Royal Dutch Shell shares down as profits come in under expectations

Royal Dutch Shell (LON:RDSB) profits fell short of expectations in the second quarter, sending shares down in morning trading on Thursday. Net income attributable to shareholders in the quarter, based on a current cost of supplies (CCS) and excluding identified items, rose 30 percent to $4.691 billion, well below the company-provided analysts’ consensus of $5.967 billion. Shell attributed the fall in profits to lower trading results, higher costs and currency exchange. Shell also announced a $25 billion share buyback programme, subject to further progress with debt reduction and oil price conditions. Royal Dutch Shell Chief Executive Officer Ben van Beurden commented: “Today we are taking another important step towards the delivery of our world-class investment case, with the launch of a $25 billion share buyback programme. “This move complements the progress we have made since the completion of the BG acquisition in 2016, to reshape our portfolio through a $30 billion divestment programme and new projects, to reduce net debt, and to turn off the scrip dividend. “Our financial framework remains unchanged. Our free cash flow outlook and the progress we have made to strengthen our balance sheet give us the confidence to start our share buyback programme.” Shares in Royal Dutch Shell (LON:RDSB) are currently trading down 2.86 percent at 2,647.00 (1056GMT).

Facebook shares plummet amid disappointing growth

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Facebook shares (NASDAQ:FB) plunged more than 20 percent on Wednesday amid slowing revenue growth. Monthly active users rose 11 percent year over year to 2.23 billion, alongside daily active users, at 1.47 billion. Growth remained in the US and Europe, which constitute the company’s largest advertising markets. However, this proved the social media’s slowest growth in more than two years. Facebook are still dealing with the fallout from the Cambridge Analytica scandal, in which data from the social media site was harvested by to create targeted voter advertising for the Vote Leave and US Election campaigns. In response to the incident, the European Union introduced the General Data Protection Regulation, which ultimately had a knock-on effect on user growth and engagement. Specifically, European daily active users fell 3 million in the quarter, alongside a drop in month active users. This proved the company’s first full quarter reporting since the privacy scandal was exposed back in March. The results proved behind analyst expectations, resulting in shares plunging 24 percent during after-hours trading, shedding $130 million in value. Wall Street analysts had been expecting user growth of around 1.49 billion, with revenues of $13.3 billion. This proves the first time in Facebook’s history that it has missed analyst expectations. The chief financial officer, David Wehner, said: “Our total revenue growth rates will continue to decelerate in the second half of 2018, and we expect our revenue growth rates to decline by high single-digit percentages from prior quarters sequentially in both Q3 and Q4.” Explaining the disappointing growth, Wehner attributed weaker results to currency changes, privacy laws and different advertising strategies. He added: “We expect currency to be a slight headwind in the second half versus the tailwinds we have experienced over the last several quarters. We plan to grow and promote certain engaging experiences like Stories that currently have lower levels of monetisation, and we are also giving people who use our services more choices around data privacy, which may have an impact on our revenue growth”. Shares in Facebook trading +1.32 percent as of 10.29 (GMT).    

Cobham shares plunge on dispute with Boeing

Shares in Cobham (LON:COB) plunged over 10 percent on Thursday, after the company confirmed that it had not received payment from one of its biggest clients for recent work on an aircraft. The dispute, between Cobham and Boeing over work on a KC-46 aerial tanker aircraft, escalated after Cobham said Boeing was withholding payment due to “as yet unquantified damages assertions”. It did however warn that challenges with the KC-46 programme will add around £40 million in extra costs to complete the work. This comes alongside Wednesday’s news that there had been another $418 million in cost overruns due to other complications. The dispute comes ahead of Cobham’s six month interim results, which are set to be released on the 3rd August. It expects to announce no change to its full year 2018 underlying profit guidance.

Shares in Cobham (LON:COB) are currently down 9.92 percent at 118.55 (1029GMT).

Sky shares up after “exceptional year”

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Broadcasting giant Sky (LON:SKY) reported an “exceptional” financial year on Thursday, boosted by strong demand for its Sky Q service. Revenues came in 5 percent higher for the full year, hitting £13.6 billion, up for the 29th consecutive year. Statutory operating profit rose by 7 percent to £1.034 billion, with earnings before interest, tax, depreciation and amortisation were up 9 percent to more than £2.3 billion. The results were supported by strong customer demand for its Sky Q television service, which has now been installed in 3.6m homes. Group chief executive Jeremy Darroch commented: “In the UK and Ireland, our largest market, we’ve delivered an excellent operational and financial performance whilst scaling our new initiatives. In Germany and Austria, we have comprehensively upgraded all our services as part of our plans for sustained long-term growth in what is Europe’s largest TV market. “In Italy, we’ve had a ground-breaking year, opening up significant new growth opportunities for our business by offering new services over DTT and fibre, allowing us to reach new segments of the market. “ Shares in Sky rose at market open, before trading down slightly at 0.06 percent at 1,506.00 (1012GMT).

