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Exxon posts strongest results since 2017, vows to resume share buybacks

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October 29, 2021

By Sabrina Valle and Arathy S Nair

(Reuters) – Exxon Mobil Corp on Friday pledged to revive its long-dormant share repurchase program next year, bolstered by a jump in profit and improved cash flow in the third quarter as rising global economic activity has caused fossil fuel demand to surge.

The higher profit follows several years of lackluster returns and heavy spending at Exxon, and as agitated shareholders this year voted to put three new directors on the company’s board due to dissatisfaction with its direction.

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For more than a decade, Exxon had been once the largest U.S. corporate repurchaser of shares before suspending the practice in 2016.

“The upside surprise was the buyback program, no one was expecting it this soon,” said equity analyst Paul Sankey at Sankey Research.

The nation’s largest oil and gas company reported net income of $6.75 billion, or $1.57 per share, in the third quarter, the highest since the last quarter of 2017. That compared with a loss of $680 million, or 15 cents per share, in the year-earlier period.

REFINING GAINS

Exxon’s $1.58 a share profit beat the Refinitiv estimate by two cents. Third-quarter results reflected the highest refining profit in at least two years, soaring natural gas prices and energy shortages that pushed oil to a three-year high. Crude prices have continued to climb to near a seven-year high.

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Exxon shares finished up 16 cents at $64.49 as some analysts expressed disappointed in the size of buyback program.

The company’s three businesses delivered higher returns from past cost-cutting restructurings and as the global economy emerges from the coronavirus pandemic, Chief Executive Officer Darren Woods said.

The benefits of those changes “are manifesting themselves,” Woods told analysts on a conference call, adding that Exxon expects to “deliver the same growth in earnings and cash flow as our pre-pandemic plans” that called for $30 billion in annual profit by 2025.

That outlook will allow the company to resume buybacks starting next year under a plan to spend up to $10 billion on share repurchases through 2023, Exxon said.

“The macro winds are at Exxon’s back,” said Stewart Glickman, energy equity analyst at CFRA Research.

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CARBON EMISSIONS CUTS

In 2016, Exxon cut share repurchases amid weak results, saying it would buy shares only to offset dilution from executive pay plans as opposed to returning cash to shareholders.

In the decade prior, Exxon spent $210 billion on its own stock, more than any other U.S. company in that period.

A day after Exxon’s Woods appeared before Congress to address the company’s previous dismissal of global warming, Exxon said it would increase spending to cut its carbon emissions to $15 billion between 2022 and 2027.

Profits in oil and gas soared in the third quarter on the strength of international demand, reaching nearly $4 billion compared with a $383 million loss a year ago. Chemical profits slipped from last quarter’s high but more than tripled from the same period last year.

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The company said it will benefit in the fourth quarter from higher oil and gas volumes, increased European seasonal gas demand and the $1 billion sale of its UK North Sea assets.

Exxon shares are up than 50% this year, as earnings bounced back from last year’s historic loss, but remain below where they traded in early 2020. This year’s profit has allowed the company to repay about $11 billion in debt taken on last year to cover its dividend.

Earlier this year, Exxon spent heavily on a proxy battle waged by a hedge fund unhappy with the oil and gas company’s strategy. The fund, Engine No. 1, was successful in convincing enough shareholders to vote for three new directors to serve on Exxon’s board.

(Graphic: Exxon, once a buyback giant, to resume the practice: https://fingfx.thomsonreuters.com/gfx/ce/dwvkrawbapm/Pasted%20image%201635518149103.png)

(Reporting by Arathy S Nair in Bengaluru; Editing by Shounak Dasgupta, Steve Orlofsky and Paul Simao)

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Tesla sold 52,859 China-made vehicles in November – CPCA

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December 8, 2021

BEIJING (Reuters) – U.S. electric vehicle maker Tesla Inc sold 52,859 China-made vehicles in November, including 21,127 for export, the China Passenger Car Association (CPCA) said on Wednesday.

Tesla, which is making Model 3 sedans and Model Y sport-utility vehicles in Shanghai, sold 54,391 China-made vehicles in October, including 40,666 that were exported.

Chinese EV makers Nio Inc 10,878 cars last month, a monthly record high, and Xpeng Inc delivered 15,613 vehicles. Volkswagen AG said it sold over 14,000 ID. series EVs in China in November.

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CPCA said passenger car sales in November in China totalled 1.85 million, down 12.5% from a year earlier.

