(Alliance News) - Oil major BP said Tuesday its third-quarter performance showed signs of improvement despite a difficult environment brought about by the coronavirus pandemic.
For the third quarter ended September 30, BP posted a loss of USD45 million, narrowed from USD749 million last year; however its replacement cost loss widened to USD644 million from USD351 million.
Underlying replacement cost profit, the company's preferred measure, was USD100 million, compared with a loss of USD6.7 billion in the second quarter, and USD2.3 billion profit for the third quarter of 2019.
BP said that compared to the second quarter, the results benefited from the absence of significant exploration write-offs and recovering oil and gas prices and demand. This was partly offset by significantly lower oil trading result.
BP declared a third-quarter dividend of 5.25 US cents, halved from 10.25 cents in the third quarter last year.
Looking ahead, BP said the ongoing effects of the Covid-19 pandemic continue to create a volatile and challenging trading environment. There have been some early signs of global economic recovery as countries move to more regional or localised restrictions on movement and governments continue to offer monetary and fiscal policy stimulus. However, the shape and pace of the recovery is uncertain, as it depends on the further spread of the pandemic.
Chief Executive Officer Bernard Looney, in post since February, commented: "Having set out our new strategy in detail, our priority is execution and, despite a challenging environment, we are doing just that - performing while transforming. Major projects are coming online, our consumer-facing businesses are really delivering and we remain firmly focused on cost and capital discipline. Importantly, net debt continues to fall. We are firmly committed to our updated financial frame, including the dividend - the first call on our funds."
BP shares were up 1.6% early Tuesday. Peer Royal Dutch Shell reports on Thursday. Its A shares were up 0.2%.
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 5,781.65
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Hang Seng: down 0.5% at 24,783.28
Nikkei 225: closed marginally lower at 23,485.80
DJIA: closed down 650.19 points, 2.3%, at 27,685.38
S&P 500: closed down 1.9% at 3,400.97
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GBP: flat at USD1.3015 (USD1.3017)
EUR: flat at USD1.1821 (USD1.1818)
Gold: up at USD1,906.15 per ounce (USD1,903.80)
Oil (Brent): up at USD40.72 a barrel (USD40.38)
(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
1000 CET EU monetary developments in euro area (M3)
0830 EDT US advance report on durable goods
0855 EDT US Johnson Redbook retail sales index
0900 EDT US monthly house price index
1630 EDT US API weekly statistical bulletin
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UK Prime Minister Boris Johnson is under pressure from scores of Conservative MPs to detail a "road-map out of lockdown" as more people in England come under the toughest coronavirus restrictions, PA reports. Johnson has been warned by a group of 50 Tory backbenchers representing northern constituencies that the pandemic is threatening his election pledge to "level-up" the country. More than eight million people in England – predominantly in the North – will be under the most stringent Covid-19 restrictions by the end of the week, with Warrington the latest area to be placed in Tier 3. The measures – which came into force in the early hours of Tuesday – mean pubs and bars in the Cheshire town must close unless they serve substantial meals. Households are also banned from mixing indoors or in private gardens and beer gardens, while betting shops, adult gaming centres, casinos and soft play centres have been shut. Nottingham and the boroughs of Broxtowe, Gedling and Rushcliffe will move into Tier 3 on Thursday, with details expected to be set out later on Tuesday. The two areas will join the Liverpool City Region, Greater Manchester, Lancashire and South Yorkshire in Tier 3, placing 8.2 million people in England under the toughest restrictions.
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US President Donald Trump's struggling re-election campaign received a boost Monday with the confirmation of his latest Supreme Court nominee, tilting the top body to the right and clinching his judicial legacy in a landmark victory for American conservatives. The Republican-controlled Senate elevated Amy Coney Barrett to the lifelong position in a 52-48 vote, capping a rapid and deeply contentious process that makes her the sixth conservative, and third Trump appointee, on the nine-member court. Barrett, 48, assures a strong conservative judicial legacy for Trump, who has also been able to appoint dozens of young, right-wing judges to federal courts in his four years in office. Democrats have fumed over the process that confirmed a justice so close to a presidential election, and warn that Barrett might vote to overturn the landmark 1973 decision that protects abortion rights, or to gut health care provision for millions of Americans.
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BROKER RATING CHANGES
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LIBERUM CUTS ANTOFAGASTA TO 'HOLD' ('BUY') - TARGET 870 PENCE
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LIBERUM CUTS KAZ MINERALS TO 'HOLD' ('BUY') - TARGET 470 PENCE
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BARCLAYS INITIATES THG HOLDING WITH 'OVERWEIGHT' - TARGET 825 PENCE
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COMPANIES - FTSE 100
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HSBC Holdings reported a sharp drop in third-quarter profit, but was "pleased" with significantly reducing its credit losses and is considering a "conservative" shareholder payout for 2020. HSBC is London's fourth-biggest company by market capitalisation. In the three months to September 30, the Asia-focused lender's pretax profit dropped 37% year on year to USD3.07 billion from USD4.84 billion. However, the figure beat the company-supplied consensus estimate of USD2.07 billion. Revenue fell 11% to USD11.93 billion from USD13.36 billion. This was partly offset by cutting operating expenses to USD8.04 billion from USD8.15 billion and a reduction in expected credit losses to USD785 million from USD883 million the year before. HSBC also noted its third-quarter expected credit losses are sharply below the previous quarter's USD3.83 billion hit.
