigation in the second quarter. back to germany. those litigation expenses. they come in at 1.2 billion euros.
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that is above the estimate of 550 million. taking a big litigation expense charge on this business in the second quarter. in terms of the underlying performance, net income 7.96 billion euro. meeting estimates over at deutsche bank. bigger than expected litigation expense which could take investors eyes. let's continue the prospect of banking, caroline. caroline: we are getting breaking news from lloyd on asset sales. this time it is irish loans. commercial loans also. they are selling to a company, a consortium, led by ennis here it -- and us. it is a unit related to goldman sachs. we are sailing that's we're seeing commercial loans up to seven million pounds -- loads of 27 million pounds -- loans up to
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270 million pounds. they are selling this portfolio coming getting in just shy of 830 million pounds worth. it will be adding to their capital. they will be selling it to a consortium led by ennis. jean: anna: -- we're getting numbers and from international -- we've had numbers coming through this morning. first half adjusted net profit $205 million. just a touch ahead. a performance improvement in operating profit. let's speak to the ceo of the business. joining us now in a first interview is richard solomon, the ceo of international hotels
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group. great to see on the program. you say you remain confident on the four-year outlook. i want to find out what is driving the confidence. if you were to feel nervous about your jogger free, where would they be? richard: we seen a lot of momentum in the business. you talked about the bottom line which is well. if you look around the world, all of our major regions, we saw growth. we are adding a lot of hotels. we signed new hotels about 41,000 rooms. which is more than we have signed since 2008. good continuing momentum. anna: we have good momentum, you catch the eye of essential speculation. there's been consistent speculation as to whether you -- as to whether a hotel chain is interested in buying your business.
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richard: we never speculate on market speculative. it is not new. -- market speculation. it is not new. our organic pipeline is very large. over 200,000 rooms. 100,000 of those are under construction. we look at the organic growth of the business. we look at the way our brand -- how the end -- holiday in which is our biggest brand. a lot of growth in the business. a lot of demand from third-party owners. anna: if you're to receive an offer what kind of offer would have to look like to be something your board would have to consider? bridgette: if somebody makes an offer we would consider it -- richard: if somebody makes an offer, we would consider it.
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we have about 5% of the world's rooms. with 13% of the pipeline. that is growing faster than it ever has. russ, we got enormous demand. we've launched new brands. we've launched two new hotels under our chinese brand. that confident outlook that you mentioned is about how our business is performing which is very strongly. anna: you mentioned your china operation. let's talk about china. how is the turmoil that we have seen impacting your business echo is that -- this is? is that getting down to chinese is his travelers and their willingness to spend on hotel rooms? is that having impact on you at all? richard: it really isn't. we have largest business in china of any global hotel player. if you look the numbers, we are 1.5%. china was passed its growing market. over 10%.
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there has been impact in china and hong kong. we are again signing a lot of deals and's ending a lot of -- and building a lot of hotel rooms. we are not seeing that at the moment at all. anna: given selling hotel rooms. you have also been selling hotels. what are you going to do with some the money you've raised by selling these continentals and hong kong and paris. you talked about returning some of that. can you give us more details and what you will do with it? richard: we have said that we would say more about that at our prelims. the reason is the hong kong sale is a very objective sale. our practice has been once we
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have the cash proceeds, we talk about what we are going to do. we've returned around $10 billion to shareholders. i'm sure we will continue with that. we'll talk more about that next year. anna: might you be interested in buying up any technology businesses? i don't ad court has bought an up -- i know that ad court has bought a number of hotels. are you looking to acquire in that area? which: not necessarily in -- not necessarily -- richard: not necessarily to acquire. the way we look at it is to get in partnership with the top innovators. we did a deal with amadeus to
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replace our global dealers. partnering with people has been our approach. i would not say that we would never acquire something. you should be as good as you can at delivering the experience and partnering with leaders in order to drive your business forward. anna: richard, thank you very much for joining us. richard solomon's, the chief executive officer of international hotel group. we've had a blast of earnings coming through. the feds say job gains are good but failed to say what exactly they will lift off the hiking rate. we will tell you when we are back after the short break. ♪
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anna: "countdown." look back. you're watching -- welcome back you are watching "countdown." caroline: the profit line has come down 3%. the big news is job cuts. the owner of british gas here in the united kingdom a big player in oil and gas. they're cutting jobs by 6000 net. they're crating 2000 jobs. 6000 jobs to be removed and cost-cutting programs. they're executing themselves out of expiration. they're going to be cutting costs by 1.5 billion pounds in the next five years. anna: a big strategy update coming through from that provider of energy.
