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Disney’s profits plummet as coronavirus keeps its core businesses flailing

CorporateNov 13. 2020

By The Washington Post · Steven Zeitchik · BUSINESS 
A year ago this month Disney was riding high as it revealed it had racked up nearly $70 billion in revenue and $15 billion in operating income for fiscal 2019 while also celebrating the launch of Disney Plus.

On Thursday, the company announced darker news for 2020: amid the coronavirus, it saw operating income drop 45% for the year to just $8.1 billion, and a whopping 82% for the fourth quarter to just $600 million. Once taxes are factored in, the company lost $700 million during the quarter, which encompassed the July-September period.

The company has been battered by the pandemic, which has kept it from attracting large numbers to its theme parks and from opening new movies in theaters. Both realms are usually very popular in the summer.

Disney did disclose that it now had 73 million global subscribers to Disney Plus, making the streaming service a juggernaut in its first 12 months of operation. And there were other silver linings: Revenue for the quarter of $14.7 billion were higher than analysts’ forecasts of around $14 billion, while its loss per share was about 20 cents compared to expectations of 70 cents.

But the revenue figure was still down 23% compared to 2019. And once all expenses and taxes are included, the company lost about $700 million in the quarter after running in the black many previous summers (in 2019, it took in nearly $800 million once expenses and taxes were factored in).

In response to the challenges, the company has sought to tighten its belt. It laid off 300 workers from ESPN earlier this week and has also drastically pared down the number of employees at theme parks.

Disney Plus has been a platform for a number of social media hits, including “The Mandalorian,” whose new season came out last month. The company is aiming to release at least one piece of major content each quarter, with the Pixar original “Soul” coming in December. On Thursday, Disney announced “WandaVision,” the service’s first Marvel series, will be released on the platform in January.

But Disney Plus’ success is tempered by the investment costs associated with it. A MoffettNathanson report says the division could lose $2 billion each this year and next; Disney had acknowledged it won’t be profitable until 2024.

The company also did not reveal numbers for “Mulan,” which cost Plus subscribers $30 to watch. Disney Chief Executive Bob Chapek said the experiment was successful enough in the company’s eyes that it could well be repeated with other movies.

“We saw enough very positive results,” he said, “to know we’ve got something here in terms of the premiere access strategy. He added, “What we’ve learned from Mulan is there will be a role for it strategically with our portfolio of offerings.”

Disney has been battered by a host of coronavirus factors, including the closure of movie theaters in many states, forcing it to shift much of its movies to 2021. Disneyland remains closed as California Gov. Gavin Newsom has maintained strict reopening requirements. Walt Disney World in Florida is open, but executives have acknowledged business has been slower than anticipated.

Chapek attempted to put a good spin on the news. “Even with the disruption caused by COVID-19, we’ve been able to effectively manage our businesses while also taking bold, deliberate steps to position our company for greater long-term growth,” he said in a statement.

But in a call, he also acknowledged the difficulties in theme parks and pointed the finger at Newsom.

“We are extremely disappointed that the state of California continues to keep our theme parks closed despite our proven track record,” he said, as he referred to re-openings in Florida and Asia. “We believe state leadership should look objectively at what we’ve achieved. . .as opposed to setting an arbitrary standard.”

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Minor suffers major loss of Bt5.59bn in third quarter

CorporateNov 13. 2020

By The Nation

Minor International (MINT) has recorded a third-quarter net loss of Bt5.59 billion, down 223 per cent from the same period last year as Covid-19 took a big toll on the hospitality giant.

MINT’s third-quarter revenue was Bt14.88 billion, down 50 per cent year on year, while the company’s net loss in the first nine months was Bt15.81 billion, down 328 per cent from the same period last year.

MINT’s chief financial officer Brian James Delaney predicted the company’s performance would improve over the fourth quarter and into next year as its post-Covid business plan kicks into gear.

“We expect MINT’s performance to move into positive territory by next year on hopes of a Covid-19 vaccine and the company’s asset-circulating strategy,” he said.

“Meanwhile, the company will continue to manage expenses to maintain liquidity while seeking opportunities to generate revenue amid unexpected crises.”

He added that MINT’s third-quarter revenue had doubled from the previous quarter after the company’s hotels, restaurants and retail businesses were able to reopen following the easing of lockdown restrictions.

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Solar giant SPCG expects to generate Bt5bn revenue this year

CorporateNov 13. 2020

By The Nation

Solar-power company SPCG projects its revenue from sales and services will hit Bt5 billion this year and Bt5.5 billion next year.

