Tesla reported a 157 per cent year-on-year surge in fourth quarter net profit on the back of increased demand for its electric vehicles.
The October-December period marked Tesla’s sixth straight profitable quarter, but also missed analysts' forecasts for the first time since the second quarter of 2019.
Net profit rose to $270 million in the three months ending December 31. It was 18.42 per cent ($61m) less than the third quarter of 2020.
Revenue during the period increased 46 per cent to $10.74 billion, the first time the company reported $10bn or more in sales. It surpassed the analysts' estimate for $10.38bn.
"This was primarily achieved through substantial growth in vehicle deliveries as well as growth in other parts of the business," the company said.
"Despite unforeseen global challenges, we outpaced many trends seen elsewhere in the industry as we significantly increased volumes, profitability and cash generation … we believe that 2021 will be even more important,” it added.
Tesla's stock closed 2.14 per cent down at $864.16 per share on Wednesday. It fell another 5 per cent in after-hours trading to $820.39 a share.
Tesla’s average selling price of vehicles declined nearly 11 per cent in the last quarter, as the company’s product mix continued to shift from Model S and Model X to the more affordable Model 3 and Model Y.
It delivered 57,039 units of Model X and Model S, almost 11 per cent of its total handovers, last year. The company sold 442,511 units of the Model 3 and Model Y last year.
Tesla, which joined the S&P 500 index last month, delivered close to 500,000 vehicles globally last year. It aims to increase its production to more than 750,000 units this year.
The company said it aims to achieve 50 per cent average annual growth in vehicle deliveries in the coming years and has "sufficient liquidity" to fund its "product roadmap, long term capacity expansion plans and other expenses".
"In some years, we may grow faster, which we expect in 2021 … the rate of growth will depend on our equipment capacity, operation efficiency, and capacity and stability of supply chain," it said.
The Covid-19 pandemic, climate change and emissions have increased the focus on the future of cars. Joe Biden’s triumph in the US elections and China announcing plans to boost the sector have also propelled the industry.
Among EV manufacturers, Tesla continued to dominate 2019 as market leader. It accounted for 16 per cent of the market, compared with a 12 per cent share in 2018, according to McKinsey’s EV index.
The company is currently building Model Y at its gigafactories in Germany and the US and aims to start deliveries from each location this year.
"In Berlin and Austin, we remain on track to start vehicle production this year," the company said.
"Our engineering team has made significant progress in full self-driving software, with a limited release to customers … we are excited to deliver our first Tesla Semi [truck] by the end of the year."
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Multitasking pays off for money goals
Tackling money goals one at a time cost financial literacy expert Barbara O'Neill at least $1 million.
That's how much Ms O'Neill, a distinguished professor at Rutgers University in the US, figures she lost by starting saving for retirement only after she had created an emergency fund, bought a car with cash and purchased a home.
"I tell students that eventually, 30 years later, I hit the million-dollar mark, but I could've had $2 million," Ms O'Neill says.
Too often, financial experts say, people want to attack their money goals one at a time: "As soon as I pay off my credit card debt, then I'll start saving for a home," or, "As soon as I pay off my student loan debt, then I'll start saving for retirement"."
People do not realise how costly the words "as soon as" can be. Paying off debt is a worthy goal, but it should not come at the expense of other goals, particularly saving for retirement. The sooner money is contributed, the longer it can benefit from compounded returns. Compounded returns are when your investment gains earn their own gains, which can dramatically increase your balances over time.
"By putting off saving for the future, you are really inhibiting yourself from benefiting from that wonderful magic," says Kimberly Zimmerman Rand , an accredited financial counsellor and principal at Dragonfly Financial Solutions in Boston. "If you can start saving today ... you are going to have a lot more five years from now than if you decide to pay off debt for three years and start saving in year four."
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.”
Biog
Mr Kandhari is legally authorised to conduct marriages in the gurdwara
He has officiated weddings of Sikhs and people of different faiths from Malaysia, Sri Lanka, Russia, the US and Canada
Father of two sons, grandfather of six
Plays golf once a week
Enjoys trying new holiday destinations with his wife and family
Walks for an hour every morning
Completed a Bachelor of Commerce degree in Loyola College, Chennai, India
2019 is a milestone because he completes 50 years in business
