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(Alliance News) - Royal Dutch Shell on Friday said it will continue its share buyback scheme "at pace", as the oil major provided a fourth-quarter update, though it also warned on cash outflows from operations.
Shell said it will continue to distribute the remaining USD5.5 billion proceeds from its Permian assets divestment through share buybacks.
"The Permian related distributions are in addition to the distributions of 20% to 30% of cash flow from operations as per our existing capital allocation framework. Further details of the amount and pace of total shareholder distributions will be disclosed at the fourth quarter results announcement," Shell added.
It will release full quarterly results on February 3.
Elsewhere in the fourth quarter note, Shell warned on "significant outflows" of cash from operations in its Integrated Gas arm.
"[Cash flow from operations] excluding working capital is expected to have significant outflows from variation margin impacts on the back of the prevailing gas and electricity price environment, including the unprecedented gas price volatility at the end of the fourth quarter," the company said.
However, trading results from the unit are tipped to be "significantly higher" quarter-on-quarter. This is despite "ongoing supply issues".
On its oil products arm, Shell added: "Marketing results are expected to be in line with the fourth quarter 2020 but lower compared with the third quarter 2021 due to seasonal trends, the demand impact due to the Omicron virus and foreign exchange impacts in Turkey."
Cash flow from operations at the unit will be hit by USD1 billion worth of outflows, however. This is down to the timing of payments related to emission schemes on product sales in both Europe and North America.
Shell A and B shares were down 0.3% early Friday
Here is what you need to know at the London market open:
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MARKETS
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FTSE 100: up 0.1% at 7,454.21
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Hang Seng: up 1.8% at 28,493.38
Nikkei 225: closed marginally lower, down 9.31 points at 28,478.56
S&P/ASX 200: closed up 1.3% at 7,453.30
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DJIA: closed down 170.64 points, or 0.5%, at 36,236.47
S&P 500: closed down 0.1% at 4,696.05
Nasdaq Composite: closed down 0.1% at 15,080.87
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EUR: flat at USD1.1301 (USD1.1304)
GBP: flat at USD1.3538 (USD1.3534)
USD: up at JPY115.88 (JPY115.76)
Gold: down at USD1,788.82 per ounce (USD1,791.00)
Oil (Brent): unchanged at USD82.42 a barrel
(changes since previous London equities close)
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ECONOMICS AND GENERAL
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Friday's key economic events still to come
1100 CET EU flash estimate euro area inflation
1100 CET EU retail trade
1100 CET EU business & consumer surveys
0930 GMT UK construction purchasing managers' index
1100 GMT Ireland retail sales
0830 EST US monthly jobs report
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The UK housing market rounded off a bumper year of price growth with another record high in December, figures from Halifax showed, though tough economic conditions mean 2022 could be a more muted year for house prices inflation. The average UK house price rose 1.1% monthly to another record high of GBP276,091 in December. Growth topped market expectations of a 0.7% climb, according to FXStreet. Prices also had risen 1.1% monthly on November. The only month of the 2021 to not register monthly growth was June, when prices declined by 0.6%. Annually, house prices jumped 9.8% in December, accelerating from November's 8.2% rise. December's yearly hike was the chunkiest of 2021, topping May's 9.6% rise.
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A surge in coronavirus cases in the run-up to Christmas due to the Omicron variant knocked footfall in the UK, the latest British Retail Consortium-Sensormatic IQ monitor showed. Total footfall in the four weeks to January 1 was down 19% on pre-virus levels, with a 2.9 percentage point decrease from October. Nonetheless, this was better than France, which saw a 24% drop in December, and Germany saw footfall crash 52%. On UK High Streets, footfall declined 23% in December on two years ago, below the three-month average of a 21% fall. Retail parks and shopping centres also saw footfall decline to a greater extent than the three-month average. For 2021 as a whole, UK foot traffic was 33% below 2019 - but, encouragingly, up 19% on 2020.
