TOP NEWS SUMMARY: Shell Joins BP In USD20 Billion Annual Loss Club

(Alliance News) - The following is a summary of top news stories Thursday.

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COMPANIES

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Royal Dutch Shell posted a hefty loss for 2020, in line with global peers, in a year which saw the oil industry battered by the coronavirus pandemic. For 2020, the oil major swung to a loss attributable to shareholders of USD21.68 billion from a profit of USD15.84 billion in 2019. Adjusted earnings were USD4.85 billion, down 71% from USD16.46 billion and missing consensus forecasts for USD5.05 billion. Total revenue & other income for 2020 was USD183.20 billion, down sharply on USD352.11 billion in 2019. For the fourth quarter alone, Shell swung to a loss attributable to shareholders of USD4.01 billion from a USD965 million profit in 2019. Total production available for sale in 2020 was 3.4 million barrels of oil equivalent per day, down 8% on the year before. Shell expects its first quarter 2021 dividend to be USD0.1735, up 4.2% on the fourth-quarter payout. Peer BP on Tuesday had said its 2020 loss attributable to shareholders was a similar USD20.31 billion, turning from a USD4.03 billion profit in 2019. It cut its full-year dividend by 23%.

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Unilever posted an annual earnings fall, with revenue falling short of expectations, hurt by currency movements in its fourth-quarter. More positively, the consumer goods company set out growth plans in the US, India and China and upped its fourth quarter payout. For 2020, Unilever posted revenue of EUR50.72 billion, down 2.4% from USD51.98 billion in 2019. Revenue just missed forecasts of EUR50.81 billion. On a constant currency basis, however, revenue was up 3.5% in 2020. Annual pretax profit fell 3.5% to EUR8.00 billion from EUR8.29 billion, though like revenue, it rose at constant currency, by 3.9%. For the whole of 2020, underlying sales growth was 1.9%, in line with expectations. In the fourth quarter alone, Unilever's revenue fell 4.2% to EUR12.10 billion from EUR12.64 billion a year earlier. Looking ahead, Unilever said it will aim for underlying sales growth ahead of its markets, delivering growth in the range of 3% to 5%, as well as profit growth ahead of sales growth, on a comparable basis.

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Compass Group reported a more moderate decline in organic revenue for its first quarter and improved margins, the contract caterer having been hit hard by the virus pandemic and associated restrictions on travel and entertainment. Organic revenue tumbled 34% year-on-year in the three months to December 31, which is the first quarter of Compass's 2021 financial year. This marked an improvement on a 34% slide in the fourth quarter of its 2020 financial year and a 44% tumble in the third quarter. Compass's financial year runs to September 30. Its operating margin continued to improve, increasing to 2.7% in the three months to December 31 from 0.6% in the fourth quarter of the 2020 financial year and minus 4.8% in the third. All regions are now profitable, Compass noted.

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BT Group made no change to its full-year guidance, despite reporting a weaker third quarter performance. For the three months to the end of December, adjusted earnings before interest, tax, depreciation and amortisation was down 4.8% at GBP1.88 billion from GBP1.98 billion the year before and pretax profit declined to GBP529 million from GBP578 million. This was on revenue that fell 5.2% year-on-year to GBP5.48 billion from GBP5.98 billion. For the nine months to the end of December, BT posted a pretax profit of GBP1.59 billion, down 17% from GBP1.91 billion the year before. Adjusted Ebitda was 5% lower at GBP5.60 billion. Looking ahead, for the financial year ending March 31, BT made no changes to its guidance for Ebitda, capital expenditure or revenue, with the Ebitda range remaining from GBP7.3 billion to GBP7.5 billion. For the 2020 financial year, adjusted Ebitda was GBP7.39 billion.

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Barratt Developments posted a rise in its earnings for the first half of its current financial year, highlighting a record number of home completions in the period. For the six months ended December 30, Barratt posted pretax profit of GBP430.2 million, up 1.7% from GBP423.0 million recorded the year prior. This was as revenue climbed 10% to GBP2.49 billion from GBP2.27 billion. Total home completions jumped a record 9.2% to 9,077 from 8,314. Operating margin was 20%, up from 19%. The Leicestershire-based company said it will resume dividend payouts with the payment of 7.5 pence per share for the first half, compared to zero last year. Turning to current trading, Barratt highlighted a "solid start" to the second half, with net private reservations per active outlet per average week for January at 0.77, down from 0.83 at the same period in 2020 but ahead of 0.74 at the same time in 2019.

