Tesla pulled off what Chief Executive Elon Musk called an "historic quarter" for the electric car maker on Wednesday, posting a profit, positive cash flow and fatter-than-expected margins as higher production volumes of its new Model 3 began to pay off.
Its shares surged nine per cent after hours trading.
The results were a boost for the embattled company after a tumultuous quarter in which US security regulators accused Musk of fraud for tweeting that he had secured funding for a go-private deal, later abandoned.
A settlement between Musk, Tesla and the US Securities and Exchange Commission allows Musk to remain as CEO, but requires a new independent chairman to oversee an array of capital intensive new projects in 2019, from a factory in China to development of Tesla's new Model Y SUV.
Tesla said it would begin taking orders in Europe and China for the Model 3 before the end of 2018, and said only 20 percent of North American reservation-holders had cancelled their bookings.
Free cash flow of $881 million- only the third time that number has been positive in Tesla's history- was helped by a surge of new production of the Model 3, controlled spending and lower capital expenditures.
While still below the production target it set for June of 5,000 Model 3s per week, the roughly 4,300 Model 3s the company is now averaging per week were enough to boost results.
Mr Musk had vowed since May that Tesla would be profitable in both the third and fourth quarters, and has repeated that the company would not need new capital from financial backers.
Tesla said earlier this month it built 53,239 Model 3 sedans in the quarter, in line with its target of 50,000 to 55,000 vehicles, and delivered 55,840 of the cars to customers.
Mr Musk has been under intense pressure to prove he can deliver consistent production numbers for the Model 3, seen as crucial to Tesla's profitability and its ability to be a high-volume car producer.
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More sales of the higher-priced versions of the Model 3 currently on offer, helped margins, which rose to over 20 percent in the quarter, Tesla said. Lower labour hours per vehicle helped, as did lower materials costs.
Total revenue more than doubled to $6.82 billion, beating analysts' average estimate of $6.33 billion, according to Refinitiv data.
Tesla ended the quarter with $3.5 billion in cash after spending $510.3 million in quarterly capital expenses.
Tesla reported a profit of $311.5 million, or $1.75 per share, for the third quarter ended Sept. 30, compared with a loss of $619.4 million, or $3.70 per share, a year earlier.
Excluding items, Tesla had a profit of $2.90 per share.
Mercer, the investment consulting arm of US services company Marsh & McLennan, expects its wealth division to at least double its assets under management (AUM) in the Middle East as wealth in the region continues to grow despite economic headwinds, a company official said.
Mercer Wealth, which globally has $160 billion in AUM, plans to boost its AUM in the region to $2-$3bn in the next 2-3 years from the present $1bn, said Yasir AbuShaban, a Dubai-based principal with Mercer Wealth.
“Within the next two to three years, we are looking at reaching $2 to $3 billion as a conservative estimate and we do see an opportunity to do so,” said Mr AbuShaban.
Mercer does not directly make investments, but allocates clients’ money they have discretion to, to professional asset managers. They also provide advice to clients.
“We have buying power. We can negotiate on their (client’s) behalf with asset managers to provide them lower fees than they otherwise would have to get on their own,” he added.
Mercer Wealth’s clients include sovereign wealth funds, family offices, and insurance companies among others.
From its office in Dubai, Mercer also looks after Africa, India and Turkey, where they also see opportunity for growth.
Wealth creation in Middle East and Africa (MEA) grew 8.5 per cent to $8.1 trillion last year from $7.5tn in 2015, higher than last year’s global average of 6 per cent and the second-highest growth in a region after Asia-Pacific which grew 9.9 per cent, according to consultancy Boston Consulting Group (BCG). In the region, where wealth grew just 1.9 per cent in 2015 compared with 2014, a pickup in oil prices has helped in wealth generation.
BCG is forecasting MEA wealth will rise to $12tn by 2021, growing at an annual average of 8 per cent.
Drivers of wealth generation in the region will be split evenly between new wealth creation and growth of performance of existing assets, according to BCG.
Another general trend in the region is clients’ looking for a comprehensive approach to investing, according to Mr AbuShaban.
“Institutional investors or some of the families are seeing a slowdown in the available capital they have to invest and in that sense they are looking at optimizing the way they manage their portfolios and making sure they are not investing haphazardly and different parts of their investment are working together,” said Mr AbuShaban.
Some clients also have a higher appetite for risk, given the low interest-rate environment that does not provide enough yield for some institutional investors. These clients are keen to invest in illiquid assets, such as private equity and infrastructure.
“What we have seen is a desire for higher returns in what has been a low-return environment specifically in various fixed income or bonds,” he said.
“In this environment, we have seen a de facto increase in the risk that clients are taking in things like illiquid investments, private equity investments, infrastructure and private debt, those kind of investments were higher illiquidity results in incrementally higher returns.”
The Abu Dhabi Investment Authority, one of the largest sovereign wealth funds, said in its 2016 report that has gradually increased its exposure in direct private equity and private credit transactions, mainly in Asian markets and especially in China and India. The authority’s private equity department focused on structured equities owing to “their defensive characteristics.”
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