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(Alliance News) - BP's quarterly profit soared on improved oil prices as it said Monday it plans a fresh USD1.25 billion share buyback.
Underlying replacement cost profit for the third quarter of 2021 rose to USD3.32 billion from just USD86 million year-on-year.
"This has been another good quarter for BP - our businesses are generating strong underlying earnings and cash flow while maintaining their focus on safe and reliable operations. Rising commodity prices certainly helped," said Chief Executive Bernard Looney.
However, BP's reported loss for the quarter was USD2.54 billion, widening from USD450 million a year ago. This was due to "significant adverse fair value accounting effects of USD6.1 billion pre-tax, primarily due to the exceptional increase in forward gas prices towards the end of the quarter."
Nonetheless, the oil major plans a further share buyback worth USD1.25 billion. It expects to complete this before announcing its fourth-quarter results, and will outline plans for the final tranche of buybacks for 2021 surplus cash flow when releasing the results.
It said: "On average, based on BP's current forecasts, at around USD60 per barrel Brent and subject to the board's discretion each quarter, bp continues to expect to be able to deliver buybacks of around USD1.0 billion per quarter and have capacity for an annual increase in the dividend per ordinary share of around 4% through 2025."
Brent oil was trading at USD85.10 a barrel on Tuesday, up from USD84.65 late Monday.
BP shares were down 0.5% early Tuesday.
Here is what you need to know at the London market open:
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MARKETS
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FTSE 100: down 0.2% at 7,271.57
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Hang Seng: down 0.3% at 25,076.08
Nikkei 225: closed down 0.4% at 29,520.90
DJIA: closed up 94.28 points, or 0.3%, at 35,913.84
S&P 500: closed up 8.29 points, or 0.2%, at 4,613.67
Nasdaq Composite: closed up 97.53 points, or 0.6%, at 15,595.92
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EUR: up at USD1.1612 (USD1.1589)
GBP: soft at USD1.3661 (USD1.3675)
USD: down at JPY113.65 (JPY114.17)
Gold: up at USD1,794.74 per ounce (USD1,790.75)
Oil (Brent): up at USD85.14 a barrel (USD84.65)
(changes since previous London equities close)
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ECONOMICS AND GENERAL
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Tuesday's Key Economic Events still to come
US Federal Reserve two-day policy meeting begins
0955 CET Germany manufacturing PMI
1000 CET EU eurozone manufacturing PMI
1630 EDT US API weekly statistical bulletin
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A Labour member of Parliament is proposing a new law to ban in the UK all wet wipes that contain plastic. Putney MP Fleur Anderson's Bill to prohibit the manufacture and sale of wet wipes containing plastic will have its first reading on Tuesday. According to Anderson, 90% of the 11 billion wet wipes that are used in the UK every year contain some form of plastic which, when broken down, turn into microplastics which can be ingested by wildlife and enter the food chain and water supply. The MP added wet wipes are the cause of 93% of blockages in UK sewers.
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Members of the Bank of Japan's monetary policy expect the nation's economy to pick up as Covid-19's impact wanes, though the recovery in the services sector could be more protracted, minutes from the central bank's September meeting showed. At the meeting, the Bank of Japan decided by an 8-1 majority vote to keep a negative interest rate of 0.1%. Then at its October meeting, the Bank of Japan again announced it would maintain the negative interest rate. Minutes from the September meeting showed BoJ members were largely bullish about Japan's prospects once the pandemic's effects subside.
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BROKER RATING CHANGES
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BERENBERG RAISES RENTOKIL INITIAL TO 'HOLD' (SELL) - PRICE TARGET 510 (440) PENCE
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MORGAN STANLEY RESUMES ENTAIN WITH 'OVERWEIGHT' - TARGET 2,430 PENCE
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BANK OF AMERICA REINITIATES TUI WITH 'BUY' - PRICE TARGET 300 PENCE
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COMPANIES - FTSE 100
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Lender Standard Chartered reported a jump in third-quarter profit amid "further progress". Operating income rose to USD3.77 billion in the third quarter, up 7% year-on-year. Pretax profit jumped 44% to USD1.08 billion, helped as StanChart's credit impairment charge was reduced to USD107 million from USD353 million. "We delivered a return to top-line growth in the third quarter and achieved further progress against our strategic priorities, with strong performance in our Financial Markets and Trade businesses and ongoing positive momentum in Wealth Management," said Chief Executive Bill Winters. The emerging markets-focused bank said it continues to expect full-year income "similar" to that achieved in 2020 on a constant currency basis. It expects credit impairment to remain at low levels in the fourth quarter. Its CET1 ratio at the full-year is seen around the top of the 13% to 14% range. This compares with 14.6% as at September 30.
