What can be expected from BHP’s full-year results?

Liam Roche
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What can be expected from BHP’s full-year results?

The BHP share price (LON:BHP) is trading close to an all-time high. This is because of hopes for “a post-pandemic economic recovery, commodity price strength and the company’s own capital discipline”, said AJ Bell investment director Russ Mould.

These factors have allowed the company to rein in capital investment and acquisitions, sell assets and pay down debt.

While the FTSE 100 company has six main product areas, iron ore and copper are the two that continue to contribute overwhelmingly to its profit levels.

Source: Company accounts

Analysts’ Consensus Forecasts

Analysts are expecting sales of $59bn for BHP‘s full-year results, compared to $43bn for the same period a year before. For the year beginning analysts have predicting sales of $63bn.

Operating profit for the full-year is expected to double to $30bn, along with an additional increase to $35bn in 2022.

Source: Company accounts, Marketscreener, consensus analysts’ forecasts

Analysts are expecting a doubling of earnings per share (EPS) to $3.15, with a further one-third advance in the coming year to $4.41.

Finally, a dividend of $2.89 against $1.20 a year ago, with a further increment to $3.34 expected in the coming year.

“That means BHP is expected to show the greatest dividend growth in sterling terms of any firm in the FTSE 100 between 2020 and 2022 and is enough to leave the stock on a double-digit forward yield,” said Russ Mould.

A question mark remains over whether the current earnings and dividend success is sustainable. Analysts do not appear to think so.

“They have sales, profits, earnings per share and dividends falling in the year to June 2023, which is in keeping with central banks’ view that current price inflation is ‘transitory,’ and the result of a post-lockdown surge in demand, production bottlenecks and shipping shortages,” said Russ Mould.

Capital Expenditure and Net Debt

Two final numbers to watch are capital expenditure and net debt. Net debt ended the first half at $11.8bn, the very bottom of the company’s $12 to $17bn target range. Capex was forecast to be $7.3bn in fiscal 2021, while the last published budget for 2022 was $8.5bn.

Source: Company accounts, Marketscreener, consensus analysts’ forecasts, management guidance

Rio Tinto share price dives on ex-dividend date as excitement builds over new commodity

Liam Roche
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Rio Tinto share price dives on ex-dividend date as excitement builds over new commodity

Rio Tinto Share Price

The London-listed Rio Tinto share price (LON: RIO) is down by 7.21% during the afternoon session on Thursday, and is the day’s worst performing stock on the FTSE 100. To the relief of investors in the mining giant, the move is a result of the company’s stock trading ex-dividend. If one purchases a stock on its ex-dividend date or after, they will not be entitled to the next dividend payment. Therefore the value of the Rio Tinto share price fell today, and not due to any performance related issues within the company.

Aside from the ex-dividend date passing there is other news which could set the miner on a better path, following what has been an underwhelming 2021 so far. Year-to-date the Rio Tinto share price is now down by 3.56%.

Finances

Rio Tinto revealed record half-year profits that surpassed its total for all of 2020 its key commodity, iron ore, reached an all-time high. Rio said pre-tax profits increased by 240% to a record $18bn in the half-year to June on revenues of $33bn. Additionally, the FTSE 100 miner swung to a net cash position of $3.1bn from net debt of $664m at the beginning of the year.

Rio’s chief executive Jakob Stausholm didn’t get carried away with the results, suggesting good fortune of rising commodity prices helped. “We have seen significant price hikes and fortunately we have reaped the benefit from it,” he said. “But there a still a number of things that can be done better.”

Stausholm also suggested that the high price of iron ore would not last forever. “We never give price predictions on price but I would always say that when the iron price is above $200 a tonne it is not sustainable . . . it is bound to reduce.”

Fortunately for the Rio Tinto share price, there could be another commodity to help take the burden off of iron ore.