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caroline, think you very much. here are the stories you need to know. the imf director says she has plead that she is pleased the fed is taking an approach to monetary policy. she spoke yesterday in washington, d c. >> we clearly -- which is certain well into its recovery process. we should expect policy in the not-too-distant future. anna: madame lagarde says the imap and fed are not always on the same page -- says the imf and fed on not always on the same page. lehman's reported profits that beat estimates. with all of its gains, the slumping oil prices have a detrimental effect on business. siemens revenue would have declined. in banking, para bought is --
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since the financial crisis. the largest bank has enlisted consulting groups to work on the rebound. that is according to three people with knowledge of the matter. let's get back to the reporting season. this is a ftse 100 listed the business. it runs a number of shopping center businesses throughout the u.k.. let's talk to the ceo of the business, david joins us now. even, great to see you. things were joining us. shares down. that does not tell the story. david: it includes valuation. a bigger number a year ago. the underlying ups day trading was up 6%.
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anna: what can you tell us about u.k. growth story. you operate shopping centers across the u.k.. nine of the top 20 are operated by your company and what can you tell us? david: we focus on manchester, newcastle. it ripples out across the u.k.. we are beginning to see that in terms of demand from retailers. a good performance in these six months. 4% ahead. things of desktop percent ahead. things are -- talk percent ahead -- 12% ahead. things are picking up. anna: in the budget, there were questions. many retailers waiting to see what happens with some of the taxation issues around their companies.
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also around the minimum wage. these are types of challenges that they talk to you about. david: he wants these stores and retail than it -- destinations. that drives business. we get -- we got the prime centers in the u.k. retailers need to be to create their brand and get the public in front of their store. anna: what about the underlying performance of the u.k. economy, because the central bank talking about how interest rates will be clear end of this year. is that something you keep a close eye on echo ms. marcussen: -- ion -- i on? david: it has rippled out from london to the region. anna: if we did see an increase in interest rate, would that be
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a headache? david: i think recovery is on a solid foundation now. anna: i spoke to the management of unit bill they are not operating in the u.k.. they have a high-end -- they talk about the u.k. being so expensive to what they do. is that something you're suffering from? david: i think that is something that is true in london. we are expecting that will happen. the u.k. is a solid market. we get 400 customer visits a year. 25 million customers. like wembley stadium every day. the u.k. consumer is in good
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shape. anna: were expecting gdp numbers from the spanish -- we are expecting gdp numbers from spanish companies. david: we have two centers in spain. the retail cell figures up 10% on average. released on recovery. -- really strong recovery. anna: david, the ceo. we have had earnings from deutsche bank. second quarter profit more than tripled after the company tax bill fell. let's get hans nichols and from berlin. a little bit of breathing room. hans: mr. crane is been a man on the job that to govern 30 days ago. these note that these numbers
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provide him a little bit of leeway. equity trading came in better than expected. that trading came in quite high. there are a few storm clouds. there is a 1.2 billion cost for litigation before the estimate on that was 550 million euros. almost a double cost on litigation. total outstanding litigation liability is what they expect the pay is 3.2 billion. that is roughly in line with what we have been expecting. it looks like they have done a decent job. we'll be digging deeper into the numbers. it is not until the conference call later this afternoon that we will get to these key questions. what do their leverage ratios need to be? looks like one number -- better than last quarter. more breathing room there. on so many of these questions with deutsche bank, when he to figure out where they are going to be cutting jobs? we know they want to cut costs.
