Shell planning for “prolonged downturn”
Royal Dutch Shell (LON:RDSA) reported its second quarter earnings this morning, announcing profits of $3.4bn in the three months to June 30th – a 35 percent decrease on last year.
The company have said that they are planning for a “prolonged downturn”, and aim to make cuts, including 6,500 jobs over the year, in order to “mitigate the impact” on profits amid a drop in oil prices. Shell have already reduced 2015 capital expenditure to $30 billion, down by 20 percent.
CEO Ben van Beurden said that the company was successfully “reducing our capital spending and operating costs, and delivering a competitive performance in today’s oil market downturn.”
“We have to be resilient in a world where oil prices remain low for some time, whilst keeping an eye on recovery. We’re taking a prudent approach, pulling on powerful financial levers to manage through this downturn, always making sure we have the capacity to pay attractive dividends for shareholders,” he said in a statement.
Earlier this year, Shell launched a £47 billion cash-and-share bid for BG Group, the Reading-based multinational oil company. Van Beurden believes that the merger would enhance Shell’s “free cash flow, create an international oil company leader in LNG (liquefied natural gas) and deep water innovation, and be a springboard to change Shell into a simpler and more profitable company”; however, low oil prices have affected the entire industry over the last few months.
Twitter announces quarterly results – two more execs leave
Twitter (NYSE:TWTR) beat analysts expectations when it released its quarterly results yesterday. The company posted revenues of $502.4m for the last quarter, compared with $312.2m one year earlier and a net loss of $137m.
However, as the company announced their quarterly results, two more high-profile executive announced their departure. Todd Jackson, former director of product management, disclosed that he is leaving for Dropbox and Christian Oestline, former vice president of product management will be joining YouTube. This comes just after CEO Dick Costolo quit, leaving uncertainty over his replacement. These vacancies, as well as stagnating growth, have affected share price over recent weeks.
Twitter’s sales are up 61 percent, but user growth figures were disappointing, up 2.6 percent to 316 million – a deceleration from last quarter. Average monthly users were up 15% year-over-year, to 316 million, but up only 8 million from 308m the quarter before – a rise of just 2.6%
“Our Q2 results show good progress in monetization, but we are not satisfied with our growth in audience,” said interim CEO Jack Dorsey in a company statement.
Twitter is currently trading down 13.43%.
Chinese shares climb 3% after Monday’s drop
Chinese shares have recovered some of Monday’s fall, with the Shanghai Composite Index breaking a three-day slide to close up 3.5 percent today and the CSI300 index climbing 3.1 percent.
Beijing have introduced further measures to control the volatile stock markets, which fell more than 8 percent on Monday.
China’s securities regulator announced probes into share “dumping” and pledged to buy stocks to calm the market, while the central bank hinted at more policy easing.
“The possibility for A shares to rebound in the following month is quite big given liquidity is rich in the market now and short-selling ability has been largely curbed,” said Zhang Qi, an analyst at Haitong Securities in Shanghai told Reuters.
Elios Motors’ three wheeler completes successful crowdfunding campaign
If you thought three wheel cars were a thing of the past, think again; yesterday, Elio Motors reached their $25 million crowdfunding goal on StartEngine for their modern, eco-friendly trike.
Unlike most platforms, crowdfunding on StartEngine isn’t all-or-nothing and the contract between Elio and their investors isn’t binding. It utilises new “Regulation A+” rules under the American 2012 JumpStart Our Business Start-up (JOBS) Act, which paves the way for private companies to raise up to $50 million from non-accredited investors. Regulation A+’s Tier 2 allows companies a period to “Test The Waters” during which they can communicate with potential investors. There is no obligation by either party to take part in a transaction.
The vehicle has already had plenty of interest, with more than 43,000 people reserving a place in line to purchase a vehicle – and its no wonder. The three-wheel vehicles will be made in America with 90% American content, will use around 84mpg and have excellent safety features, including an inforced roll-cage frame, Anti-Lock Braking System, and 50% larger crush zones than similar vehicles. The colours are nattily named, with choices such as Marshmallow, Red Hot, Rocket Silver, Sour Apple, Licorice – and to top it all off, Elio will be pricing the cars at just $6,800.
