Hyundai Heavy says Aramco buys 17% stake in S.Korean refiner unit for $1.2bn

State-owned Saudi Aramco has agreed to buy a 13 percent stake in South Korean oil refiner Hyundai Oilbank for $1.24bn. (File photo/AFP)
Updated 15 April 2019
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Hyundai Heavy says Aramco buys 17% stake in S.Korean refiner unit for $1.2bn

  • Saudi Aramco reached an agreement to acquire a $1.24 billion stake in South Korean refiner Hyundai Oilbank
  • It would provide Saudi Arabia's state-run oil company with a dedicated outlet for its crude to South Korea

SEOUL: The biggest shareholder in South Korean oil refiner Hyundai Oilbank said on Monday that state-owned Saudi Aramco had agreed to buy a 17 percent stake in its oil processing operations for 1.4 trillion won ($1.24 billion).
Hyundai Heavy Industries Holdings said in a regulatory filing that it had signed a sales agreement with Saudi Aramco that included an option for Aramco to buy an additional 2.9 percent stake in Hyundai Oilbank.
The agreement, reached with an Aramco subsidiary, Aramco Overseas Co. B.V (AOC), will support the mother company’s crude oil placement strategy by providing a dedicated outlet for Arabian crude oil to South Korea, Aramco said in a statement.
In late January, Hyundai Heavy said Aramco planned to invest up to $1.6 billion for as much as 19.9 percent of the South Korean refiner to expand its foothold in the country.
Aramco bought the stake in the unlisted refiner for 33,000 won per share, which is slightly lower than its initially planned price, reflecting market conditions, said an official at Hyundai Heavy who provided no further details.
The investment is meant to support Aramco’s broader downstream growth strategy and provide long-term crude oil options and offtakes as part of the company’s trading business, Abdulaziz Al-Judaimi, Aramco’s senior vice president of downstream, said in the statement.
Hyundai Heavy has said it plans to “reconsider” listing its refinery arm after completing the stake sale.
The Hyundai Heavy official said the company would take its time in deciding whether to go ahead with its refining arm’s public listing, without setting a timeframe.
Hyundai Oilbank, South Korea’s smallest refiner by capacity, has a total of 650,000 barrels per day of refining capacity in the southwestern city of Daesan and aims to expand its petrochemical business.


Microsoft tops $1 trillion as it predicts more cloud growth

Updated 25 April 2019
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Microsoft tops $1 trillion as it predicts more cloud growth

BENGALURU/SAN FRANCISCO: Microsoft Corp. on Wednesday briefly topped $1 trillion in value for the first time after executives predicted continued growth for its cloud computing business.
The Redmond, Washington-based company beat Wall Street estimates for quarterly profit and revenue, powered by an unexpected boost in Windows revenue and brisk growth in its cloud business which has reached tens of billions of dollars in sales.
Microsoft shares rose 4.4% to $130.54 in late trading after the forecast issued on a conference call with investors, pushing the company ahead of Apple Inc’s $980 billion market capitalization. The companies and Amazon.com Inc. have taken turns in recent months to rank as the world’s most valuable US-listed company.
Microsoft’s stock has gained about 23% gain so far this year, after hitting a record high of $125.85 during regular trading hours.
Under Chief Executive Satya Nadella, the company has spent the past five years shifting from reliance on its once-dominant Windows operating system to selling cloud-based services.
Azure, Microsoft’s flagship cloud product, competes with market leader Amazon Web Services (AWS) to provide computing power to businesses.
Growth in that unit slowed to 73% in the third quarter ended March 31 from 76% in the second quarter. Mike Spencer, Microsoft’s head of investor relations, said the decline was roughly in line with the company’s estimate.
Christopher Eberle, a senior equity analyst with Nomura, said that with Azure, “one should assume a slower rate of growth as we move forward, simply due to the law of large numbers.” Still, Azure will bring in $13.5 billion in sales in fiscal 2019 with an overall growth rate of 75%, he estimated. “I can’t name another company of that scale growing at these rates.”
Microsoft tops tech rivals such as Amazon in market capitalization on some days despite having less revenue, partly because most of its sales is to businesses, which tend to be steadier customers than consumers. A growing proportion of Microsoft’s software sales are billed as recurring subscription purchases, which are more reliable than one-time purchases.
Microsoft’s earnings per share of $1.14 beat expectations of $1 according to IBES data from Refinitiv.
Windows licensing revenue from computer makers grew 9% year over year, beating expectations after a 5% decline in the previous quarter. Spencer said a shortage of Intel Corp. processor chips for PCs that many analysts expected to last into this summer had been resolved earlier than expected, allowing PC makers to ship more machines.
Microsoft’s “commercial cloud” revenue — which includes business use of Azure, Office 365 and LinkedIn — was $9.6 billion this quarter, up 41% from the previous year but down slightly from the 48% growth rate the previous quarter.
Microsoft’s so-called “intelligent cloud” unit, which contains its Azure services, posted revenue of $9.65 billion, above Wall Street estimates of $9.28 billion, according to IBES data from Refinitiv. Chief Financial Officer Amy Hood said that unit could reach $11.05 billion in revenue in the fiscal fourth quarter.
The “productivity and business process” unit that includes both Office as well as social network LinkedIn had $10.2 billion revenue versus expectations of $10.05 billion.
Microsoft’s latest results contained two weak spots.
Its gaming revenue was up only 5% versus 8% the quarter before, which Spencer attributed to less revenue from third-party game developers and the fact that many gamers are delaying purchases of Microsoft’s Xbox console because a new model is expected soon.
Sales of the company’s Surface hardware grew 21% versus 39% the quarter before, also because customers waited for updated hardware they expected to be released soon.
Total revenue rose 14% to $30.57 billion, beating analysts’ average estimate of $29.84 billion according to IBES data from Refinitiv.
Net income rose to $8.81 billion, or $1.15 per share, from $7.42 billion, or 96 cents per share, a year earlier.