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St James's Place said its funds under management came in at a record high in the third quarter. For the quarter ended September 30, St James's Place reported gross inflows of GBP3.05 billion, down from GBP3.74 billion in the same period last year and net inflows were GBP1.44 billion, down from GBP2.11 billion. Closing funds under management were GBP118.7 billion, up from GBP112.82 billion last year. "Funds under management closed the period at a record GBP118.7 billion, up 1.5% year to-date. This performance highlights the strength and resilience of our business in these more difficult times," said CEO Andrew Croft. "Looking ahead, the increased uncertainty linked to COVID-19 will inevitably influence client investment confidence and consequent decision-making. However, drawing on the experience of the last six months, I am confident that the Partnership will continue to adapt to whatever circumstances they face in order to establish long-term relationships with new clients through the provision of high-quality advice, and retain clients through maintaining outstanding service," Croft added.
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Whitbread said its half-year performance was in-line with expectations and reflected the closure of the vast majority of its businesses during the lockdown period in the UK from the end of March. For the six months to August 27, Whitbread swung to a pretax loss of GBP724.7 million from a profit of GBP219.9 million a year before, while revenue fell 77% to GBP250.8 million from GBP1.08 billion. Whitbread declared no interim dividend, having paid out 32.7 pence last year. The hospitality firm said it has rapidly reopened its estate, with 97% of UK hotels reopened by the end of July, and has subsequently grown its market share. Since reopening, UK accommodation sales performance has been ahead of the market, benefiting from the fast reopening and the strength of the Premier Inn brand, it asserted. Whitbread said UK occupancy levels have steadily improved on a weekly basis, averaging 51% in August, while UK restaurant performance was boosted by the positive impact of the Eat Out to Help Out scheme. August UK total sales improved to 39%. Occupancy improved again in September, rising to 58%.
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COMPANIES - FTSE 250
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Betting platform Plus500 said revenue almost doubled in the third quarter to USD216.4 million form USD110.6 million a year before, lifting earnings before interest, tax, depreciation and amortisation by 91% to USD134.2 million from USD70.1 million. However, Plus500 said customer income was down in the third quarter from a record second quarter and the decline has continued into the fourth quarter. However, it said it expects annual revenue and Ebitda to be in line with current market forecasts.
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COMPANIES - MAIN MARKET AND AIM
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Roadside rescue firm AA agreed to extend the deadline for private equity bidders TowerBrook Capital Partners and Warburg Pincus to make a firm takeover offer, saying discussion continue and due diligence is progressing. The old deadline was Tuesday and the new one is November 24.
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COMPANIES - GLOBAL
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Novartis said income slipped in the third quarter of 2020 despite moderate revenue growth. The Basel, Switzerland-based pharmaceutical company reported net sales growth of 1% in the third quarter of 2020 to USD12.26 billion. On a constant currency basis, Novartis said sales were in line with the prior year, noting that Covid-19 hurt demand, particularly in dermatology, ophthalmology and Sandoz retail. Net income came in 5% lower year-on-year at USD1.93 billion, mainly due to legal provisions, the company noted. Core net income, meanwhile, grew by 8% to USD3.47 billion from USD3.21 billion in the third quarter of 2019, due to lower spending and improved gross margin. "Novartis continues to deliver solid performance with double digit increases in core operating income and expanding margins, despite the impact of Covid-19 on healthcare systems. Our key growth drivers and launches are performing well," said Chief Executive Vas Narasimhan.
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Banco Santander reported a sharp drop in profit in the third quarter but said it is recovering "well" from the second quarter, and has proposed paying a dividend. In the three months to September 30, the Spanish lender's underlying pretax profit slipped 17% to EUR3.18 billion from EUR3.84 billion a year before. Total income dropped 11% annually in the third quarter to EUR11.09 billion from EUR12.47 billion, with net interest income down to EUR7.77 billion from EUR8.81 billion. Chief Executive Ana Botin said: "The recovery of our business is progressing well, and the third quarter was significantly stronger than the second. Revenues increased 18% in constant euros as activity returned close to pre-pandemic levels, loan loss provisions fell 14% and we continued to reduce costs ahead of plan."
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Tuesday's Shareholder Meetings
City of London Investment Trust PLC - AGM
Filtronic PLC - AGM
Tlou Energy Ltd - AGM
Accrol Group Holdings PLC - AGM
Brooks Macdonald Group PLC - AGM
Rolls-Royce Holdings PLC - GM re rights issue
MyCelx Technologies Corp - AGM
Oriole Resources PLC - GM - re fund raise
Dechra Pharmaceuticals - AGM
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By Tom Waite; thomaslwaite@alliancenews.com
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