The following is a summary of top news stories Thursday.
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COMPANIES
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Shell said earnings surged by two-thirds in the first half of 2022, as the oil major continued to benefit from a sharp rise in oil prices following Russia’s invasion of Ukraine. For the six months to June 30, adjusted earnings before interest, tax, depreciation and amortisation was $42.18 billion, up 67% from $25.20 billion last year. Income attributable to shareholders almost tripled to $25.15 billion from $9.09 billion. For the three months to June 30, Shell reported adjusted earnings of $11.5 billion, smashing the record $9.1 billion generated in the first quarter. Revenue grew 59% to $184.26 billion from $116.18 billion a year ago. Shell declared an interim dividend of $0.50, up 21% from $0.41 last year. In addition, Shell launched a share buyback programme of $6 billion, which is expected to be completed before the release of its third quarter results on October 27.
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Paris-based TotalEnergies said profits more than doubled in the second quarter on the surge in global oil and gas prices as a result of the war in Ukraine. TotalEnergies said in a statement that its bottom-line net profit amounted to €5.69 billion in the period from April to June, compared with €2.21 billion a year earlier. Second-quarter sales were up 37% at €74.77 billion from €47.05 billion. In the first half as a whole, net profit rose 92% to €10.64 billion from €5.55 billion, as sales rose to €143.38 billion from €90.79 billion year-on-year. The firm declared a dividend of €0.69 per share for the period, an increase of 5% from the payout the year before.
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Anglo American said profit slumped by one third in the first half of 2022, as the diversified miner faced ‘considerable challenges’ that hobbled production across most of its operations, ranging from copper to platinum, nickel and iron ore. Pretax profit fell by 33% to $6.80 billion in the six months that ended June 30 from $10.18 billion in the same period last year. Revenue fell by 17% to $18.11 billion from $21.78 billion, dragging down underlying earnings before interest, tax, depreciation and amortisation.In response, Anglo American slashed its dividend, declaring an interim payout of $1.24 per share, down 27% from $1.71. ‘As we progressed through the first half, we began to regain operational momentum while also adjusting to the considerable challenges posed by Covid-19 related absenteeism, disrupted supply chains and logistics corridors, weather extremes and geopolitically-led economic volatility,’ Anglo American Chief Executive Duncan Wanblad said.
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Barclays reported a drop in first-half profit as the bank took a credit impairment charge, but also launched a share buyback. For the six months to June 30, total income was £13.20 billion, up 17% from £11.32 billion last year. Net interest income rose 22% to £4.76 billion, with Barclays boosted by the ‘rising interest rate environment’ in the UK. However, pretax profit fell 24% to £3.73 billion from £4.90 billion. Barclays took litigation and conduct charges of £1.9 billion for the first half of the year, up from just $176 million a year before, including a previously disclosed £1.3 billion cost related to the ‘over-issuance of securities’ in the US and a £165 million associated estimated monetary penalty from the US Securities & Exchange Commission. In addition, credit impairment charges were £341 million, swinging from a release of £742 million a year before. Barclays declared a half-year dividend of 2.25p per share and said it intends to initiate a further share buyback worth up to £500 million.
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Banco Santander reported strong revenue growth in the first half of the year, but said net loan loss provisions jumped nearly 50% in the second quarter. The Madrid-based lender said revenue for the three months ended June 30 grew 13% year-on-year to €12.82 billion from €11.31 billion. Net interest income rose 16% to €9.55 billion, as net fee income increased 16% to €3.04 billion. The firm put aside €2.57 billion in net loan-loss provisions, an increase of 46% from a year prior.
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Swiss food maker Nestle said raised its full-year sales forecast after price increases and cost-cutting contributed to a strong performance in the first six months of 2022. Nestle said it booked group sales of fr.45.6 billion, about $48 billion, in the period from January to June, an increase of 9% over the same period a year earlier. At the same time, net profit declined by 11% to fr.5.2 billion as a result of one-off charges, higher taxes and asset writedowns, the statement said.