SPCG finance director Pipat Viriyataranon expects profits to rise thanks to the company’s cost management policy, adding that it has repaid bonds on time without the need for additional borrowing.

“In the first nine months, SPCG’s net profit was Bt2.09 billion, up 9 per cent year on year, with revenue from sales and services at Bt3.81 billion, up 1 per cent,” he said.

He said SPCG will continue expanding its solar rooftop business via its subsidiary Solar Power Roof (SPR), which will focus on residences and an MSEK joint venture with Mitsubishi UFJ Lease & Finance Co (MUL) for Japanese factories in Thailand.

Pipat said SPCG had a budget of Bt10 billion to invest in new solar projects both at home and abroad, especially Japanese solar farms.

The company has already pumped B1.3 billion into the 480-megawatt Ukujima Mega Solar Project in Japan and expects to invest another Bt1.4 billion to complete the project in 2023.

“We expect the project to generate returns of at least 8 per cent of total investment,” he said.

SPCG is targeting capacity of 390MW – 260 megawatts from its 36 solar farms in Thailand and 30MW from Tottori Yonago Mega Solar Farm in Japan, he added.

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Eastern Power buys back Bt1.38m in shares

CorporateNov 12. 2020

By The Nation

Eastern Power Group (EP) has bought back 353,800 shares worth over Bt1.38 million so far this month.

According to the Securities and Exchange Commission (SEC), EP chairman Yuth Chinsupakul bought back 123,800 shares worth over Bt480,000 at Bt3.88 per share on November 2, 30,000 shares worth over Bt110,000 (Bt3.93 per share) on November 3, and 200,000 shares worth over Bt790,000 (Bt3.95) on November 9.

EP’s share price in October rose by 3.19 per cent to Bt3.88 and has climbed another 0.5 per cent so far in November to Bt3.92.

In September, EP’s board of directors approved selling its stake in three power plants in Japan for Bt1.99 billion to support business expansion and repay loans.

EP registered profits of Bt132.45 million for the past six months, down Bt39.34 million or 22.9 per cent from the same period last year, while its revenue dropped to Bt707.30 million, down 0.5 per cent year on year.

The company’s revenue from its publishing business dropped by Bt72.74 million or 21.95 per cent year on year, but revenue from electricity sales rose by Bt69.73 million or 25.53 per cent from its Kurihara 2 power plant in Japan, which started selling electricity on November 25, 2019.

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CKP sees Q3 net profit of Bt831.3m, plans to issue debentures

CorporateNov 11. 2020Xayaburi Hydroelectric Power Plant 

By The Nation

CK Power Public Company Limited (CKP) announced an expected third quarter net profit of Bt831.3 million, envisaging an optimistic fourth quarter.

TRIS Rating gave the firm an “A/Stable” rating over its development of large power plants and expected cash flow.

CKP managing director Thanawat Trivisvavet said the performance of the firm and its subsidiaries in the third quarter was positive after the company faced a decrease in revenue in the second quarter due to lowered production capability during the dry season.

Overall, CKP earned Bt2.13 billion in revenue during the quarter, about Bt129.5 million more than the same period last year, when the company earned Bt2.001 billion, it said. The revenue growth amounts to a 6.5 per cent increase in total revenue, resulting in a third-quarter net profit of Bt831.3 million, compared to Bt33.3 million in the same period last year, an increase of Bt798 million.

This quarter’s impressive rise in revenue is due to the fact that the Nam Ngum 2 Hydroelectric Power Plant was able to generate and sell more electricity than the same period last year.

In the third quarter, the power plant generated 405.2 million units of electricity – a 35.4 per cent increase from the previous quarter when it produced and sold about 299.3 million units of electricity.

As for the water inflow, the plant experienced a 7.5 per cent increase compared to the same period last year, when the water inflow was reported at 2.22 billion-2.38 billion cubic meters.

The reported increase in net profit is partially due to the updated progress report about investment in the Xayaburi Hydroelectric Power Plant, which is now operating at full capacity.

CKP was able to sell 2.31 billion units of electricity from the Xayaburi plant, which subsequently generated Bt4.48 billion in income.

Simultaneously, the Bangpa-in Cogeneration Power Plant 1 and 2 are operating as normal, the firm said.

