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forest444

(5,902 posts)
Mon Sep 5, 2016, 11:47 PM Sep 2016

Corporate profits in Argentina down 32% in 2nd quarter, and by 52% in real terms.

Quarterly earnings reports published by companies listed on the Buenos Aires Stock Exchange reflected a worsening economy in the second quarter of 2016. The 45 companies that published earnings reports suffered a decline in their combined profits of 32% compared with the first three months of 2016, and 30% compared to the same time last year.

Taking inflation into account, which averaged 45.3% in the second quarter of 2016, corporate profits were down nearly 52% from the same time in 2015. The decline in dollar terms was even greater: 56%.

This was the worst showing for Argentina's publicly listed corporations since the depths of the international financial crisis in the second quarter of 2009, when profits fell by a combined 47% to 4.2 billion pesos ($1.1 billion at the time). Corporate profits recovered quickly, however, and reached a record 33.9 billion pesos ($3.7 billion) in the third quarter of 2015.

Accelerating inflation, which doubled from 2015 levels, accounted for much of the declining profit margins. An estimated jump in prices of 14% during the second quarter pushed revenues up by 11% from the first quarter; but also led to a 32% collapse in net income.

Compared to the same time last year, revenues rose by 29% - a decline in real terms of 11%. Earnings results nevertheless varied widely from sector to sector.

According to the latest data from the Central Bank, banks and other financial firms saw an annual rise in revenue of 48%, and of net income, 56%. Banking profits rose by 52% during the first half of 2016; but actually doubled in June from the same time a year earlier. These results were mainly driven by the recovery in government securities - which make up about 45% of banks' liquid assets - as well as income from Lebac 35-day treasury bills, whose annualized yields nearly doubled to 38% in the first months of the year before declining to 28% currently.

The nation's oil sector struggled under depressed global oil prices as well as cutbacks in federal price supports, and firms in this sector lost 2.3 billion pesos ($160 million) in the first quarter of 2016. They recorded a net profit of 1.2 billion pesos ($85 million) in the second quarter; but this was due almost entirely to the purchase of a majority stake of Petrobras Argentina by Pampas Energía. The nation's largest oil producer, YPF, saw a 97% collapse in net income in second quarter as the public-private firm reeled from adverse global conditions as well as the politically-motivated dismissal of CEO Miguel Galuccio in March.

Galuccio, appointed CEO upon the partial renationalization of YPF in 2012 by former President Cristina Fernández de Kirchner, had been credited with helping reverse output declines at YPF under its previous Repsol management.

Massive rate hikes authorized by the same right-wing Mauricio Macri administration boosted natural gas distribution profits however. Revenues in this sector increased by 100% year-on-year in the second quarter as the hikes took effect in April. Their net income, even so, grew slightly below inflation (by 44%) as the sharply higher gas rates also affected their own overhead, generation, and distribution costs.

An injunction issued on July 18 by Federal Judge Luis Arias of La Plata, and upheld by the Argentine Supreme Court on August 18, rescinded these hikes however. Macri had refused to submit the rate hikes to a public hearing, as the law requires, and gas utilities were ordered to issue reimbursements for any charges above March 31 rates. The rate hikes will now be subject to a public hearing ordered by the Supreme Court, scheduled for September 16.

Electric utility profits were similarly impacted by the Macri administration's gas rate hikes of 400% or more. Power generation costs skyrocketed by way of sharply higher gas prices, leading to a collapse in net income from 1.1 billion pesos ($75 million) in the first quarter of 2016 to a loss of 2.2 billion pesos ($150 million) in the second.

A separate injunction issued by Federal Judge Martina Forns of San Martín on August 4 has suspended electricity rate hikes as well, all but guaranteeing that the third quarter will also result in losses in the electric utility sector.

Reeling from legal and political setbacks stemming from the precipitous handling of rate hikes, the Macri administration today announced that the Energy Ministry - led by Shell executive Juan José Aranguren, currently facing conflict of interest charges over the hikes - will seek rate increases averaging 203%.

"While the recession won't subside until at least the 4th quarter of 2016," according to the local financial weekly Research For Traders, "growth may return sometime in 2017."

At: https://translate.google.com/translate?hl=en&sl=es&tl=en&u=http%3A%2F%2Fwww.iprofesional.com%2Fnotas%2F237949-La-recesin-se-reflej-en-los-balances-las-empresas-que-cotizan-en-la-Bolsa-ganaron-32-menos&sandbox=1

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Corporate profits in Argentina down 32% in 2nd quarter, and by 52% in real terms. (Original Post) forest444 Sep 2016 OP
So while Macri is shredding Argentina's economy, and way of life for the population, Judi Lynn Sep 2016 #1

Judi Lynn

(160,219 posts)
1. So while Macri is shredding Argentina's economy, and way of life for the population,
Tue Sep 6, 2016, 03:22 AM
Sep 2016

they muet be content hearing observations, forecasts like "........ growth may return sometime in 2017."

That's bound to lift their spirits, wouldn't you think? Maybe next year. Wow.

What has been happening still doesn't seem possible.

Thank you for this report, forest444.

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