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JD Sports Fashion raised GBP464.2 million through a placing of shares, the proceeds of which will go towards supporting investment in expanding the company and to capitalise on acquisition opportunities. The FTSE 100 sportswear retailer issued 58.4 million shares at a price of 795 pence each, which reflects a 2.5% discount to the closing price of 815p on Wednesday. The shares placed represent around 6.0% of its existing share capital. Following the placing, JD Sports Fashion will have 1.03 billion shares issued overall. JD Sports on Monday said it had agreed to buy Baltimore, Maryland-based footwear and apparel streetwear retailer DTLR Villa for USD495 million. JD Sports said the acquisition of DTLR will enhance its presence in the north and east region of the US and complements its existing JD and Finish Line brands, alongside the recent acquisition of Shoe Palace based on the west coast.

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MARKETS

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London shares were slightly higher, with the internationally exposed FTSE 100 helped by a weak pound, which fell ahead of the Bank of England's interest rate decision at noon. Unilever was the worst blue-chip performer, down 4.0%. Shell shares were down 1.3%, having started the day higher. US stock market futures were pointing higher ahead of fourth-quarter earnings from tobacco firm Philip Morris International and carmaker Ford.

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FTSE 100: up 0.1% at 6,513.22

FTSE 250: up 0.2% at 20,793.42

AIM ALL-SHARE: flat at 1,198.61

GBP: down at USD1.3577 (USD1.3651)

EUR: down at USD1.1987 (USD1.2022)

GOLD: down at USD1,811.72 per ounce (USD1,835.90)

OIL (Brent): up at USD58.85 a barrel (USD58.64)

(changes since previous London equities close)

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ECONOMICS AND GENERAL

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UK construction sector activity fell into contraction territory in January as concerns about the near-term economic outlook led to greater hesitancy among clients. The IHS Markit/CIPS UK construction purchasing managers' index registered 49.2 points in January, down from 54.6 in December. The latest reading missed the market forecast, cited by FXStreet, of 52.9. Markit said the latest survey showed a slowdown in new order growth to its weakest since June 2020.

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Eurozone construction activity contracted at steepest rate since May 2020, figures from IHS Markit showed. The IHS Markit eurozone construction total activity index fell to 44.1 in January from 45.5 in December, to signal a sharp and accelerated decline in eurozone construction activity. France posted the steepest rate of contraction, followed by Germany, with both countries seeing rates of contraction quicken since December. Italy meanwhile recorded a drop in construction activity for the third time in the past four months, albeit one that was only mild.

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Britain and the EU agreed on Wednesday to work "intensively" to resolve post-Brexit problems plaguing Northern Ireland, after border checks on goods were suspended this week. The commitment made at talks between senior UK minister Michael Gove, EU Commission vice-president Maros Sefcovic and Northern Irish leaders, will see them reconvene in London next week. It follows British demands for "rapid action" from the bloc and Prime Minister Boris Johnson renewing criticism of its role in the province as it grapples with special new trading rules. Gove and Sefcovic said in a joint statement they had "concluded that the UK and the EU would immediately work intensively to find solutions to outstanding issues". It added they had reiterated their commitment to the 1997 Good Friday Agreement that ended three decades of conflict in Northern Ireland, and to the "proper implementation" of its new trade arrangements.

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US President Joe Biden on Wednesday said he expects "some" Republican support for his huge new Covid-19 economic relief package but signaled that Democrats should stay united and push ahead regardless. "I think we'll get some Republicans," he said in an Oval Office meeting with Democratic senators. The package being pitched by Democrats is worth USD1.9 trillion and includes USD1,400 stimulus checks to Americans hit by the drawn-out pandemic's drag on the economy. A Republican counter-offer would total only USD600 billion. Biden, who came into office calling for unity in heavily divided Washington, said he was not open to reducing the cash payments, although he said that distribution of the checks could be "better" targeted. "People need it and frankly they've been promised it," he said in a recording played on CNN of a conference call Biden had with House Democrats. "I'm not gonna start my administration by breaking a promise to the American people," he said.

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Demand for electric vehicles soared in the EU last year as buyers took advantage of government subsidies for clean cars aimed at helping manufacturers weather the unprecedented hit from the Covid-19 pandemic, the European Automobile Manufacturers Association said. Some 538,772 fully electric autos were sold across the bloc, up more than double from 2019, while sales of plug-in hybrids more than tripled, to 507,059 from 139,954. Overall, sales of alternatively-powered cars – including fuels like ethanol or natural gas – made up one-quarter of the market last year, a figure that climbed to 34% for the fourth quarter alone.

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