(Alliance News) - The following is a summary of top news stories Thursday.
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COMPANIES
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Royal Dutch Shell reported a larger-than-expected jump in quarterly earnings on improved energy prices. Shell's adjusted earnings jumped to USD3.23 billion from USD2.86 billion - ahead of company-compiled consensus at USD3.13 billion - as it swung to a profit attributable to shareholders of USD5.66 billion from a loss of USD24 million year-on-year. The improved earnings print reflects higher realised oil and liquefied natural gas prices, Shell said. At the end of the quarter, net debt stood at USD71.3 billion, down from USD75.4 billion at the end of 2020 as the company progresses towards the USD65 billion target. Once this is achieved, Shell plans to increase shareholder distributions to 20% to 30% of cash flow from operations. The dividend for the quarter was USD0.1735 per share, up 4% on the previous quarter.
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Unilever reported annual underlying sales growth of 5.7% for the first quarter of 2021, driven by volume, up 4.7%, with price hikes contributing 1.0%. Turnover fell by 0.9% to EUR12.3 billion, however, largely due to a negative currency-related impact of 8.0%. Unilever's Foods & Refreshment arm achieved underlying sales growth of 9.8% - with out-of-home ice cream returning to growth and in-home ice cream up double-digits - fuelled by volumes, while Home Care reported sales growth of 5.9% and Beauty & Personal Care growth of 2.3%. "We are confident that we will deliver underlying sales growth in 2021 within our multi-year framework of 3% to 5%, with the first half around the top of this range. We expect to increase underlying operating margin slightly for the full year, though with a decline in the first half driven by Covid-19 impacts, higher cost inflation and increased marketing spend over the prior year," said Chief Executive Alan Jope. Unilever will pay a quarterly dividend of EUR0.4268 per share and has approved a share buyback programme of up to EUR3 billion, to commence in May.
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NatWest reported a jump in quarterly profit, even as total income fell. The UK state-back bank's pretax profit surged to GBP946 million for the first quarter of 2021 from GBP519 million a year ago, on total income of GBP2.66 billion, down 16% from GBP3.16 billion. Natwest recorded a net impairment release of GBP102 million in the first quarter, compared to a charge of GBP802 million a year ago. NatWest retained its outlook guidance. Chief Executive Alison Rose said: "Defaults remain low as a result of the UK government support schemes and there are reasons for optimism with the vaccine programmes progressing at pace and restrictions being eased. However, there is continuing uncertainty for our economy and for many of our customers as a result of Covid-19."
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Standard Chartered reported a "strong" start to 2021, with a sharp drop in credit impairments and a record quarter from its Wealth Management arm giving the bank confidence for the rest of 2021. In the three months to March 31, the Asia-focused lender reported a sharp jump in pretax profit to USD1.41 billion from USD886 million the year before. This followed a dramatic drop in the lender's credit impairment to USD17 million from USD962 million. Operating income fell 9% in the first quarter to USD3.94 billion from USD4.34 billion the year before, with net interest income down 10% to USD1.66 billion from USD1.84 billion.
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London Stock Exchange Group said it expects to complete the sale of Borsa Italiana Group to Euronext on Thursday for EUR4.44 billion. The sale was first announced in October with a price of EUR4.33 billion, plus an additional amount reflected cash generated by the business before completion. LSEG reaffirmed that the proceeds will be used to pay down debt related to its USD27 billion acquisition of Refinitiv. Euronext had earlier confirmed the completion of the deal and announced a EUR1.8 billion share issue.
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Apple reported doubled earnings for the second quarter of its financial year, driven by record revenue through sharp growth in iPhone and Mac sales. For the three months ended March 27, the Cupertino, California-based technology colossus posted net income of USD23.68 billion, more than doubled from USD11.25 billion the same period the year before. Diluted earnings per share also more than doubled annually to USD1.40 from USD0.64. Total net sales grew 54% year-on-year to USD89.58 billion from USD58.31 billion the prior year, driven by a 66% rise in iPhone sales to USD47.94 billion, as well as a 70% increase in Mac sales to USD9.10 billion, the latter reaching an all-time high. Apple declared a dividend of USD0.22 per share for the quarter, up 7% year-on-year.