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they're going to be geographical job cuts. where will they be? will he be heavy and the debt trading operation? is that a place where deutsche bank does not see much more room for growth. the key question i have is what will he say about capital increases? the predecessor was clear that you do not need to have any more capital increases. we'll see what mr. crane says about that. it will be an interesting conference call. we'll try to dig in to that litigation charge. why that litigation number was higher than expected. we'll see what mr. crane has to say. and the: think you very much -- anna: thank you very much. after the break we talk about big oil. the oil producer buying bt group for more than 70 billion u.s. dollars they -- they are planning at shell for a
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prolonged downturn. that is according to the company's statement. we'll try to dig in to what that downturn might look like. we spent time with the ceo of the business. dividend commitment will remain unchanged. $1.88 a share. the coveney says anybody who thought the fall in the oil price was good to put the oil majors off the commitment we are pleased by what we are hearing from shell. they are refining businesses. they try to deal with the extent of the oil price we will be seeing -- we have been seeing in recent months. oil prices forced a number of these businesses to change their strategy. if you want to get in touch with us i am want her.
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-- i am on their -- i am on twitter. stay with us here on "countdown."
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anna: "countdown." welcome back. you're watching "countdown." here are the stories you need to know. blame -- siemens reported profits that the analyst estimates. excluding currency effects, siemens revenue would have declined 3%. lufthansa says profits more than doubled. lufthansa also saw its passenger airlines improve. shell says it plans to cut 6500
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jobs this year and reduce capital investment by $7 billion. second quarter adjusted profits -- the company is selling about 33% to a japanese business for about $1.4 billion. let's stick with that conversation about the oil businesses. been dan burton joins us. good to see you. things for joining us here on bloomberg television. what you are planning to with your japanese business. selling 33% of shell. why did you decide to do that? what is the rationale? ben: good morning. thank you very much for the opportunity.
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we've always -- we always review our portfolio. we feel the business is either resilient or -- we thought in this case, the strategic base was not strong enough to justify holding on to it. we will be able to derive more value. the logical conclusion is we refreshed that part of our portfolio and move on. anna: you talked about prolonged downturn for the business. give us more of your thought process? ben: it has to do with the oil price. no one really knows what the oil price is going to be. it depends on how demand will grow for oil. how supply will shrink. we believe in the long run the instrumentals will -- but we are
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not planning on that. we want to make sure the company is strong. what we are doing is acting with vigor. that means taking cost down. it means looking very clearly at capital investment programs. it means restructuring weaknesses. it means divestments. all there to make sure we can stand by our commitment to keep the dividend. at the same time, observe options for growth. " the dividend, you mentioned it, that remains your primary focus? ben: the commitment that the
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board and myself have to the dividend is very strong. the dividend is very important. we've gone through the unusual fact that we have announced a dividend for seven quarters. $1.88 per share for this year. we've done that again. we felt it was appropriate to reassure our investors that the dividend is set. we want to stand by the commitment. as a matter fact, if you look at the bg acquisition, the bg acquisition will make the company more resilient. anna: you mentioned where you you think the oil price could go. tell us how that plays into what you can get out of the bt deal.
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some people have been asking if the deal still make sense at current oil prices. what oil prices do you need to make this deal? ben: in terms of its capacity to add to the free cash flow, it makes sense and almost any oil price scenario. we're going to create one of the strongest companies in the industry combining a very good integrated gas/energy business, making a real leader in these two businesses. making it a large company as well. a company that can refocus on more profitable positions. $50 billion divestment program. it will be the company that will have a stronger growth. a more predictable growth pipeline. a more capital efficient growth pipeline. anna: how fast through the
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antitrust process it has the relationship been? the chinese regulator might want to restrict some kind of -- for this deal? ben: the whole regulatory process is slightly ahead of schedule. you may have received -- we have received an ok from the united states. the brazilian regulator and others have given complete clearance. where filed -- we have filed and almost all jury did -- all jurisdictions, including china. we are now in the process. the process needs to run its course. i am confident that we will get there. i am confident that we will close the deal early next year. in the meantime, we are working hard together with bg to plan
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for the integration. we want to be ready on day one, but we want to have a very clear view on how we're going to expect the synergies. we will be aiming to have this done as a world-class process. anna: details anymore about where the job cuts will fall? geographically? which parts of it? ben: the job cuts make up for a significant number. let me also say that this is a result of a multiplicity of programs we have going on. focusing on bottom-line improvements. it has to do with restructuring. if you add up the tally, it comes out to 6.5 thousand. it is adding up what we have in motion.