Anglo American to begin development at Peru copper mine

Shares in miner Anglo American (LON:AAL) fell nearly 2 percent at market open on Thursday, after it reported a 9 percent fall in net profit for the first half of the year. Anglo American’s profit for the six months ended June 30 fell to $1.29 billion, down from $1.42 billion in the year-earlier period. However, revenue for the first half of the year rose 13 percent to $13.7 billion. Underlying EBITDA also rose to $4.6 billion, roughly in line with analyst forecasts. De Beers contributed strongly to the results, with diamond production up 8 percent to 17.5 million carats in the first half of the year. The company also announced that they would be going ahead with the development of its $5 billion Quellaveco assets in Peru, which is one of the world’s largest untapped copper projects.

Mark Cutifani, Chief Executive of Anglo American, said:

“We see significant further potential to deliver enhanced returns from the portfolio, with our business model and relentless focus on innovation and business improvement resetting our performance benchmarks. As we now move forward to develop the world-class Quellaveco copper project in Peru, in conjunction with our partner Mitsubishi, we are excited about the opportunities we see across the business.”

Anglo American (LON:AAL) shares are currently down 1.39 percent at 1,676.40 (0944GMT).

Compass Group shares down on “difficult” European environment

Shares in catering company Compass (LON:CPG) fell on Thursday, after the group reported a more challenging business environment in Europe. The group managed to record a positive performance for the third quarter period, with organic revenue up by 5.7 percent across the whole group. Organic revenue growth in North America was up 7 percent, boosted by “particularly good growth” in its Business & Industry, In Europe, revenue growth was a little more subdued, 3.2 percent (2% excluding Easter). The margin for the nine months to June 30 was down slightly year-on-year, but the company still expects “modest margin progression” for the full year. “Better than planned margin improvement in Rest of World, is offsetting a more difficult volume and cost environment in Europe. As a result, our full year expectations are unchanged, with organic growth above the middle of our 4-6 percent range, and modest margin progression,” the company said. “Looking to the longer term, we continue to be excited about the significant structural market opportunity globally and the potential for further revenue growth, margin improvement and continued returns to shareholders”. The company added that continued strength in the pound would weigh on revenues, and that financial year end net debt to EBITDA ratio is expected to be around 1.5x. Shares in Compass Group (LON:CPG) are currently down 3.19 percent at 1,591.00 (0920GMT).

Diageo announce £2bn share buyback on solid performance

Drinks giant Diageo (LON:DGE) reported a rise in both pre-tax profit and net sales on Thursday, alongside the announcement of a £2 billion share buyback programme. The group said the decision would take them to the next level as the world’s biggest distiller, following an earlier share buyback of £1.5 billion in June. “On 26 July 2018 the Board approved a new share buyback programme to return up to £2.0bn to shareholders during the year ending 30 June 2019,” the company confirmed in a statement. For the 12 months to 30 June, pre-tax profit rose to £3.74 billion, with annual net sales of £12.2 billion and operating profit of £3.7b billion. Net sales was driven by 2.5 percent volume growth helping to offset the impact of a stronger pound, and was driven by double digit growth in both Asia Pacific and Latin America. “Our financial performance expectations are unchanged and we expect to continue to invest in the business to deliver our mid-term guidance of consistent mid-single digit organic net sales growth and 175bps of organic operating margin expansion for the three years ending 30 June 2019,” said Ivan Menezes, Chief Executive. Shares in Diageo (LON:DGE) are currently trading down 0.77 percent at 2,825.00 (0851GMT).

National Express profits rise by a quarter

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National Express (LON:NEX) shares shot up in early trading on Wednesday, after profits jumped by nearly a quarter in the first half of 2018. Half year pre-tax profit rose by 24 percent to £80.1 million in the first half of 2018, with group revenue rising by £0.4 billion to £1.21 billion. The group’s North American business recorded the biggest growth, up by 9.7 percent in constant currency to $753.2 million, with the UK growing by 0.8 percent to £273.6 million. National Express boosted shareholder sentiment with a 10 per cent increase in the interim dividend to 4.69p. CEO Dean Finch said: “National Express has had another strong start to the year “We also continue to make disciplined acquisitions that help grow our portfolio strategically. “We have made seven acquisitions so far this year and have entered new fast-growing markets, providing avenues for interesting future expansion. “Our pipeline of new opportunities remains strong and growing. “This combination of growth in our core business and the number of exciting new opportunities allows us to again increase the interim dividend by 10%. “We remain on course to deliver the board’s expectations.” Shares in National Express are currently up 2.01 percent at406.80 (0830GMT).