The company website makes its benefits very clear:
In a statement, Elio Motors CEO Paul Elio said that the $25 million is, “just the beginning as we race toward our 2016 goal of mass production. He continued, “overall, we are extremely pleased with the initial support of our crowdfunding initiative and will continue to take additional expressions of interest while working with the SEC on next steps.”
The company website makes its benefits very clear:
“For students the vehicle would offer a safe and reliable means to move around campus. It would allow families with minivans and SUV’s to add an economical commuter vehicle to the driveway. For pure enthusiasts, it would deliver on flat out fun – with a potential for customizing as unlimited as imagination itself. Paul Elio envisioned a vehicle that’s truly for everybody, and its inflation-defying $6,800, sticker price ensures that nobody
will be left out.”
It’s hard not to be impressed by this new vehicle, and it’s easy to see why so many people were willing to express an interest. However, the car is currently still in production; it will be interesting to see how the markets react when – or is – it goes on sale.
Volkswagen lowers sales forecast after weak demand in China
Volkswagen (OTCMKTS:VLKAY) lowered its sales forecast, which expected sales to be flat on last years 10.1 million cars, after weaker demand in China.
This comes after China recorded a 3.4% monthly year-on-year drop in new-car sales in June, its first decline in more than two years. China’s Automakers Association also cut its 2015 forecast for vehicle sales growth to a meager 3 percent last week, as a volatile stock market affected sales to consumers concerned about the slowing economy.
Fluctuations in China’s market will strongly affect VW, where the group’s largest division delivers more than 40 percent of its vehicles.
However, a higher-margin western European market and cost cuts helped VW raise group operating profit to 3.49 billion euros, which does not include earnings from Chinese joint ventures.
“The difficult market environment and fierce competition” is posing challenges, Finance chief Hans Dieter Poetsch said.
VW are currently trading down 2.43% at 40.97 pence per share.
GlaxoSmithKline up 3% after second quarter report
Shares in GlaxoSmithKline (LON:GSK) jumped more than 3 percent this morning after the company reported second-quarter earnings per share (EPS) that were slightly higher than forecast by analysts.
Sales also rose 6 percent to 5.9 billion pounds in the last quarter. They currently have a market capitalization of around £65 billion.
The drugmaker recently sold its marketed cancer drugs to Novartis, and bought the Swiss group’s vaccines. However, the company experienced a slide in sales of the lung drug Advair after an introduction of a generic drug in the US.
Looking long-term, the company currently has several new drugs in the research stage and around 40 new drugs and vaccines in Phase II or Phase III clinical development. They have also just become the first drug company to be given approval from European Medicines Agency for a malaria vaccine.
Chief Executive Andrew Witty is under pressure to deliver recovery after poor profit performance over the past few years.
GlaxoSmithKline plc. (GSK) is a healthcare company that researches and develops pharmaceuticals, vaccines and consumer healthcare products. They are currently trading up 3.16% at 1371 pence per share.
Record demand for Sky pushes profits up
Sky (LON:SKY) have reported an 18 percent jump in full-year operating profit on this morning, slightly above analysts expectations.
Full-year revenue was also up 5 percent to £11.3 billion. Combined with cost cuts across the business, the company reported an operating profit of £1.4 billion.
The positive results were driven by demand for broadband and tv entertainment and success in Europe; Sky, which formed from the combination of Britain’s BSkyB, Sky Deutschland and Sky Italia said the group had seen its highest organic customer growth for 11 years in Britain and Ireland.
Sky have done less well in Italy, where demand has fallen for the past three years. The company reported figures have remained stable, however.
“The investments we have made have given us a strong platform on which to build and we have a clear set of plans to deliver long-term growth and returns for our shareholders,” Chief Executive Jeremy Darroch said.
Sky are currently up 1.07% at 1,135 pence per share.
Barclays reports 25% rise in profits
Barclays bank (LON:BARC) has reported its half-yearly results, led by a 25% rise in pre-tax profits to £3.14bn.
Pre-tax profit was 1.85 billion pounds for the second quarter, up 12 percent from a year ago and ahead of the average analyst forecast of 1.75 billion pounds.
However, the bank have set aside another 850 million pounds to compensate UK customers for mis-sold PPI protection. This will bring the total compensation given up to £6m.
