Shell’s 33% drop in Q2 2023 adjusted EBITDA will not come as a surprise to investors as oil prices slip and the higher energy price environment of 2022 becomes a distant memory.

Shell’s shares were down 1.5% in early trade on Thursday as the energy major said lower oil prices, refining margins and gas trading activity curtailed earnings in the second quarter.

The oil major’s Q2 earnings teaser released earlier this month alluded to lower earnings, and with Shell shares a way off recent highs, a muted market reaction to today’s announcement was expected.

Despite lower adjusted EBITDA in the second quarter, Shell produced another monster quarter for free cash flow, which rose to $12.1bn from $9.9bn in Q1.

Shell will have pleased income seekers with another quarterly dividend hike. Shell will pay 33.1¢ per share to those holding the stock on the 10th August ex-dividend date.

Barclays shares were weaker on Thursday after the FTSE 100 bank reported lower total income in the second quarter as investment banking activity slowed.

Total income for the second quarter slipped to 6% to £6.4bn as investment banking activity revenue fell 3%. Investors will also be concerned Barclays have revised their net interest margin guidance for the full year to 3.15% from 3.20%.

Net interest margin is a key profitability metric, and the downgrade will be a blow for the bank as global interest rates look set to plateau.

Another big disappointment for investors was the subdued performance in their investment banking unit as deal flow slowed. Barclays’ Corporate and Investment Bank (CIB) income decreased by 3% to £3.2bn, as lower Global Markets and Investment Banking fees outweighed a strong transaction banking performance.

Barclays is setting aside a further £400m in charges for bad debts as the economic backdrop becomes cloudier.

Lower operating costs helped profit before tax rise to £2bn in Q2, up from £1.5bn in the same period a year ago. However, lower costs and a £750m share buyback were not enough to offset concerns about the outlook, and Barclays shares were down 6% at the time of writing on Thursday.

Empresaria shares sank on Thursday after the recruitment group said fee income was falling amid weak trading conditions.

Empresaria’s net fee income fell 9% year-on-year to £29.7m in H1 as the global specialist staffing group continues to face difficult market conditions. Permanent recruitment saw the greatest impact, with a 24% decline. The US has been especially challenging, particularly for IT recruitment.

Empresaria now expects full year adjusted profit before tax of approximately £5m, well below previous forecasts.

Empresaria shares were down 27% after suggesting the weak trading climate is expected to persist into the second half.

Adjusted net debt rose slightly to £8.7m in H1, though headroom increased to £18.4m thanks to tighter cash management. Offshore Services, of which Empresaria owns 72%, saw 15% net fee growth driven by UK Healthcare demand. But US IT hiring remained soft. Ongoing cost cuts won’t fully mitigate trading weakness. Empresaria needs hiring demand to rebound globally to get profits back on track. The staffing group reports interim results on 22 August.

Rhona Driggs, CEO of Empresaria, commented:

“We continue to face challenging market conditions which developed through the second half of 2022 and remained throughout the first half of 2023.  We have not seen the anticipated signs of sustained improvement as client confidence remains low and candidates continue to be reluctant to move in the current environment.  With the ongoing macro-economic uncertainty, we now expect these factors to continue to have an adverse impact on the Group’s profits in the second half of 2023.

We have taken action on our cost base and will continue to maintain tight control over costs while ensuring that we are able to maximise opportunities as and when market confidence returns.  While we are disappointed with these results, we are continuing to execute on our strategic initiatives and are confident in the medium and longer-term prospects of the Group.”

Lloyds shares were firmly lower on Wednesday amid lower profits and concerns the bank would face several challenges in the second half of the year.

Although first-half 2023 profit before tax rose 23% compared to the same period last year due to higher interest rates, Lloyds experienced a sharp drop in Q2 2023 profit compared to Q1.

Q2 profit before tax fell 29% to £1.6bn from £2.26bn in Q1.

Lloyd’s fall in profits resulted from a £700m impairment charge to their retail loan book as the bank prepares for an increase in bad debts such as mortgage defaults.

Lloyds’ net income was pretty consistent in Q2 2023 compared to Q1 at £4.5bn. However, it was slightly lower than previously and will not inspire investors.