Jadarite

Rio Tinto is doing its best to position itself to profit as internal combustion engine vehicles get replaced over the remainder of this decade. One way the company will look to do this is via a little-known commodity called ‘jadarite’.

Back in 2004 the mining giant discovered the substance, named after the Jadar valley in Serbia, a high-grade mineral compound of lithium and borates which has never been located anywhere else.

While lithium is vital to the production of lithium-ion electric batteries, Borates are contain salts known as boron, which is used in fertilisers, and also materials for solar panels and wind farms.

Rio Tinto has allocated £1.7bn to a site close to the radar river in an effort to extract the commodity after it figured out how to process the compound economically and at scale.

The miner said the site could allow the company to become Europe’s biggest supplier of lithium for the next 15 years. Rio expects to be able to extract 58,000 tons of jadarite per year, enough for 1m electric car batteries.

For those with eyes on the Rio Tinto share price, this could be an interesting development to watch unfold, and could boost the miner’s balance sheet for years to come.

White House calls on OPEC+ to act to keep fuel prices under control

Liam Roche
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White House calls on OPEC+ to act to keep fuel prices under control

White House

The US government has called on OPEC and its allies to raise its levels of output in a bid to keep rising fuel prices under control, as inflation in America reaches its highest yearly growth rate in 13 years.

While OPEC+ has recently increased its production levels, the White House is calling on the oil producing nations to do more, saying that not doing so could put the world recovery from the pandemic in doubt.

OPEC and its allies reached an agreement in July to increase oil supply in an effort to keep soaring crude oil prices under control.

The group’s plan is to pump an additional 400,000 barrels per day each month during August, increasing output by 2m barrels per day by the end of 2021.

The monthly increases will rise next year, as OPEC+ confirmed it has extended the deal from April next year to December 2022.

However, Jake Sullivan, Biden’s national security adviser, said that “while Opec+ recently agreed to production increases, these will not fully offset previous cuts imposed during the pandemic until well into 2022.”

Inflation

The price of goods and services in America rose again in July, albeit in line with analysts’ expectations, on high levels of pent-up demand.

The consumer price index increased by 5.4% in July year-on-year, as reported by the Labor Department, in a continuation of the levels seen in June.

The Federal Reserve, however, is reaffirming its position that inflation is transitory.

Oil Prices

At the beginning of the year, Brent crude oil was sitting just above $50, whereas at the time of writing, is valued at $71.35.

The comments by Jake Sullivan accompanied a rise in the price of Brent crude oil, the international benchmark, by 1.2% per barrel in New York yesterday evening.

Prior to that, oil prices showed some signs of steadying as the Delta variant looks set to impact the global economic recovery.

But other factors may come into play which would keep the price of oil down at least somewhat.

The International Energy Agency (IEA) has said that increased demand for oil reversed its path last month and will now move more slowly for the remainder of the year.

“Growth for the second half of 2021 has been downgraded more sharply, as new COVID-19 restrictions imposed in several major oil consuming countries, particularly in Asia, look set to reduce mobility and oil use,” the Paris-based IEA said.

FTSE 100 slips but remains in touching distance of post-pandemic highs

Liam Roche
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FTSE 100 slips but remains in touching distance of post-pandemic highs

The FTSE 100 was modestly lower, down 0.12% to 7,211.74, in early trading as weakness in the mining sector overshadowed some decent UK economic data.

However, the index remains above the 7,200 mark and is in touching distance of yesterday’s post-pandemic highs.

AJ Bell financial analyst Danni Hewson noted that “Rio Tinto shares slumped heavily as they traded without entitlement to a pretty generous dividend.”

“For now there appear few big catalysts to shift the index in either direction amid a lull in major corporate and economic updates – however that’s often when something emerges from leftfield to upset the apple cart,” Hewson added.

FTSE 100 Top Movers

Aviva (3.98%), Polymetal International (1.93%) and Hargreaves Lansdown (1.85%) lead the way on the FTSE 100 on Thursday.