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Anheuser-Busch InBev reported top-line growth in the first half of 2022 on the back of a modest rise in volumes. The Leuven, Belgium-based brewer posted an 11% increase in revenue to $28.03 billion for the first six months to June 30 from $25.83 in the prior year. Total volumes, including beers and non-beers, rose by 3.1% to 289.1 million hectolitres in the first half from 280.4 million hectolitres. The owner of Budweiser and Stella Artois brands saw normalised earnings before interest, taxes, depreciation and amortisation increase by 7.5% to $9.58 billion from $9.11 billion. AB InBev expects its Ebitda to grow in-line with its medium-term outlook of between 4% and 8%. Revenue is likely to grow ahead of Ebitda from a healthy combination of increased volumes and high price.
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Diageo reported a jump in full-year profit and lifted its payout, due to double-digit sales growth across all regions. In the financial year that ended June 30, the London-based brewer and distiller’s pretax profit rose 18% to £4.39 billion from £3.71 billion the year before. This was on net sales growth of 21% to £15.45 billion from £12.73 billion. Diageo declared a final dividend of 44.59 pence per share, up 5.0% from 42.47p the year before. This takes its full-year dividend to 76.18p, reflecting a 5.0% increase from 72.55p.
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BAE Systems reported good trading in the first half of 2022 in line with expectations despite interim profit being weighed down by its ship repair business. BAE also confirmed the appointment of Cressida Hogg as its new chair. Hogg will join the board of the defence contractor on November 1 and replace Roger Carr at the annual general meeting in May next year. Hogg is currently chair of London-based property developer Land Securities Group PLC. LandSec said it has started a process to find a new chair, noting Hogg will have served on the board for nearly nine years. For the six months to June 30, the BAE Systems said pretax profit fell 32% to £779 million from £1.15 billion a year before, despite revenue rising 4.3% to £9.74 billion from £9.34 billion. BAE declared a 10.4 pence per share interim dividend, up 5.0% from 9.9p a year before.
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Airbus reported a drop in profit in the first half of 2022, hindered mainly by a weaker performance from the group’s Defence and Space division. For the six months ended June 30, the Blagnac, France-based aerospace firm posted net income of €1.90 billion, down 15% from €2.23 billion the same period a year prior. Earnings per share also dropped 15% to €2.42 from €2.84. Airbus’s profit performance was hurt by the Airbus Defence and Space business, which suffered an impairment related to the Ariane 6 launcher delay, rising inflation in some long-term contracts and the consequences of international sanctions. Revenue edged 0.8% upwards to €24.81 billion from €24.64 billion, reflecting the number of commercial aircraft deliveries remaining flat at 297, as did the delivery number from Aircraft Helicopters at 115 units.
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RELX retained its outlook for 2022 as a whole, following a strong performance in the first half, through a mix of organic growth and new acquisitions. For the six months ended June 30, the London-based professional information and analytics firm posted pretax profit of £998 million, up 21% from £825 million in the same period a year prior. This was on revenue which grew 17% year-on-year to £3.97 billion from £3.39 billion. On a constant currency basis, revenue rose 13%. RELX declared an interim dividend of 15.7 pence per share, up 10% from 14.3p a year prior.
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Meta Platforms cautioned on weak ‘advertising demand’ driven by economic uncertainty, as its second quarter revenue and profit fell short of market expectations. The Facebook owner reported revenue of $28.82 billion in the three months to June 30, edging 0.9% lower from $29.08 billion a year earlier. Pretax profit tumbled 35% to $8.19 billion from $12.51 billion a year prior. Earnings per share declined 32% to $2.46 from $3.61. Revenue fell short of CNN-cited consensus of $28.9 billion, while EPS missed a forecast of $2.54.
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Qualcomm posted stronger third quarter earnings and said it has extended a patent license deal with Samsung. Revenue in the third quarter ended June 26 climbed 36% to $10.94 billion from $8.06 billion a year earlier. The San Diego, California-based semiconductor company’s net income rose 84% to $3.73 billion from $2.03 billion. Looking ahead, it expects fourth quarter revenue between $11.0 billion and $11.8 billion, at best a 26% rise, so slowing from the third quarter’s increase. In addition, it said it has lengthened a pact with Samsung, extending a patent license agreement for 3G, 4G, 5G and upcoming 6G mobile technology through the end of 2030.