“Much will be made of Lloyds Banking Group’s 23% jump in first-half profit amid the backdrop of a cost-of-living crisis and increased pressure from regulators to share the benefits of interest rate hikes with savers,” said Danni Hewson, head of financial analysis at AJ Bell.

“The net interest margin, the difference between what a bank earns in interest from loans and what it pays out, is slightly higher than analysts had forecast for the quarter, though down on where it had been in the three months previously.”

“There are storm clouds gathering as the country’s biggest mortgage lender has to consider how many of its customers are likely to struggle as they face a jump from ultra-low fixed rates to the unexpected ‘new normal’.”

Lloyds shares were down 3.2% at the time of writing.

Rolls Royce shares were sharply higher in early trade on Wednesday after the group said they see a much better-than-expected first half.

Rolls Royce said operating profit would be £660m-£680m compared to analyst consensus estimates of £328m. The aerospace company’s free cash flow will also smash estimates coming in at around £340m-£360m. The consensus was for just £50m free cash flow.

“Rolls Royce is highlighting the early success of its transformation programme, which is driving productivity improvements. Civil Aerospace has swung back into profit, reflecting a stronger aftermarket outcome, while defence sector earnings are also sharply improved, with demand stronger and a more even pattern of deliveries this year compared to last,” said Steve Clayton, head of equity funds, Hargreaves Lansdown.

“Rolls Royce is boosting full year guidance for operating profits and cash flows by around 50%, one of the largest improvements seen so far in the current reporting season. The company is benefiting from a recovery in flying hours by the airline industry, which is pushing more aircraft into the workshops for engine overhauls.”

Rolls Royce shares were over 20% higher at the time of writing.

The strong first half has given Rolls Royce the confidence to upgrade their outlook for the rest of the year and now see underlying operating profit in the region of £1.2bn-£1.4bn, up from prior forecasts of £0.8bn-£1.0bn.

The upgrade in profit outlook is testament to Rolls Royce’s turnaround plan, which shows early signs of success.

Tufan Erginbilgic, Rolls Royce CEO, commented:

“Our multi-year transformation programme has started well with progress already evident in our strong initial results and increased full year guidance for 2023. There is much more to do to deliver better performance and to transform Rolls-Royce into a high performing, competitive, resilient, and growing business.”

Lawrence Stroll’s Aston Martin Lagonda Global Holdings (LON:AML) has today announced better than expected half-time results.

The £2.5bn capitalised luxury car maker reported that in the six months to end June its total wholesale volumes were up 10% at £2.95bn (£2.67m), while its revenues were 25% increased at £677.4m (£541.7m), with its pre-tax loss halved at £142.2m (£285.4m).

The first half improvement was driven by the much higher volumes and stronger pricing, together with its DBX707 and V12 Vantage Roadster showing impressively.

The group, which is enjoying its 110^th anniversary this year, ended the period with a cash balance of £400m, boosted by the Geely £95m subscription, together with a £60m revolving credit facility, giving it an overall liquidity of £460m. Net debt was £846m (£766m).

In Q3 deliveries are scheduled to begin for its 499 DBS 770 Ultimate, which was a total sell-out of the January 2023 launched model.

The Aston Martin DB12, the new generation front engine sports car classed as the world’s first Super Tourer, was launched in late May and which is sold out for the rest of the year will see customer deliveries starting in Q3.

Executive Chairman Lawrence Stroll stated that:

“Although we may only be halfway through the year, 2023 has already proven to be a remarkable year in which Aston Martin has shone brighter than ever.

We are now driving new levels of operational excellence to support our growth and deliver on our targets which focus on increasing value for each car we sell, aligned with the characteristics of a true ultra-luxury company.”

The group remains well on track to achieve its medium-term financial targets of c.£2bn revenue and c.£500m adjusted EBITDA by 2024/25. 

The company has stated that it expects to substantially achieve these financial targets in 2024 and, with continued strong momentum, is likely to exceed them in 2025.

Consistent with its target to become free cash flow positive from 2024, the company also expects to further deleverage its balance sheet, targeting a net leverage ratio of c.1.5x in 2024/25.

For the second half of this current year, the group expects to achieve a similar level of adjusted EBITDA in Q3 2023 as Q2 2023, with a significant increase in adjusted EBITDA in Q4 2023, primarily due to the timing and related contribution of new product launches.

It also expects to deliver significant growth in profitability.

The shares opened up 3% at 360.80p.