CKP and its subsidiaries have earned a total Bt5.72 billion in revenue in the past nine months, Bt1.007 billion, or 15 per cent, reduction compared to the same period last year mainly because of the announcement to gradually reduce and sell electricity from the Nam Ngum 2 Hydroelectric Power Plant. Hence, mid-year sales revenue in 2020 was lower than the same period last year. Additionally, revenue from the Bangpa-in plants 1 and 2 was also about 7 per cent lower this year than last year due to lower gas prices. However, the company was still able to generate Bt397 million in total profit, a Bt140 million, or 55 per cent, increase from last year, when it earned Bt257 million in total profit, the firm said.

This increase in profit is due to profit sharing from the Xayaburi plant, which was recorded at Bt231 million. The Xayaburi plant has so far this year generated revenue totalling Bt8.94 billion from selling 4.65 billion units of electricity.

Thanawat said the company is now planning to issue debentures (non-subordinated, unsecured) of no more than Bt4 billion around the end of this month in order to facilitate further operations and new power plant investment that is currently under negotiation.

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Krungsri increases minimum salary requirement for personal loans

CorporateNov 11. 2020Nayanee Peaugkham, chief of Krungsri Consumer Group 

By The Nation

Krungsri Consumer, a provider of credit cards and personal loans, has adjusted the salary criteria for borrowers from Bt10,000 per month to Bt12,000. This is because Krungsri is becoming more prudent in lending amid the trend of declining household income.

Nayanee Peaugkham, chief of Krungsri Consumer Group, said the group has maintained the criteria for credit card applicants at a monthly salary of Bt15,000

She added that the group is being more careful in granting personal loans as some customers already have a heavy debt burden. Also, she said, raising the monthly salary criteria is helping reduce risks for the company.

She believes the credit card and personal loan market next year will enter growth territory and will see at least one-digit growth.

These businesses have been suffering contraction due to the impact of the Covid-19 outbreak. The company will also focus more on debt collection and restructuring to help customers relieve their debt burden, she added.

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Intouch says Bt7.7bn claim for broken satellite won’t hit finances

CorporateNov 11. 2020

By The Nation

Intouch Holdings (INTUCH) expects its 2020 turnover to drop year on year due to a decline in Advance Info Services (ADVANC) revenue. Meanwhile, turnover of the firm’s satellite arm, Thaicom (THCOM), is projected to rise slightly after challenges in signing new contracts, according to Tomyantee Kongpoolsilpa, INTUCH senior vice president Portfolio Management & Investor Relations.

However, she denied that a Bt7.7-billion compensation claim against THCOM for a lost satellite would impact its finances.

She said ADVANC had allocated a budget of Bt35 billion to expand 5G networks and 4G home internet, of which Bt18 billion had been used to extend 2600MHz-spectrum 5G coverage to 60 per cent of Bangkok and 60 per cent of the Eastern Economic Corridor (EEC).

“The company will continue expanding 5G coverage in the 700MHz and 26,000MHz spectrum to enhance service and business operations, with the number of 5G users set to hit 100,000 this year and 1 million next year,” she said. The company would also continue investing in start-ups related to digital telecommunication and 5G.

She also said that the Digital Economy and Society (DES) Ministry’s Bt7.7-billion compensation claim for the damaged Thaicom 5 satellite would have no impact on INTUCH’s financial statement because the company is complying with the concession contract.

The DES Ministry has issued a notice urging INTUCH and THCOM to deliver a new satellite to replace Thaicom 5 by next year, or else pay damages of Bt7.7 billion with annual interest of 7.5 per cent. Failure to deliver would also incur a fine of Bt4.98 million with annual interest of 7.5 per cent until delivery or full payment of damages.

Thaicom 5 developed a technical fault on December 17, 2019 and, after several unsuccessful attempts at recovery, THCOM proposed deorbiting the satellite 14 years after its launch in May 2006.

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FPT’s capital expansion seen as a prelude to major investment plans

CorporateNov 10. 2020

By The Nation

Frasers Property (Thailand) (FPT)’s move to increase its capital from Bt2.31 billion to Bt3.71 billion by offering 1.39 billion newly issued ordinary shares is a signal that the company is aiming to invest in big projects, an expert at Kasikorn Securities said.

FPT’s stock price on Monday rose by 5.88 per cent, or 60 satang, to Bt10.80 per share.

Thanapol Sirithanachai, FPT country chief executive officer, said that of the 1.39 billion newly issued ordinary shares, 695.78 million shares would be offered to existing shareholders, 463.85 million shares to the public and 231.92 million shares to a limited group of private investors.