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Samsung Electronics reported a profit for the second quarter of ₩10.95 trillion, about $8.4 billion, up 16% to compared with the previous year. Operating profit for the quarter grew 12% to ₩14.1 trillion from the previous year while sales for the second-quarter were ₩77.2 trillion, a 21% increase from a year earlier. Looking to the second half of the year, Samsung said fundamental demand for servers will remain solid as the investments in core infrastructure and new growth areas such as AI and 5G are expected to keep expanding. Demand for consumer products such as PCs and mobile devices is likely to stay weak, though there is a chance that the slump in demand in PCs may expand to enterprise segments. In the smartphone market, the company forecasts earnings to grow compared in the second half of the year compared with the first two quarters, as new products are due to be released by major customers.
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MARKETS
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The dollar was suffering on Thursday after what the market interpreted as dovish remarks by the Federal Reserve chair following a second successive 75-point hike to US interest rates. Meanwhile, the peak of the second-quarter earnings season was dominating stock markets. Among big reporting companies on Thursday, Shell was up 2.1% in London, TotalEnergies was down 3.3% in Paris, Nestle was down 1.3% in Zurich, and Meta Platforms was down 5.7% in the New York pre-market.
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CAC 40: marginally lower, down 2.49 points at 6,255.45
DAX 40: down 0.2% at 13,142.26
FTSE 100: down 0.1% at 7,338.87
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Hang Seng: closed down 0.2% at 20,622.68
Nikkei 225: closed up 0.4% at 27,815.48
S&P/ASX 200: closed up 1.0% at 6,889.70
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DJIA: called down 0.2%
S&P 500: called down 0.3%
Nasdaq Composite: called down 0.8%
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EUR: up at $1.0204 ($1.0133)
GBP: up at $1.2172 ($1.2045)
USD: down at JP¥135.31 (JP¥137.17)
GOLD: up at $1,746.44 per ounce ($1,718.59)
OIL (Brent): up at $108.41 a barrel ($106.68)
(currency and commodities changes since previous London equities close)
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ECONOMICS AND GENERAL
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US Federal Reserve Chair Jerome Powell said a period of slower growth may be needed for a US economy characterised by a tight labour market, though he played down recessionary fears. In addition, he cautioned that a period of detailed forward guidance could come to an end, as the central bank now eyes a ‘meeting-by-meeting’ approach to monetary policy decisions. Powell said Wednesday’s 75 basis-point rate hike - taking the federal funds rate to a 2.25% and 2.50% range - was of the correct magnitude, though the Fed would not hesitate to implement a stronger rise if needed. However, he also said going forward, the level of rate hikes could slow. ‘As the stance of monetary policy tightens further, it likely will become appropriate to slow the pace of increases while we assess how our cumulative policy adjustments are affecting the economy and inflation,’ Powell explained.
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The US Senate passed a bill to boost domestic production of semiconductors amid shortages of the microchips that power everything from smartphones to cars to weapons. The legislation, which now goes back to the House of Representatives for final passage, provides $52 billion to increase domestic semiconductor production and more than $100 billion over five years for research and development. The CHIPS Act was passed in the Senate by a rare bipartisan vote of 64 to 33 with 17 Republicans joining hands with Democrats.
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Ukraine President Volodymyr Zelensky said Ukraine will up its export of electricity to the EU as the bloc faces an energy crisis sparked by Russia’s invasion. ‘We are preparing to increase our electricity exports to consumers in the EU,’ Zelensky said in his daily address to the nation. ‘Our exports would not only allow us to increase our income in foreign currency but will also help our partners to resist Russian energy pressure,’ he said after Russia drastically slashed its gas deliveries to Europe. ‘We will gradually make Ukraine one of the guarantors of European energy security,’ he added. The Ukrainian electricity grid was connected to the European network in mid-March, helping to keep supplies flowing despite the war.
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Ukraine said it has restarted operations at its blockaded Black Sea ports as it moved closer to resuming grain exports with the opening of a coordination centre to oversee a UN-backed deal. Progress towards fulfilling the landmark agreement came as Kyiv’s artillery struck a key bridge in Moscow-controlled territory in south Ukraine, damaging an important supply route as Ukrainian forces look to wrest back the Kherson region. Kyiv has said it hopes to begin sending out the first of millions of tonnes of grain ‘this week’ despite a missile strike by Russia over the weekend on the port in Odessa.
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Italy industrial sales increased at a faster rate year-on-year in May, though the monthly growth rate slowed, figures from national statistics office Istat showed. Italy industrial sales rose by 1.4% on a monthly basis in May after growing by 2.8% - revised from the initial 2.7% increase - in April. On an annual basis, the increase of 24% in May followed that of 22% in the previous month.
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