This announcement comes less than a month after the bank’s new chairman John McFarlane sacked Chief Exectutive Antony Jenkins because his turnaround plan for the bank was not working fast enough.
“We need to accelerate the execution of the strategy,” McFarlane said on Wednesday, pinpointing a need to speed up the growth in earnings, return on equity and capital generation.
McFarlane said he plans to cut costs as a percentage of income to “mid 50s” percent, from 68 percent in the first-half of the year. He also plans to cut Barclays’ non-core profits from £57 billion to £45 billion by the end of 2016.
ITV profits rise, despite poor ratings
ITV released their half-yearly earnings this morning, with profits rising by 25% to £391m as revenue increased across all divisions.
Its net advertising revenue for the previous six months was also up 5% to £838m. However, poor ratings led to a decline in viewers for the channel, with its viewing share across all channels falling 4%.
ITV chief executive Adam Crozier said that improving ratings was a “key focus” for the year.
“Our viewing performance was impacted by strong competition from the BBC, no major sporting event and some of our shows not performing as well as we had expected,” the company said.
However, ITV have won exclusive rights to events including the Rugby World Cup and a range of new dramas including Jekyll & Hyde, as well as the return of Downton Abbey in September for its final season. The company seem confident that viewings will pick up next quarter.
Shares in ITV rose 3.5% to 272.9p in morning trading, valuing the company at almost £11bn.
Could Birmingham and Croydon be the next tech hubs?
A few months ago, Birmingham was named the sixth best city for investment in Europe. However, it appears the attraction of the city keeps on growing; its burgeoning tech quarter, or “Silicon Canal” is set to rival London’s Silicon Roundabout.
Greater Birmingham claims to be home to 6,000 technology businesses employing nearly 40,000 people, and is bidding to attract 10,000 new technology jobs by 2020 as the digital boom spreads from London to the regions.
“There’s no reason why Tech City should suck in all the attention and investment from government. If Britain wants to compete in the global tech economy, we must unleash the power of regional cities like Birmingham,” said Neil Rami, chief executive of Marketing Birmingham.
But it’s not just Birmingham that is gearing up to challenge Old Street: a suprising new tech epicentre can also be found in Croydon.
Johnny Rose, founder of Tech City Croydon, disagrees that Birmingham is the new tech city. According to him, “if you want a “community-led initiative”, “incredible talent pool”, and a tech community experiencing “exponential growth”, you don’t need to be travel north, you need to go further south.”
The Office for National Statistics showed that Croydon’s tech startup cluster achieved 23% growth between 2011 and 2013, higher than east London (17.1%) and the UK as a whole (11.3%) averages over this period. Croydon is now home to over a thousand digital, creative and technical startups, including social networks, mobile dining apps, new media outlets and FinTech firms such as QuidCycle.
Whilst many think of Croydon as too suburban to be an industry hub and – possibly – a bit of a dump, they might have been right once; but not any more. Interestingly, Croydon’s Tech City initiative was inspired by its bad reputation and kickstarted by the 2011 riots, which were prominent in Croydon.
Saif Bonar, founder of Matthew’s Yard, a cafe and community hub in Croydon, said:
“Arguably the riots were one of the best things that happened to Croydon”, he says, “Without them, the progress we’ve made would have taken much longer.”
Many new tech firms have seen through Croydon’s grimy exterior, and reaped the benefits. Tech City Croydon organise tech events every week of the year, from advice surgeries to networking events. Gatwick airport is just 15 minutes by train, providing connections to other European start-up centres such as Berlin and Helsinki, and it’s almost easier to get from East or West Croydon via mainline train that across London by tube.
Simon Bird, co-founder of dotMailer: “It is really just an extension of central London, albeit with more cost-effective office and living opportunities. People think it is unsafe, but I really don’t see that and I work here every day.”
As Old Street’s Silicon Roundabout expands and further cements London’s position at the centre of Europe’s Fintech scene, other parts of the country are prospering too. Both Birmingham and Croydon were areas in need of regeneration and fresh talent – and through the growth of tech start-ups, that is exactly what they’ve got. It will now be interesting to see which city will be next to reap the benefits.
Miranda Wadham