While at the other end, Rio Tinto (-7.21%), Evraz (-6.38%) and Legal and General (-1.68%), were dragging the FTSE 100 back.

GDP surged by 4.8% between April and June as UK consumers played their role

Liam Roche
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GDP surged by 4.8% between April and June as UK consumers played their role

Sunak says today’s figures show that UK economy is on the mend

UK GDP grew by 4.8% between April and June, it was revealed on Thursday, as most businesses are at least beginning to find their feet again as lockdown restrictions have been eased.

The Office for National Statistics showed that the expansion of the UK economy came about thanks to retail, restaurants and the hotels sector.

The official GDP figure did, however, fail to meet the Bank of England‘s expectations of 5%.

Compared to before the pandemic, the UK economy is now 4.4% smaller.

Commenting on UK GDP showing a positive uptick and an encouraging economic outlook, Douglas Grant, Director of Conister, part of AIM listed Manx Financial Group, said: “Today’s UK GDP data shows a positive uptick quarter on quarter and provides a more encouraging outlook for the UK economy going forward. “

However, the plight of UK small businesses and current default levels caused by the ongoing impact of the pandemic could be of real concern.

“We must acknowledge that the UK’s business debt burden has ballooned to unprecedented levels”, said Grant “and “unfortunately this has already created a relentless flow of weak zombie-like companies falling off a loan default cliff.”

Danni Hewson, AJ Bell financial analyst, says that consumers have played their part in bringing the UK economy back to life: “The fact that pubs and restaurants were able to offer indoor service for the full month of June helped to drive GDP up.”

“People have embraced the opportunity to get out and about and consumer facing services returned to just slightly below pre-pandemic levels, with children back in the classroom and patients happy to return for a face-to-face chat with their GPs.”

Chancellor Rishi Sunak said: “Today’s figures show that our economy is on the mend, showing strong signs of recovery.

“I know there are still challenges to overcome, but I feel confident in the strength of the UK economy and the resilience of the British people.”

Bumble boosted as online dating continues amid pandemic

Liam Roche
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Bumble boosted as online dating continues amid pandemic

Bumble saw it total paying users jump by 20% to 2.9m in Q2

Bumble (NASDAQ:BMBL), the online dating app, surpassed quarterly revenue estimates as many turned to online dating during lockdowns.

The firm, based in Texas, saw it total paying users jump by 20% to 2.9m in Q2.

Online dating apps grew in popularity last year as people dated virtually due to being isolated by lockdowns.

Bumble retains confidence in its outlook despite the onset of the Delta variant threatening to disrupt its key markets.

“When COVID accelerates and loneliness climbs, people turn to us for connections,” Bumble CEO Whitney Wolfe Herd said on an earnings call.

During Q2 in America, Bumble was downloaded over 2.05m times, an increase of nearly 18% year-on-year.

The company’s revenue rose during the second quarter by 38% to $186.2m, above estimated by Refinitiv IBES of $178.7m.

Bumble is expecting current-quarter revenue between $195m and $198m, above expectations of $190.9m.

Bumble, known for putting women in charge of making contact with potential mates, reached a market value of more than $13bn after listing shares in February.

Aviva to return £4bn to shareholders

Liam Roche
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Aviva to return £4bn to shareholders

Aviva’s adjusted operating profit up 17% to £725m

Aviva (LON:AV) confirmed it will return £4bn to shareholders by next June as its new chief executive is carrying out big changes to the insurance business.

The announcement comes as Aviva’s operating profit rose by 17% to £725m over the first half of the year.

However, it came in below the company-provided consensus of £781m.

The FTSE 100 insurance firm also raised its interim dividend by 5% to 7.35p per year.

Aviva has carried out a series of disposals over the past year, allowing the company to focus its efforts on the key UK, Ireland and Canada markets.

The disposals, not all of which are yet complete, will bring in a total of £7.5bn. The money not returned to shareholders will be used to pay down debt.

