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Royal Dutch Shell beefed up its commitment to cut carbon emissions as the oil major fends off calls to break itself up. But quarterly results from Shell were mixed and chief executive Ben van Beurden opted not to use record cash flow to boost shareholder returns.
Shell’s adjusted net profit from July to September fell to $4.1bn from $5.5bn in the previous quarter, missing the analysts’ consensus forecast. Higher gas prices and a surge in trading income meant cash flow from operations excluding working capital movements hit a record $17.5bn.
Shell said it would reduce absolute emissions from its operations, known as scope 1 and scope 2, by 50 per cent by 2030, compared to 2016 levels. The stronger climate commitment comes after a Dutch court in May ordered it to cut all emissions, including those released when its products are burnt by customers, by 45 per cent by 2030.
Shell is under pressure to break itself up after the activist hedge fund Third Point built a large stake and accused the oil supermajor of being bogged down by an incoherent strategy.
Meggitt, the aerospace engineer, warned that supply chain issues and weakening defence markets were putting pressure on revenue and profit. The company, which has agreed to be taken over by US peer Parker-Hannifin, said 2021 organic revenue will be 5 per cent lower and underlying operating profit will be in the range of £170m to £190m. It had previously targeted 2021 earnings ahead of the 2020 total of £190.5m.
Lloyds Banking Group lifted 2021 guidance after posting forecast-beating earnings. The bank’s first set of results under chief executive Charlie Nunn showed pre-tax profits up more than 50 per cent to £2bn as strong demand for mortgages pushed up interest income. For the year end Lloyds lifted guidance for net interest margin, operating costs and credit impairments.
WPP raised its 2021 sales target on a strengthening of demand in the US, Britain and Germany. “Our very strong performance goes well beyond a cyclical recovery, with like-for-like growth over 2019 at 6.9 per cent in the quarter,” said chief executive Mark Read. The advertising group guided for underlying net sale growth of 11.5 to 12 per cent this year, from 9 to 10 per cent previously. For the third quarter WPP reported like-for-like revenue before pass-through costs, its preferred sales measure, up a better than expected 15.7 per cent.
Travis Perkins said underlying profit for 2021 will be ahead of market expectations. Positive trading momentum had continued with like-for-like sales growth of 13.1 per cent in the third quarter, the builders’ merchant said.
Polymer maker Synthomer has agreed to pay $1bn cash to buy an adhesive resins business from US peer Eastman Chemical. To support the purchase Synthomer launched a share placing to raise approximately £200m.
DS Smith said ahead of its October half-year end that recent trading has been in line with expectations. “Very positive” box volume growth, higher selling prices and an improved performance from its US business combined to more than offset significant input cost increases, the packaging maker said.
Inchcape, the car dealership chain, raised its full-year pre-tax profit target to at least £290m from £260m previously on better than expected margins but cautioned that supply chain issues would continue into 2022.
Estate agent Foxtons said in a trading update that nine month revenue group rose 50 per cent to £103.6m as sales by value more than doubled.
Restaurant Group, the owner of the Wagamama noodle chain, has named former Cadbury and Avis Europe executive Ken Hanna as its next chair. Hanna will succeed Debbie Hewitt in January when she joins the English Football Association.
Beyond the Square Mile
Samsung Electronics reported its highest quarterly profits in three years and said the global chip crunch would continue into next year. Samsung’s net profit jumped 31 per cent to Won12.3tn ($10.4bn) in the July-September quarter as sales increased 10 per cent to a record Won74tn.
The semiconductor crisis wiped almost €500m off Volkswagen’s pre-tax profits in the last quarter, as the German group struggled to produce enough cars to meet resurgent demand. The world’s second-largest carmaker by volume said profits fell by almost 15 per cent to €3.1bn in the three months to the end of September. VW also cautioned that it would sell as few cars in 2021 as it did during the height of the pandemic last year. The group delivered just over 9.3m vehicles in 2020.
UniCredit reported a 55 per cent rise in profits compared to a year earlier, as the Italian bank set out its first quarterly results after last week walking away from a deal to buy state-owned rival Monte dei Paschi di Siena. The bank’s €1.1bn of pre-tax profits for the third quarter were 26 per cent ahead of analyst forecasts, while its €4.4bn of revenues were also higher.
Anheuser-Busch InBev said sales had surged past pre-pandemic levels in the third quarter as drinkers switched to the Budweiser brewer’s more expensive brands. The volume of drinks it sold in the three months to September was up 3.4 per cent, against analyst expectations of a decline. That and drinkers moving to premium brands helped to bring revenues up 7.9 per cent at the group, which also brews Stella Artois and Corona.
Essential comment before you go
Martin Wolf delivers a scathing verdict on the Budget. “Rishi Sunak’s effort was not so much agenda-setting as a recognition of political realities,” he writes. The chancellor has embraced “what are, by British standards, high taxes and a big state.”
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