(Bloomberg) — Oil edged higher as signs of a recovery in demand continued to surface following the easing of virus-led lockdowns in some regions, while Saudi Arabia pledged to cut production further.Futures rose 2.6% in New York after falling Monday. Pockets of fuel demand are starting to emerge in India and China, and while a huge glut remains, global stockpile builds are starting to slow. Saudi Arabia announced a surprise move to deepen daily output cuts by another 1 million barrels, which was followed by smaller reductions from OPEC allies the United Arab Emirates and Kuwait.Oil is still down about 60% this year with little clarity over when global consumption will be back to pre-virus levels. China has seen a steady recovery in air and road travel in its capital city, but in Europe various degrees of lockdown continue to hobble consumption. In the U.S., an OPIS report showed that the volume of fuel sold by retailers across the nation rose just over 7% in the week ended May 2. However, the rebound is still far below 2019 levels and traders remain wary of a resurgence of coronavirus cases.See also: Wuhan to Test Whole City of 11 Million After New Cases Emerge“The road to oil price recovery will likely be choppy and plagued with stop-and-go rallies and selling cycles until some level of price certainty is restored,” said Roger Diwan, vice president of financial services at IHS Markit.Indian fuel consumption in May is expected to be as much as 25% higher than April as planting season begins, requiring tractors and water pumps to burn more diesel, while trucks return to the road as lockdown restrictions ease, according to officials at two state-owned refineries. In China, more people are driving to avoid public transport due to virus fears, boosting gasoline demand.Saudi Arabia aims to pump just under 7.5 million barrels a day in June, compared with an official target of about 8.5 million a day. It’s a sign of the urgency in Riyadh to stabilize the market as rock-bottom prices force the kingdom to impose deep spending cuts. Kuwait and the U.A.E. followed by announcing additional daily curbs of 80,000 barrels and 100,000, respectively.See also: Saudis in ‘Whatever It Takes’ Mode to Fast-Track Recovery: RBCSaudi Aramco reported a 25% year-on-year drop in first-quarter profit after the crash in oil prices. Income declined to 62.48 billion riyals ($16.6 billion) in the first three months of the year, according to a statement. It said it would pay a dividend of $18.75 billion for the quarter, keeping it on track to meet its pledge of a full-year payout to shareholders of $75 billion.For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.

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(Bloomberg) — Vodafone Group Plc kept its sales growing in the three months to March and pressed ahead with plans to bring in new investors for its wireless towers next year. The shares rose as much as 8.8%.Chief Executive Officer Nick Read said Vodafone’s go-it-alone strategy in the U.K. was still the right one, after rivals Liberty Global Plc and Telefonica SA announced a $39 billion merger of their British operations.The international mobile carrier reported organic service revenue growth of 1.6% in its financial fourth quarter, stronger than the 0.9% consensus of analyst estimates gathered by the company, and kept a final dividend of 4.5 euro cents.Key InsightsRead is trying to streamline the company’s operations and pay down debt after weak sales and heavy costs forced a surprise dividend cut a year ago. The coronavirus pandemic only adds to the challenge.Investors had been waiting to see if the virus might force another cut in shareholder payouts and disrupt Read’s plans to spin out the mast business, which analysts have valued at between 8 billion euros and more than 20 billion euros, depending on factors such as network sharing deals and debt.It said a separate company being created for its roughly 58,000 mobile masts was on track to sell or list a stake in early 2021, as it set out a new goal of 1 billion euros ($1.1 billion) in annual cost savings within three years.The mast sale, and sales growth, might still come unstuck. Vodafone said the economic impact of the pandemic in its markets is “likely to be significant.”“I believe the market remains structurally favorable to us,” Read told reporters on a call.Market ReactionVodafone shares were up 7.8% as of 10:03 a.m. in London, continuing a recovery that began in mid-March when they fell below 1 pound per share to a 23-year low. Until Tuesday’s bounce, the shares have been underperforming their industry peers this year.Of analysts surveyed by Bloomberg, 19 rated the stock a Buy, 5 a Hold and 2 a Sell.Get More“We are preparing for a potential IPO in early calendar 2021, and we are targeting to provide financial information at our interim results in November 2020,” the Newbury, England-based company said in its results statement Tuesday.Organic sales in Italy, Vodafone’s first major market to be hit by the virus, slid 3.7% in the quarter, slightly better than the 4.6% drop forecast by analysts. Spain fell 2.7%, beating the 5.5% forecast decline.The company also revealed writedowns of 1.7 billion euros for the year at its Spanish, Irish, Romanian and automotive units, citing competition in Spain and the economic turbulence caused by Covid-19.StatementNOTE: Vodafone cashflow could benefit from deferral of 5G spectrum auctions: BINOTE, May 7: Telefonica COO Says CTIL Could Still Be ‘Monetized’(Adds more on tower unit in second key insight, opening share gain)For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.