British American Tobacco shares up on strong profit and revenue

British American Tobacco (LON:BATS) shares rose over 4 percent on Thursday morning, after reporting a significant jump in both revenue and profit. Operating profit rose 72.4 percent to £4.44 billion in the six months to June, with revenue up by 56.9 percent to £11.64 billion. Adjusted operating profit fell, however, by 5.4 percent and strong Revenues were partially offset by an 8 percent hit from a stronger pound. “The foreign exchange impact on the Group’s results was a headwind of 8 percent for the first six months of the year and is estimated to be 5-6 percent for the full year, based upon the current foreign exchange rates,” the company said. The results were largely boosted by an increase in the volume of cigarettes and THP sold, up 11 percent to 348.3 billion on a reported basis. This was driven by the acquisition of Reynolds American and good pricing. “Despite the recent slowdown in the THP category in some markets, including Japan and South Korea, we remain confident of exceeding £1 billion of reported revenue in NGP in 2018 as we expect a range of new launches to re-energise growth in THP in the second half of the year,” the company said. Shares in British American Tobacco are currently up 4.10 percent at 4,136.00 (0818GMT).

The Ultimate Guide for a Northerner Considering Relocating to London

Sponsored by FJP Investment Are you thinking of making the move from North to South? Each year there is an influx from the North to the South, some are young professionals career driven and excited by the thought of life in the heart of city life, some are students having had enough of home towns wishing to enjoy cosmopolitan city life, whatever it is; London brings Northerners in their thousands each year to the big smoke. Sometimes travelling from where you grew up can be just a few hours to London, however, be prepared as relocating from North to South can actually be a bit of a culture shock. FJP Investment have put together some pros and cons regarding relocating which may help in some way when making the decision to pack up and leave you home town to move down to London. Rents According to Jamie Johnson of FJP Investment “Believe me, it is no fairy tale that rents in London are considered to be the most expensive European City rents for the third year in a row and four times higher than other British cities!” More Career Choices However, along with higher rents, London has of course a major advantage over other cities in that salaries are much higher in the City and there are far more job prospects on offer with wider opportunities which also takes into account that the average wage in other cities is circa £27,700 and opposed to London where is it is nearer the £40,000 mark. Housemates Good or bad? Some may find that having a house or flat share in London is a bonus, helps you find your feet when you first arrive. Living with people who know their way around and knowing where to go to get the best deals as opposed to learning the hard way on your own. Most people find this to be an ideal way to live when they first relocate as rents are high and therefore by sharing, your costs are reduced enabling you to have a better start in your life down south. Of course, this is not for everyone but maybe in the beginning it really is a means to an end. Meet Interesting People London is renowned for being the most culturally diverse city in the world, home to many interesting people from all walks of life, so the house sharing can help you to find new friends through your new home and gives you the opportunity to learn many differing cultures. Expensive Transport London’s public transport has the unfortunate label of being the most expensive in the world as of 2017, yes, indeed a shock to many people who relocate, looking at a travel card for instance – in London you would pay £135 a month as opposed to £95 in Auckland and surprisingly just £91 in New York! Seeing New Things London has a plethora of attractions old and new which can certainly make your time off from work an absolute delight, from art galleries to theatres to parks to – well just about everything you would expect from a city such as London. Pints are Pricey Beware the after-work pint in the pub…. It will come as no surprise I am sure that your recreation money definitely will not stretch as far in the south as it did in the north, in fact one pub known as The Rake hit the headlines last because their pints of beer were selling at £13.40 – I certainly wouldn’t want to be buying a round! Everything’s Open Late London make sure you don’t go without, if you have the money there is always somewhere open to take it from you, even if you decide to have a TV night or a craving for a kebab at 3am there will be somewhere near that you can pop to and get what you need. Yes, moving to the big city can be challenging but it can certainly be one of the most exciting things you ever do, budget your money of course and take advantage of house sharing but make sure that however long you stay in the Capitol you make the most of it and enjoy every minute of it. FJP Investment is a leading provider of UK and Overseas property investments. Opportunities include residential care home investments.