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The US Supreme Court is to hear challenges on Friday to President Joe Biden's bid to impose Covid vaccination mandates on millions of American workers. After months of public appeals to hesitant or reluctant Americans to get their shots, Biden turned up the pressure in September. "We've been patient, but our patience is wearing thin," he said. The Democratic president made Covid vaccinations compulsory at businesses that employ 100 workers or more, as well as for health care workers at facilities receiving federal funding. Unvaccinated employees would have to present weekly negative tests and wear face masks at work. The Occupational Safety & Health Administration has given businesses until February 9 to be in compliance with the rules or face the possibility of fines.
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BROKER RATING CHANGES
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BERENBERG RAISES RIO TINTO TO 'BUY' (HOLD) - PRICE TARGET 5,500 (5,000) PENCE
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BERENBERG RAISES CENTAMIN TO 'BUY' ('HOLD') - TARGET 112 (104) PENCE
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JEFFERIES CUTS STHREE TO 'HOLD' (BUY) - PRICE TARGET 500 (650) PENCE
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COMPANIES - FTSE 100
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Smiths Group said it has completed the sale of Smiths Medical to ICU Medical. The deal, which assigned an enterprise value of USD2.7 billion to Smiths Medical, was first announced in September and approved by shareholders in November. Smiths Group will receive USD1.85 billion in cash immediately, plus USD600 million in ICU shares, which are Nasdaq-listed. Smiths noted the enterprise value of Smith Medical could rise to over USD3.0 billion depending on ICU's share price over the next three years. Smiths is returning 55% of the initial cash from the deal, or GBP742 million, in the form of a share buyback programme, with GBP64.3 million of this completed to date.
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COMPANIES - FTSE 250
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Carmaker Aston Martin said its adjusted earnings before interest, tax, depreciation and amortisation for 2021 will be GBP15 million lower than anticipated. The luxury automaker said 10 of its Aston Martin Valkyrie and Valkyrie AMR Pro vehicles were shipped in the fourth quarter, fewer than planned. "The impact is timing only, all Aston Martin Valkyrie coupes are sold and remain allocated to customers with significant deposits. An associated reduction in 2021 depreciation and amortisation is expected to result in a broadly net neutral impact on adjusted operating profit. This timing change will see deliveries and the associated Ebitda continue through 2022 as planned and now through 2023," Aston Martin added. Beyond hypercars, Executive Chair Lawrence Stroll said he was "extremely pleased" by Aston Martin's core business. Wholesales - meaning deliveries to dealers - grew 82% to 6,182 in 2021, in line with plans. Meanwhile, retails - dealer sales to customers - outpaced wholesales.
"With a full year of DBX deliveries completed and our compelling product pipeline, including a new generation of front-engine sports cars in 2023, I am more assured than ever of achieving our medium-term objectives of revenues of GBP2 billion and adjusted Ebitda of GBP500 million by 2024-25," Stroll said.
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COMPANIES - MAIN MARKET AND AIM
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Car dealer Lookers said it expects "record" underlying pretax profit in 2021, ahead of company compiled market consensus of GBP82 million. It plans to restore its dividend alongside its 2021 results, which will be published on April 13. The results will include a strategy update. Lookers began a strategic review back in October. In the fourth quarter of 2021, aftersales revenue rose 7.1% annually on like-for-like basis. Like-for-like new retail unit sales increased by about 2.0%, though used unit sales were down roughly 14%. "The group has had an exceptional year in 2021 and is starting 2022 with an excellent new car order bank. However, given ongoing global supply chain disruptions, uncertainty as to the availability of new vehicles and the sustainability of used car margins at current levels, the board believes it is right to remain cautious," Lookers added.
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Shares in AdvancedAdvt will be suspended from trading in London from Friday, as the investor confirmed it is pursuing an share-exchange merger with M&C Saatchi. This would constitute a reverse takeover of M&C Saatchi by AdvancedAdvt, which this week bought a 9.8% stake in the ad agency. Saatchi shares were down 8.1% early Friday.
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Friday's shareholder meetings
Cellular Goods PLC - AGM
Global Resources Investment Trust PLC - GM
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By Tom Waite; thomaslwaite@alliancenews.com
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