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(Bloomberg) — Saudi Arabia’s state-controlled oil giant retained its massive dividend despite a 25% plunge in profit, and signaled it would keep spending in check as it braces for deeper damage from the oil crisis.Saudi Aramco, the world’s most valuable company, will pay a dividend of $18.75 billion for the first three months of 2020. That would leave it on track to meet its full-year goal of $75 billion, though the company didn’t specify if it was still committed to that number.The dividend is crucial for the kingdom, which holds about 98% of Aramco and is facing its worst financial turmoil in decades. On Monday, the government tripled value-added tax and cut bureaucrats’ allowances as it looks to rein in a fiscal deficit that could reach 13% of gross domestic product this year.At the time of Aramco’s record initial public offering in December, the dividend was a massive part of its appeal. But even back then, a stress test carried out by JPMorgan Chase & Co. showed that if oil fell to $40 a barrel and production was 9 million barrels a day, Aramco would only remain within its self-imposed borrowing target by cutting its dividend by 30% and slashing spending dramatically.Arab Light crude last month plunged to as little as $13.34 a barrel and the kingdom has pledged to cut output to just 7.5 million barrels a day in June.The price war started just as the first quarter was coming to an end, and the greatest impact of low prices will hit in the second quarter. That’s when benchmark prices turned negative in the U.S. and the OPEC+ alliance and others agreed to rein in production.“We retain significant flexibility to adjust expenditures and have considerable experience in managing the business through times of adversity,” Chief Executive Officer Amin Nasser said. “This resilience will enable us to continue delivering on our commitments to our shareholders.”Big Oil’s generous payouts have long been a key attraction for shareholders, but low prices are threatening them. Exxon Mobil Corp. froze its dividend for the first time in 13 years while slashing capital expenditure, and Royal Dutch Shell cut payouts for the first time since the Second World War.Crude TruceAramco’s income declined 25% year-on-year to 62.48 billion riyals ($16.6 billion) between January and March and refining swung to a loss before earnings and tax are included. Aramco continues to forecast between $25 billion and $30 billion of capital spending this year but expenditure for 2021 is under review, it said.It could generate about $133 billion for the government this year across royalties, taxes and dividends, according to Credit Suisse Group AG analyst Thomas Adolff. That’s “a far cry from what it had expected originally and insufficient to cover the original government budget,” he said in a research note.Saudi Arabia and Russia have called a truce in a crude-price war that erupted in March, with the former announcing a surprise cut on Monday that will see its output in June fall to the lowest in 18 years. Aramco also moved to prop up energy markets last week by raising prices for its customers.Even so, efforts to contain the pandemic by shuttering swaths of the world economy continue to weigh on crude, which has crashed more than 50% this year.Aramco has slashed spending as it focuses on protecting the promised shareholder payouts this year. The Dhahran-based company said in March that it would limit capital expenditure to $30 billion in 2020, down from previous plans to spend as much as $40 billion. As well as the dividend, major spending commitments include the first installment of a $69.1 billion acquisition of a stake in Saudi Basic Industries Corp. Aramco is buying 70% of the chemicals maker from the kingdom’s sovereign wealth fund.“Looking ahead to the remainder of 2020, we expect the impact of the Covid-19 pandemic on global energy demand and oil prices to weigh on our earnings,” Nasser said. “We continue to reinforce the business during this period by reducing our capex and driving operational excellence. Longer term we remain confident that demand for energy will rebound as global economies recover.”Aramco’s stock rose 0.5% to 31.05 riyals by 10:54 a.m. in Riyadh. It is down 12% this year, compared with a 55% drop in benchmark Brent crude. The company’s market value has declined from a peak of over $2 trillion to about $1.6 trillion, still almost $200 billion above that of Microsoft Corp., the second-biggest firm globally.(Updates throughout.)For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.

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Vodafone kept its dividend on Tuesday, bucking a corporate trend to cut or scrap payouts due to the coronavirus crisis, as the world’s second-biggest mobile operator met expectations with a 2.6% rise in full-year core earnings. The British company said a drop in international travel due to the virus pandemic had hit its revenues from roaming calls and that it expected customer spending to suffer from the economic downturn caused by the health crisis. Core earnings reached 14.9 billion euros ($16.1 billion) in the year ended March 31, with group revenue up 3% to 45.0 billion euros, driven by business in Europe.

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German insurer Allianz on Tuesday posted a 29% fall in net profit in the first quarter from a year earlier as the coronavirus outbreak slows business. The insurer had last month flagged the drop when it published preliminary figures, and it abandoned its profit target for the full year, blaming economic uncertainty amid the pandemic. Allianz is among a host of European insurers warning about their prospects as they face claims for business disruptions, canceled events and a lack of demand for car and travel insurance.

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