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Facebook reported a sharp rise in first-quarter earnings as the social media platform benefited from strong advertising revenue. For the first quarter ended March 31, Facebook posted revenue of USD26.17 billion, up 48% from USD17.74 billion last year and net income was USD9.50 billion, almost double from USD4.90 billion. Diluted earnings per share in the first quarter was USD3.30, up 94% from USD1.71 last year. Facebook attributed the significant increase in revenue to a 30% year-on-year increase in the average price per ad and a 12% increase in the number of ads delivered. In the US and Canada, Facebook's user base remained flat at 195 million daily active users for the second consecutive quarter. Its user base in Europe increased to 309 million daily active users, up from 308 million in the fourth quarter.
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South Korean tech giant Samsung Electronics posted a 46% rise in first-quarter net profits on Thursday, largely driven by robust sales of its smartphones and home appliances due to continued stay-at-home demand. The firm is the flagship subsidiary of the giant Samsung group, by far the largest of the family-controlled empires known as chaebols that dominate business in South Korea, the world's 12th-largest economy. Samsung Electronics said net profits rose 46% in January to March from a year earlier to KRW7.1 trillion, about USD6.4 billion. "Solid sales of smartphones and consumer electronics outweighed lower earnings from semiconductors and displays," the firm said in an earnings report. Operating profit rose 45% to KRW9.4 trillion, while sales were up 18% to KRW65.4 trillion. Analysts say the company has enjoyed a particular boost from rolling out its Galaxy S21 series in January, more than a month ahead of the flagship product's usual annual launch schedule.
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Airbus said it made a promising start to 2021, swinging to a first-quarter profit, though the aerospace and defence firm cautioned that Covid-19 still has a tight grip on the industry. In the three months ended March 31, revenue fell 1.6% year-on-year to EUR10.46 billion from EUR10.63 billion a year earlier. Airbus said it swung to a first-quarter net income of EUR362 million from a EUR481 million loss a year earlier. Airbus posted a EUR59 million one-off financial gain in the first-quarter, reflecting the "revaluation of financial instruments and the evolution of the US dollar". This compared with a EUR477 million one-off hit a year earlier, hit by the full impairment of a loan to communications company OneWeb. "The good Q1 results mainly reflect our commercial aircraft delivery performance, cost and cash containment, progress with the restructuring plan as well as positive contributions from our helicopter and defence and space activities," Chief Executive Officer Guillaume Faury said.
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The US Federal Aviation Administration has ordered Boeing to make repairs on a number of its 737 MAX jets that are currently grounded due to an electrical problem. In an airworthiness directive published on Wednesday, the agency issued specific instructions on how to fix the problem. According to the FAA, a total of 106 planes from the 737-8 and 737-9 series are affected, 71 of which are licensed in the US. The repairs should require an estimated maximum of 24 hours of work per aircraft. Some three weeks ago, the FAA had received a report of an electrical bonding and grounding issue that was discovered during testing of a newly manufactured Boeing 737-8. During standard production testing by Boeing, electrical power systems did not perform as expected. Investigations identified insufficient bonding of certain metallic support panel assemblies installed in two areas of the flight deck. US airlines voluntarily withdrew dozens of planes from service. The airworthiness directive indicates that rectifying the problem may not be too expensive. The FAA put the cost of repairing the 71 aircraft registered in the US at around USD155,000.
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MARKETS
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Strong first-quarter results from the largest of large-caps were giving stock markets a lift, allowing the FTSE 100 index in London to reclaim 7,000 points. Nasdaq in New York was looking even more buoyant on Thursday after dovish remarks by US Fed Chair Jerome Powell before the closing bell on Wednesday and huge numbers from Apple and Facebook afterward. "Stock markets have taken heart from the Fed, which once again poured plenty of cold water on the idea of any upcoming change in policy," commented IG Chief Market Analyst Chris Beauchamp. "The dialogue of the deaf goes on in markets, with the Fed patiently restating its view of future policy and investors refusing to listen."