He said the company’s board of directors had the authority to consider offering the newly issued shares at one time or several times.

“The board of directors also approved to pay dividends for the operating results of 2019-20 at Bt0.60 per share on February 11 next year,” he said.

Sorapong Jakteerungkul, senior analyst at Kasikorn Securities, said PFT’s move to increase its capital is a signal that the company is aiming to invest in big projects.

He said FPT had previously bought 4,315 rai (690 hectares) of land on Bang Na-Trat Road from the Legal Execution Department, and also acquired Golden Land Property Development’s shares, pushing up the company’s debt-to-equity ratio.

“Besides, FPT has an opportunity to invest in its major shareholder Charoen Sirivadhanabhakdi’s projects in Vietnam, so increasing capital is necessary to invest in the projects,” he said.

He advised investors to invest in FPT shares in the long term at the target price of Bt16.70 per share as the company’s performance is likely to grow further.

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PTT targets 16,000MW by 2030 – half from renewables

CorporateNov 10. 2020

By The Nation

PTT Group is targeting electricity generating capacity of 16,000 megawatts by 2030 – 8,000MW from fossil-based sources and 8,000MW from renewables, said PTT’s president and chief executive officer Auttapol Rerkpiboon.

Currently, the group’s domestic and international production capacity is 10,000MW, divided equally between fossil and renewable sources.

He added that most of the targeted additional 3,000MW of the fossil-based capacity will come from the group’s overseas investment.

PTT’s plan to raise renewable power production capacity rests on merger and acquisition deals for overseas projects, talks for which are expected to be completed in the first quarter next year.

Global Power Synergy (GPSC) remains the group’s power business flagship, Auttapol added.

He said that PTT expects to perform well next year if the global crude oil price moves in the range of US$40-50 per barrel, or higher than this year’s average of $41-42 per barrel. The other factor that will benefit PTT is if there is no second wave of Covid-19 infections.

Auttapol predicts that PTT’s performance this year will improve from the second quarter onwards after the virus crisis abated and demand for diesel and petrol rose. Only demand for jet fuel is yet to return to normal levels.

He also expects US-China trade tensions to ease once Joe Biden becomes president in January, as Biden has a more compromising stance on trade than the outgoing President Donald Trump.

Arawadee Photisaro, PTT’s senior executive vice president for Corporate Strategy, added that PTT is also seeking new business opportunities in cutting-edge sectors such as life-science technology. The company is in talks to acquire an overseas drug-production facility, with a deal expected to be concluded next year.

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McDonald’s again surpasses Wall Street’s sales expectations

CorporateNov 09. 2020

By Syndication Washington Post, Bloomberg · Anne Riley Moffat · BUSINESS 

McDonald’s Corp. reported better-than-expected results for the third quarter as the global pandemic continued to lift restaurants with robust drive-through and delivery footprints.

The chain posted revenue of $5.42 billion, surpassing analysts’ expectations for the fourth straight quarter. Adjusted earnings per share of $2.22 also beat. The burger chain had previously reported same-store sales for the quarter, including 4.6% growth in the U.S. that wasn’t enough to offset weakness abroad. Globally, same-store sales dropped 2.2%.

The stronger-than-forecast results come as customers craving comfort food and touchless experiences increasingly turn to fast food. The burger giant had already been revamping digital options before the virus hit, including touchscreen ordering and increased delivery options, allowing it to maintain sales even when eat-in dining rooms were temporarily closed earlier this year in parts of the U.S. and beyond.

The stock was up 9.6% this year through Friday, just ahead of the S&P 500.

Even so, challenges remain. McDonald’s said several of its key markets have reintroduced restrictions on in-person dining, from reduced hours to dining-room closures, including France, Germany, Canada and the U.K. In the quarter ended Sept. 30, the Chicago-based company had already reported negative same-store sales in Latin America, China and several key European markets.

Things are stronger in McDonald’s home market. A brisk drive-thru business in the U.S. and limited-edition celebrity meals featuring Travis Scott and J Balvin helped the U.S. return to growth. Spicy chicken nuggets — a short-term menu item that drew buzz — also brought in customers. Still, U.S. comparable guest counts remained negative for the quarter, meaning fewer customers placed orders — they just spent more whenever they did.

The company will also host a virtual investor update Monday to share strategic priorities and plans for future growth, McDonald’s said when it announced results.