“While we’ve got more to do, our half-year results show we have what it takes to drive growth in our businesses,” Chief Executive Amanda Blanc said in a statement.

James Andrews, senior personal finance expert at money.co.uk, said: “Aviva has continued to show promising growth in Q2 having previously reported its highest Q1 sales in General Insurance for a decade.”

“Aviva is also both richer and less risky than it was, following disposals of eight non-core businesses – including Aviva Vita, Turkey and France – to free up cash to invest in the core markets of the UK, Ireland and Canada.”

“Looking ahead, Aviva needs to demonstrate it’s got a functioning plan for turning its huge cash inflows into ongoing returns for shareholders – as well as navigating changing risks as climate change sees protection claims rise – to continue the impressive share price growth seen in the past 12 months,” Andrews said.

The Aviva share price is up by 2.88% during the morning session on Thursday.

The future of Podcasting with Andrew Craissati

UK Investor Magazine
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The future of Podcasting with Andrew Craissati

Auddy is driven by a senior management team that have extensive experience in the media industry at companies including Netflix and Warner.

The UK Investor Magazine Podcast is joined by Auddy Founder & CEO, Andrew Craissati, to explore the future of the Podcasting and the market opportunity for Auddy.

Andrew Craissati was Chairman and CEO of The Virgin Group’s Asia Pacific businesses where he was Director of Virgin Radio Asia.

Auddy is currently Crowdfunding on Crowdcube and have surpassed their funding target with the aim of expanding Auddy into new markets.

https://www.crowdcube.com/auddy/

Cineworld’s results reflect a tough period of closures in both the US and UK

Liam Roche
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0
Cineworld’s results reflect a tough period of closures in both the US and UK

Cineworld looking ahead to strong recovery in Q4

Cineworld has announced its H1 results, confirming the impact of lockdown restrictions on the company’s balance sheet.

During the first half of 2021, Cineworld’s revenue fell by 59% to $292.8m, down from $712.4m the year before.

The company confirmed an adjusted EBITDA loss of $21.1m too, compared to a profit of $53m last year, a fall of 140%.

Lockdown restrictions resulted in closures across the cinema chain’s locations for a large part of the first half of the year.

The number of people admitted to Cineworld cinemas came to 14.1m, a fall of over 70% compared to the year before.

Cineworld has taken out further loans to support itself and its debt burden will be an additional challenge through the recovery period.

However, the majority of Cineworld’s locations are open again and the company is expecting a strong trading performance during the last months of the year.

Harry Barnick, Senior Analyst at Third Bridge, detailed a number of obstacles that stand in the way of Cineworld making a full recovery.

“With cinemas now open, limited capacity constraints and a strong content pipeline, Cineworld is hoping for a strong recovery in Q4.”

“However, some estimates suggest that box office revenues will be 10% lower post-covid permanently as customers have grown accustomed to watching films at home, studios have shortened the theatrical window and exhibitors have permanently closed the curtains on unprofitable cinemas.”

“You may have 20-30% of cinemas making 80% of the EBITDA, so Cineworld can afford to close underperforming cinemas depending on the rental contract. In total, Cineworld may end up closing up to 5% of its estate.”

The Cineworld share price is up by 7.22% during the morning session on Thursday.

Yourgene Health set to reap benefits of investment

Andrew Hore
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Yourgene Health set to reap benefits of investment

Investments made by Yourgene Health (LON: YGEN) will start to pay off this year, which will include a full 12-month contribution from the US business acquired last year.
The first quarter of the current financial year has started strongly, and Yourgene Health is on course to move into profit this year.
Yourgene Health is an international molecular diagnostics business offering genomics technology and services. The acquisition of Coastal Genomics Inc provides a strong base in the US which is yet to be fully exploited.
Non-invasive parental tests (NIPT) for Down’s Syndrome and other potential ai...

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