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Flutter Entertainment lowered its full-year earnings guidance range after a string of punter-friendly sports results in October. Total revenue for the third quarter of the year was GBP1.44 billion, up 9% on GBP1.33 billion a year ago. Online revenue growth of 13% at constant currency was driven by Australia, up 20%, and the US, up 85%. However, the betting operator noted that it has seen unfavourable sports results in first 24 days of October. This has hit earnings before interest, tax, depreciation and amortisation by around GBP60 million. Combined with an expected GBP10 million hit from a temporary Netherlands exit, it now expects adjusted Ebitda for 2021, for its operations excluding the US, in a range of GBP1.24 billion to GBP1.28 billion, versus prior guidance of GBP1.27 billion to GBP1.37 billion. In the US, net revenue guidance was unchanged but Flutter now expects an adjusted Ebitda loss of between GBP250 million and GBP275 million, versus a prior range of GBP225 million to GBP275 million. This includes a GBP15 million hit from adverse sports results in October.
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COMPANIES - FTSE 250
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IWG said September saw its best monthly performance to date of 2021 as it revealed it is mulling splitting off its digital and technology assets. The office workspace provider reported revenue of GBP550.8 million for the third quarter of 2021, down from GBP571.8 million year-on-year. "The momentum in trading performance has accelerated during the third quarter, with demonstrable progress in all major territories and the outlook for the remainder of the year remains encouraging. The order book for 2022 is building and, if market conditions remain favourable, continued progress is expected," said IWG. The company has undertaken a preliminary review to assess the "strategic and commercial rationale" for separating its digital and technology assets into a separate business. These assets include systems and processes to originate sales demand, manage inventory, and deliver services in an "efficient and cost-effective" manner. It added: "Similarly, the potential to more broadly leverage the intellectual property of the group, together with the ownership structure of the property portfolio, is the subject of further review to fully assess the options available to reorganise the assets of the group."
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COMPANIES - MAIN MARKET AND AIM
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Rothemere Continuation is close to inking a deal with pension trustees of Daily Mail & General Trust, which marks the final obstacle to the company's takeover of the London-based newspaper publisher, Sky News reported late Monday. Sky said the deal between Rothemere Continuation and the pension trustee involves a sum of more than GBP400 million. Negotiations between the company and the trustees are said to have involved several offers, and is the main reason why the bid's deadline has been extended three times, the most recent extension to November 25. In mid-July, Rothermere announced the potential takeover with a view to take the newspaper publisher private. At the time, DMGT said Rothermere was prepared to make a 251p per share cash offer to take the remainder of DMGT private, following two disposals. This would give an enterprise value to the remainder of DMGT of GBP810 million, the company said at the time. Jonathan Harmsworth - who owns Rothemere Continuation - holds a 29% stake in DMGT, according to Morningstar.
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COMPANIES - GLOBAL
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Kao Corp said the coronavirus pandemic continued to hurt its performance in the first nine months of 2021. The Tokyo-based chemical and cosmetics company reported net sales growth in the nine months to September 30 to JPY1.020 trillion, about USD8.98 billion, up 1.6% from JPY1.005 trillion posted a year earlier. On a like-for-like basis, net sales decreased by 0.4%. Pretax income, however, slipped to JPY113.51 billion from JPY119.15 billion, a 4.7% decline year-on-year. Kao said that, during the first nine months of 2021, the household, personal care and cosmetics products market in Japan began to show signs of recovery but still shrank due to repeated resurgences of Covid infections. Looking ahead, Kao said it expects to generate net sales of JPY1.430 trillion for 2021, up 3.5% on the prior year. Pretax income is seen up 1.7% to JPY177.00 billion.
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Tuesday's Shareholder Meetings
JPMorgan Mid Cap Investment Trust PLC - AGM
Murray Income Trust PLC - AGM
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By Tom Waite; thomaslwaite@alliancenews.com
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