(Reporting by Sophie Yu, Brenda Goh; editing by Jason Neely)

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Renault Zoe goes from hero to zero in European safety agency rating

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December 8, 2021

By Nick Carey

LONDON (Reuters) – French carmaker Renault on Wednesday received a blow for its popular Zoe electric model, as the European New Car Assessment Programme (NCAP) gave it a zero-star safety rating in tests that are standards for Europe.

The carmaker, which is cutting costs and working to turn around its performance after overstretching itself over years of ambitious global expansion, also received a one-star rating for its electric Dacia Spring model.

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Euro NCAP said the latest Zoe had a worse seat-mounted side airbag than earlier versions. Euro NCAP noted the Renault Laguna had been the first car ever to receive a five-star rating in 2001.

“Renault was once synonymous with safety,” Euro NCAP secretary general Michiel van Ratingen said in a statement. “But these disappointing results for the ZOE and the Dacia Spring show that safety has now become collateral damage in the group’s transition to electric cars.”

In the year through October, the Zoe was the third top-selling fully-electric car in Europe, behind Tesla’s Model 3 in top place and Volkswagen’s ID.3.

In a press release titled “Hero to Zero,” UK insurance group Thatcham Research noted the Zoe had initially received a five-star rating back in 2013.

“It’s a shame to see Renault threaten a safety pedigree built from the inception of the rating,” said Matthew Avery, Thatcham’s chief research strategy officer and a Euro NCAP board member.

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Eleven cars received ratings in Euro NCAP’s final round of tests for 2021, which did not include Tesla models.

A number of other vehicles received five-star ratings, including BMW’s electric iX, Daimler’s electric Mercedes-Benz EQS, Nissan’s Qashqai and Volkswagen’s VW Caddy.

(Reporting By Nick Carey; Editing by Bernadette Baum)

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Weibo shares close down 7.2% in Hong Kong debut

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December 8, 2021

By Scott Murdoch

HONG KONG (Reuters) -Chinese social media giant Weibo Corp’s shares closed 7.2% below their issue price in Hong Kong on Wednesday, as it became the latest U.S.-listed China stock to seek out a secondary listing closer to home.

The Hong Kong debut was in line with a fall in Weibo’s primary listing in New York after a torrid week for U.S.-listed China shares, which are facing greater U.S. regulatory scrutiny and also under pressure from Chinese authorities.

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Weibo, which raised $385 million for its Hong Kong listing, opened at $256.20 and closed at HK$253.2 after a volatile debut session.

The stock had been priced at HK$272.80 each in its secondary listing in which 11 million shares were sold.

“For Weibo, it’s a matter of timing. The Hong Kong market had started to rebound this week and now we are seeing some softness emerging in the market,” said Louis Tse, Wealthy Securities director in Hong Kong.

Weibo’s fall came as Hong Kong’s Hang Seng Index closed Wednesday up 0.06% while the Tech Index was 0.03% higher.

Some major stocks such as Alibaba Group Holdings, down 4.35%, were off sharply as sentiment towards tech majors remains fragile.

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“The listing market in Hong Kong is very lukewarm right now,” said Dickie Wong, Kingston Securities executive director.

“Plus, there is regulatory pressure from the (U.S. Securities and Exchange Commission) on Chinese companies to disclose basically everything within three years.

“So there is a major trend that most of the U.S.-listed Chinese companies will seek secondary or dual primary in Hong Kong so they can exit the U.S. market if they need to.”

Ride-hailing giant Didi Global decided last week to delist from New York https://www.reuters.com/technology/didi-global-start-work-delisting-new-york-pursue-ipo-hong-kong-2021-12-03, succumbing to pressure from Chinese regulators concerned about data security and denting sentiment toward Chinese stocks.

Hong Kong and China’s mainland STAR Market have attracted $15.2 billion worth of secondary listings from U.S. listed Chinese companies so far this year, according to Refinitiv data.

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“The moves are probably based on the increasing recognition that the U.S.-China decoupling will not stop and will proceed steadily,” said LightStream Research analyst Mio Kato, who publishes on Smartkarma.

“I would expect a continuous flow of listings from New York to Hong Kong over the next year or two.”

The U.S administration is progressing plans to delist Chinese companies if they do not meet the country’s auditing rules, which could affect more than 200 companies.

Chinese companies https://www.reuters.com/business/us-sec-mandates-foreign-companies-spell-out-ownership-structure-disclose-2021-12-02 that list on U.S. stock exchanges must disclose whether they are owned or controlled by a government entity, and provide evidence of their auditing inspections, the Securities and Exchange Commission (SEC) said last week.

(Reporting by Scott Murdoch and Donny Kwok; editing by Richard Pullin and Louise Heavens)

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