Lagging other markets on Thursday was Frankfurt, with Munich RE, Continental, RWE, Delivery Hero and Volkswagen weighing on the DAX 30.
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CAC 40: up 0.5% at 6,336.50
DAX 30: down 0.3% at 15,242.61
FTSE 100: up 0.6% at 7,006.33
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Hang Seng: closed up 0.8% at 29,303.26
Nikkei 225: Tokyo market closed for holiday
S&P/ASX 200: closed up 0.3% at 7,082.30
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DJIA: called up 0.4%
S&P 500: called up 0.6%
Nasdaq Composite: called up 0.9%
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EUR: up at USD1.2118 (USD1.2100)
GBP: up at USD1.3948 (USD1.3912)
USD: up at JPY108.97 (JPY108.85)
GOLD: up at USD1,777.00 per ounce (USD1,772.08)
OIL (Brent): up at USD67.84 a barrel (USD67.65)
(currency and commodities changes since previous London equities close)
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ECONOMICS AND GENERAL
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Temporary price jumps will not spook the Federal Reserve into pulling back on the stimulus it has pumped into the US economy during the Covid-19 pandemic, Chair Powell said on Wednesday. He highlighted the commitment of the policy-setting Federal Open Market Committee to keep the benchmark lending rate near zero, where it has been since the start of the crisis, and continue its massive bond buying program until employment recovers and inflation exceeds the two percent threshold "for some time". Responding to concerns from notable economists and some investors that policymakers could let things get out of control, Powell snapped back: "We know our job." Though he acknowledged that inflation will increase in the coming months as business ramps up, he stressed that the factors pushing it higher will dissipate.
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US President Joe Biden said Wednesday he was not seeking conflict with China or Russia as he put a renewed focus on diplomacy in his first address to Congress. In a speech focused on selling major investments at home, Biden told lawmakers who months earlier had dodged a deadly insurrection that they needed to show democracy can work. "We're in a competition with China and other countries to win the 21st century," Biden said, warning: "Autocrats think democracies can't compete." Biden said he told President Xi Jinping in a two-hour first phone conversation after taking office: "We welcome the competition – and that we are not looking for conflict." Biden also called for higher taxes on wealthy Americans and corporations as he sought ways to pay for his spending proposals aimed at improving infrastructure and the workforce. "How do we pay for my jobs and family plan? I made it clear we can do it without increasing the deficit," Biden told a joint session of Congress. "I will not impose any tax increase on people making less than USD400,000. But it's time for corporate America and the wealthiest one percent of Americans to begin to pay their fair share."
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The US said Wednesday it was sending more than USD100 million in supplies to Covid-ravaged India, including nearly one million instant tests on a first flight. The White House said the first flight would arrive Thursday in New Delhi on a military plane, days after President Joe Biden promised to step up assistance to the emerging US ally. The first shipment includes 960,000 rapid tests, which can detect Covid in 15 minutes, and 100,000 N95 masks for frontline health workers, the US Agency for International Development said. The White House said total aid on flights in the coming days would be worth more than USD100 million and include 1,000 refillable oxygen cylinders and 1,700 concentrators that produce oxygen for patients from the air.
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The European Parliament agreed its position on how a Covid certificate should work, bringing the EU closer to launching a document to open up travel within the bloc. Europe intends to have a certificate showing the bearer's vaccination status, Covid test results and/or evidence of having survived the disease up and running in June, in time for the continent's summer vacation period. While technical work has been ongoing to ensure the certificate is recognised across all 27 EU member states, final details have to be worked out involving capitals, the European Commission and the parliament.
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The German unemployment rate held firm in April, according to figures from the Federal Employment Agency. The seasonally-adjusted jobless rate was stable at 6.0% in April, matching the prior four months. However, unemployment increased by 9,000 people, having been expected to fall by 10,000, according to FXStreet, after a decrease of 6,000 in March.
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By Tom Waite; thomaslwaite@alliancenews.com
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