Europe Faces New Wave Of Oil Refinery Extinctions

The performance represented an improvement on the first-quarters 7 percent decline. Sales to wholesalers at the brewers MillerCoors LLC unit in the U.S. slid 1.5 percent in the second quarter, better than the first quarters 5.3 percent drop. Declines in Coors Light and Miller Lite were partially offset by brands including Redds and Leinenkugel shandy, the company said. The brewer said it expects the consumer climates in both Europe and North America to remain under pressure. SABMiller said it achieved a strong performance in Africa, where volume rose 9 percent in the first half, and good progress in Latin America , South Africa and the Asia-Pacific region. The brewer gets the largest proportion of sales from emerging markets compared with its main rivals, helping compensate for declining beer sales in Europe and the U.S. Diageo Misses Volume rose 1 percent in Latin America, SABMillers largest region, in line with estimates. Civil unrest weighed on improvements in Colombia , though sales in Peru returned to growth in the second quarter after tax increases. Diageo said today that it saw headwinds in some faster-growing economies and missed analysts estimates for sales in both Asia and the Africa, Eastern Europe and Turkey region. Emerging-market growth is decelerating — fast — driven by a mix of weak demand and destocking, Deboo wrote. Diageos total organic revenue in the three months ended Sept. 30 rose 3 percent, trailing the 4 percent median estimate of 13 analysts in a Bloomberg News survey. A 1.1 percent sales decline in western Europe beat the median estimate for a 3 percent drop, while North American growth of 5.1 percent exceeded the 4.5 percent median estimate.

Europe’s car market grows in Sept from record low levels

Investec analyst Martin Deboo said the results for Diageo, were maker of Johnnie Walker whisky and Smirnoff vodka, fitted his sell thesis – “that emerging markets are set to make life difficult for Diageo for a while”. Both Diageo and France’s Remy Cointreau (RCOP.PA) cited a Chinese government crackdown on gift-giving as a drag on sales there. Remy, which generates about 40 percent of its operating profit from cognac sales in China, said wholesalers were reducing inventories after sales fell short of expectations during the Chinese New Year. The maker of Remy Martin cognac, Cointreau liqueur and Mount Gay Rum said revenue declined 5.3 percent on a like-for-like basis to 294.4 million euros (247 million pounds) in the three months to September 30, its second quarter, compared with a 2.3 percent decline in the previous quarter. Sales of Remy Martin cognac fell 8.3 percent like-for-like, compared with a 12.9 percent slump in the first quarter, and the firm said China would continue to weigh on sales in the coming months. A recent weakening of various currencies against the U.S. dollar has also hit results. Diageo, which made a net profit of 2.59 billion pounds in the year to June 30, said that, based on spot rates, foreign exchange factors would reduce 2014 operating profit by 165 million pounds. Meanwhile brewer SABMiller Plc (SAB.L), maker of Peroni and Grolsch beers, reported net revenue rose 6 percent in its second quarter, after a 2 percent rise in the first. Sales rose 4 percent in Latin America, 3 percent in North America, 12 percent in Africa, and 5 percent in Asia Pacific, but were flat in Europe. “We see this as a solid result in tough market conditions,” said Numis Securities analyst Wyn Ellis. At 10:27 a.m., Diageo shares were up 0.7 percent in London, where SABMiller shares were up 4.2 percent.

Europe’s nameplate capacity stood at around 16 million bpd in 2012, according to the IEA. Around 330,000 bpd of European refining capacity – or six Mantua refineries – need to be shut down every year by 2020 in order to meet declining demand and rising competitive pressures, Wech said. THE LOSER IS EUROPE Many of Europe’s refineries, numbering around 120, were built in the two decades following the Second World War and are heavily geared towards gasoline production. But as demand for gasoline sharply declined in recent years in favour of diesel, refineries today face a huge surplus of gasoline which is increasingly hard to sell overseas as demand from the United States weakens. At the same time, massive state-of-the-art refineries in the United States, Asia and the Middle East are sending ever-growing volumes of diesel to Europe. And as they benefit from cheaper feedstock and lower energy costs, they can easily compete against Europe’s regional refiners. “Cheap gas is making a huge difference to the profitability of U.S. refining industry. The loser is Europe. It has to be. There is no consolidation going on and no great consolidation hope,” Torbjorn Tornqvist, chief executive officer of trading house Gunvor told the Oil & Money conference this month.

Americas help Europe’s drinks makers offset Europe and Asia

ACEA’s numbers showed the improvement was led by a 12 percent rise in sales in top market Britain to 403,000 vehicles, while sales in Germany shrank 1.2 pct to 247,000. The monthly total was still the second-lowest September figure since ACEA began gathering data for the 27 EU member states in 2003. Industry watchers have been looking for signs of recovery after the EU car market crashed to record lows in August. “The worst is behind us. The decline in sales has considerably slowed and we are now witnessing signs of recovery in demand,” said Peter Fuss, senior advisory partner at the Global Automotive Centre of accountants EY (formerly Ernst & Young). “The sales, however, continue to be artificially boosted by huge discounts and self-registrations by dealers,” Fuss added, referring to cars still held in showrooms. He warned it would take at least two years before the market was strong enough to grow on its own without the aid of incentives. BETTER GAUGE In a sign of recovery in the ailing euro zone periphery, car demand in Greece, Ireland and Portugal jumped by double-digit rates, albeit from depressed levels. For the first nine months of the year as a whole, ACEA said registrations in Europe still fell 4 percent from the year before to 9.33 million, on the back of weak demand in Germany, Italy and France – and in the Netherlands, where sales have plummeted 29 percent year-to-date. September volumes may be a better gauge of underlying trends than August, since the latter’s results are artificially depressed given many European car buyers are on holiday. It is also a crucial month for the UK market, since it accounts for about 18 percent of annual volumes. The UK increase was the sixth straight double-digit monthly rise. Among manufacturers, the biggest winner in September was Renault (RENA.PA), which increased sales 17 percent at its flagship brand, while its low-cost Romanian badge Dacia saw volumes leap by 40 percent. Germany’s Daimler (DAIGn.DE) also posted a strong month with sales of its Mercedes-Benz brand increasing nearly 14 percent after the French government was forced to end its sales ban on certain vehicles.