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by the way, that 4 billion will accelerate into next year. anna: so are those job cuts going to be in the north sea echo -- north sea? of a new announcements?ben: there are no new announcements on the north sea. we've announced job cuts in different areas. in that sense, it is adding up what has been announced up all the improvement programs we are running. we don't want to come out with some fleshy target and be quiet about it. this is the moment to say this is what we have been doing. these are the results. these are the effects of our programs. anna: how this is like yours is balancing the weaker oil price with the performance of the
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refining part of the business? what do you think we are good to see -- when you think women see any reversal? is that something you are planning for? ben: at the moment it is sad to say that the oil price purchase most. -- oil price hurts us most. for the integrated business model, it shows in times like this, we can rely on downstream business which is -- which has performed very well. one of the best quarters we have ever had. in that is a pretty good refining. all of our business in the downstream has been performing very strongly. refining, i do not count on that environment to last for many years. then again, refining is not necessarily the bulk of the results.
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it is a very high readable and marketable quality business. we have the high quality trading index. they actually make up the bulk of the downstream this is. -- downstream business. anna: iran, we saw that market opening appeared have you been in discussion with the -- with iran on the contracts? ben week -- we have been in contact with the iranians. we still have to pay an ioc $2.2 billion for compensation and crude. we are not in a position to pay that. you can imagine that the iranians have a dialogue about when that can be released. we haven't had any discussions on contract types.
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we'll be interested to look at iran when the opportunity presents itself. when we are legally allowed. it is a little bit premature. i understand a lot of excitement. i don't want to throw a lot of cold water on it. while iran may be an interesting investment, and indeed the iranians will be looking toward sophisticated technology, it will take time before we are ready to invest. things will have to be negotiated. what sort of risk profile it runs. we will be ready to move in with major investments on day two is probably overdone. anna: we talk about mergers and a positions and all types of industries, not the least your very own, do you expect that
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there will be more m&a activity? are you surprised that yours seems to be the more headline grabbing deal? ben: not for me to say and make predictions. what i can say is the fit between shell and bg is the strongest fit that was available within the sector. i'm happy to see where in the position to implement. i think we got it exactly right. what others will do, you have to see. i also observed there are not too many companies around that have the financial strength and will to undertake something like this in today's environment. let's wait and see what happens next. anna: thank you very much for joining us then dan burton -- been dan burto ben van beurden.
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it is fascinating the terms they're using, -- javier: the return to -- a price downturn could last. the company is preparing for what we call the b ob b. there is a potential for $50 to remain. job cutting, reducing spending and trying to reassure investors they will continue to be of to pay the dividend. the dividend is safe. anna: as you said this business is walking a fine line between reducing investments and not damaging productions in the future? you got to have a certain amount
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of long-term strategy visibility. have your: remember -- have javier: they run into trouble in future production. shell is very particular. [inaudible] they will run into trouble by 2020. it is a difficult line, but at the moment, we see oil prices when we are today, i think the pressure from shareholders is too strong for the boards to say no we are not going to kick -- we are not going to continue. they need to listen to the shareholders. anna: thank you very much for that reaction to that interview with shells ceo. coming up, how is china performing today? chinese equity markets are set to close.
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let's talk about that when we come back. we will get the latest market moves from asia. ♪
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anna: "countdown." welcome back. you're watching it is 7:48 in london. deutsche bank's circuit quarter profits more than triple after its tax bill dropped. the ceo of the company is pressing ahead with the banks plan to bolster profitability by reducing costs and cutting back on the business. john clan replaced. rbs unexpectedly increased second-quarter profits. it came in it 2090 3 million pounds. that beat -- that came in at 293 million pounds. that beat estimates.
