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We’re knee-deep in Q3 earnings season. And for the most part, companies are announcing better-than-expected profits.
But the most important part of this quarterly ritual is what companies are saying about the global economy.
We’ve reviewed the earnings press releases and mined the earnings conference call transcripts to find some very revealing things…
“China’s economy averaged 9.4 percent growth in the first three quarters of 2011, and we expect past policy tightening will slow full-year growth to 9.3 percent. Inflation appears to have peaked, and liquidity growth has slowed to a rate consistent with past easing. We expect no further policy tightening this year.”Source: Company Filings
“UPS produced another solid quarter of earnings growth against the backdrop of a deceleration in exports from Asia and a challenging global economic environment.”Source: Company Filings
Image: Dan Perry via Flickr
“We are also particularly pleased with results in our directly-operated international businesses, as China continues to thrive. We are now targeting to achieve at least $300 million in sales this year, the top end of the range we articulated in August.”Source: Company Filings
““The business environment remains challenging, as the economic softening that we experienced late in the second quarter continued into the third,” said CEO George Buckley. “In addition, ongoing policy uncertainty and austerity are affecting growth in Western Europe, which reduced sales in the quarter.” Management lowered guidance significantly.Source: Company Filings
Image: Frame-of-Mind via Flickr
“We said today on the call that based on what we are seeing in terms of slow improvement in housing, but some of the nice, underlying foundations of housing maybe starting to round into a little bit better form, as well as at least projections of slow but sustained global growth, that we are well-positioned for our businesses to head into 2012; produce another year of earnings growth; and continue to make progress against those 2013 goals that we laid out.”Source: Earnings Call Transcript
Image: PR Newswire
Management warns that lower discount rates and lower expected returns on pension plan assets could force the company to take a $925 million pension charge in 2012, which is much higher than it previously estimated.Source: Company Filings
Jeffrey Wayne Sheets, CFO: “We’re trying to do as much of the project outside of Australia, not just because of the Aussie dollar impacts but just because of the general condition with labor there and the fact there’s quite a bit of activity in a fairly concentrated area there. So we’re moving things… like I say, out of Australia.”
Source: Seeking Alpha
Northrop Grumman’s B2-Spirit stealth bomber
“…The budgets appear to be heading towards, I would say, sort of a flat outcome relative to 2011. In terms of translating that into us, we would expect slightly reduced sales in a flattish environment due to the continuing impacts of some of the decisions that we’ve made…I am encouraged just to balance that out a little bit, very encouraged by the strong statements that we’re seeing from the national leadership, both Secretary of Defense and others in the administration, as well as a number of critical Congressional members who are calling for the preservation of a robust national security spending profile.”
Source: Seeking Alpha
Image: GenBug on Flikr
“Among these alternate purchase group, you do see activity with these people that’s stimulated by promotion. And in a bad economic environment, you’d see more switching among that group because they’re shopping for deals among a group of brands that they qualify as acceptable to them.”Source: Seeking Alpha
“The largest specific macroeconomic risk seems to be Europe, which while maybe it’s going to become a big problem at least comes with the silver lining of likely lower oil prices. Second is the unemployment in the U.S., which is one statistic that is consistently weak. But employment generally has a low correlation with airline revenues.”Source: Seeking Alpha
Image: Courtesy of Glassdoor
“We’re also adjusting pricing in some markets in response to foreign exchange rate movements, such as in Venezuela, Mexico, Brazil and Turkey.”Source: Seeking Alpha
“While interest rates have rebounded somewhat since the announcement of Operation Twist, they still remain at low levels. While long-term low interest rates have an impact in our earnings, we have taken proactive steps to mitigate this impact.”Source: Seeking Alpha
“July, consumer confidence in the U.S. has declined and is now at its lowest level since March of 2009. Demand is also falling off sharply in parts of Europe and slowed in emerging markets. So given this economic environment, we’ve taken significant actions to substantially reduce our cost and capacity, which will improve our operating margins and profitability.”Source: Seeking Alpha
Further Reading: Here’s What Germany and China Really Think About Gold>>
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