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she'll cut 600 -- 6500 jobs this year. it dropped to $3.8 billion. the company is selling 33% of its japanese unit for about $1.4 billion. let's talk about how the asian equity session has been performing today. what kind of handover will that give us into the european section -- european session. juliette saly joins us. juliette: thank you, anna. most asian markets higher. let's have a look at how the shanghai composite is going as we head into the close. another volatile day here. the market seems to have a mind of its own.
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.7%. you can see those wild swings. elsewhere in the region, we had a good day. mainly positive commentary coming out of the u.s.. some strong data coming out of japan. the nikkei up by 7% in japan. some weakness come through in south korea, down almost 1%. samsung missed expectations. all of those earnings weighing on the cost. looking like we might reverse a little bit of yesterday's 3.5% gain. there are still five minutes to go. anna: juliet, think you very much. we heard earlier from the ft -- bfp para bougharibas.
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he could announce a massive revamp of the business. their lien what can you tell us. >> it is exclusive information according to three people who have knowledge of the matter. of course, they are impacted by tougher capital roles, especially -- it is making profit harder. they have to re-organize this unit. a coating to our sources, they have a consulting group in order to review the unit. we could have knowledge as soon as the next few weeks. p -- bnp paribas is one of the desk they have to look at the fixed income activities, especially more efficient and
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more profitable. as much as 20% by 2019. if you look at the 2014 expenses, that maybe as much as 1.2 billion euros. we have seen other european banks, deutsche bank doing the same. however bnp is less dependent than deutsche bank. it would not be as deep and fast as other firms. if you look the share price of the npp airbus -- bnp paribas it has increased. the other rivals [indiscernible] we don't know if job cuts can be ruled out. we know that the union represents 28,000 people.
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we also know they've already merged one unit together. that's led to 100 job cuts. we don't know if there will be more. that will be one of the questions i will be asking the cfo of bnp paribas when i talked to him tomorrow morning. that's on at 6:30 a.m. on bloomberg television. anna: we look for to that conversation. boy have we had a lot to deal with. jon ferro has been pouring over the details all morning. what have you got for us? jonathan: i do not envy you. over 70 companies on the stoxx 600 reporting earnings. i tried to pick up a theme. i tried to the got -- exposing the lights of shell, centrica.
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we are good to see big job cuts from those two companies. six and a half thousand coming from shell. we will wrap up that delay segment for you. we'll talk about diageo earnings. ivan menendez joining us. their forecast for a return to sales growth. what is happening in the u.s.? a bit of a soft patch, he's to run it. the federal reserve, how can we get the commitment. that seems to be the take away. not much clue that will get a rate hike in september. we will do all of that and more. goldman sachs andrew wilson after the break. anna: the use of the word some
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in terms of job gains. i want to bring you up-to-date on what is happening with futures. where expected to see a positive mood test positive move at the start of trades. the word from the feds taking -- the word from the fes is being taken quite positively. the debate very much alive as to when we do start to see a interest rate hike. we have an earnings report to deal with here in europe. nylon shell and desk keep an eye on shell. -- keep an eye on shell.
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jon: good morning and welcome to "on the move." just moments away from the start of european trading hearing it a huge day for earnings. over 70 companies reporting earnings. crude reality. shell plans to reduce their workforce and slash investment by $7 billion. centrica plans to cut 6000 jobs of their own. deutsche bank profit jumps. second-quarter net income comes in more than triple. coaching executive john brian presses ahead with a turnaround plan.
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the fed keeps rates unchanged at its july meeting and gives little away as to whether they will hike in september. attention now ships the u.s. gdp. i will break that all down for you. the ftse futures trading higher. dax futures also higher by almost 80 points this morning. looks like we will get a higher open. let's get it with caroline hyde. caroline: third day of gains. it has been the biggest two-day gain in more than two weeks. some amazing facts if you are looking at a monthly basis. we see the volatility index falling by the most on record. fascinating stuff looking at the month. for today look at what earnings is bringing us. is m&a still on the agenda? ftse 100 up by 0.5%. the cac 40 in fra


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