(Alliance News) - Royal Dutch Shell on Thursday guided for USD400 million in financial damage from Hurricane Ida, which tore through the US Gulf coast at the end of August.
The oil major said the storm hit its operations in the US Gulf of Mexico and is expected to dent earnings in the third quarter.
The Upstream segment is expected to take the biggest hit, with adjusted earnings knocked by around USD200 million to USD300 million, while Oil Products will take a hit of around USD50 million to USD100 million and Chemicals a USD100 million hit.
For its Integrated Gas unit, Shell added: "[Cash flow from operations] excluding working capital is expected to be significantly impacted by large variation margin inflows on the back of the prevailing gas and electricity price environment; these inflows are expected to be higher than the second quarter 2021."
For its Upstream arm, however, Shell said adjusted earnings are "not expected to be significantly impacted by the prevailing strong gas price environment".
Third-quarter production in Integrated Gas is expected to be between 890,000 and 950,000 barrels of oil equivalent per day, while in Upstream, it is seen at 2.025 million to 2.100 million boed, including a 90,000 boed hit from Hurricane Ida.
Shell shares A and B shares were up 0.5% early Thursday.
Here is what you need to know at the London market open:
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MARKETS
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FTSE 100: up 1.0% at 7,065.53
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Hang Seng: up 3.0% at 24,672.69
Nikkei 225: closed up 0.5% at 27,678.21
DJIA: closed up 102.32 points, or 0.3%, at 34,416.99
S&P 500: closed up 17.83 points, or 0.4%, at 4,363.55
Nasdaq Composite: closed up 68.08 points, or 0.5%, at 14,501.91
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EUR: up at USD1.1567 (USD1.1538)
GBP: up at USD1.3594 (USD1.3570)
USD: firm at JPY111.38 (JPY111.34)
Gold: up at USD1,763.05 per ounce (USD1,760.00)
Oil (Brent): down at USD81.03 a barrel (USD81.12)
(changes since previous London equities close)
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ECONOMICS AND GENERAL
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Thursday's Key Economic Events still to come
China Golden Week continues. Financial markets closed in Shanghai; open in Hong Kong.
1330 CEST EU ECB monetary policy meeting accounts
1100 BST Ireland industrial production & turnover
0830 EDT US jobless claims
1500 EDT US consumer credit
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US senators neared agreement in the small hours of Thursday to stave off a catastrophic credit default after Democrats said they were close to accepting an offer from the Republicans to raise the debt limit for two months. Mitch McConnell, who leads the Republican opposition in the upper chamber of Congress, floated the truce as his party was set to vote against Democratic plans to hike the nation's borrowing cap until December 2022 – prompting hours of negotiations late into Wednesday night. "We're making good progress. We're not there yet, but [we] hope we can come to agreement tomorrow morning," Schumer said after around 10 hours of talks. Republicans have pledged not to block the revised, short-term fix, allowing Democrats to "use normal procedures to pass an emergency debt limit extension at a fixed dollar amount to cover current spending levels to December," according to McConnell's offer.
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UK house prices shot up by more than anticipated in September, getting a final boost as the government's stamp duty support drew to a close, figures from Halifax showed. Month-on-month growth of 1.7% outstripped forecasts, according to FXStreet, for growth to be in line with the 0.8% registered in August. This latest reading was the strongest rate of monthly growth since February 2007, Halifax said. A 7.4% annual surge marked a re-acceleration from August's 7.2% rise. In March, UK Chancellor of the Exchequer Rishi Sunak extended the stamp duty holiday from the end of that month until the end of June at GBP500,000, and then tapered to a GBP250,000 threshold until the end of September. The average house price in the UK now stands at GBP267,587. In June 2020, the month before the stamp duty holiday began, the typical standardised price for a property was GBP239,317.
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German industrial production fell short of expectations in August. Output was down 4.0% month-on-month. Analysts had expected a much more modest 0.4% decline, according to FXStreet, after a 1.3% rise in July. The manufacture of motor vehicles, trailers and semi-trailers dropped by 18% month-on-month - amid well-reported semiconductor shortages denting the automotive industry - while the manufacture of machinery and equipment was down 6.3%. Thursday's data followed similarly disappointing factory orders figures on Wednesday. Month-on-month, German industrial orders fell 7.7% in August, reversing a gain of 4.9% notched in July.
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BROKER RATING CHANGES
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DEUTSCHE BANK INITIATES MARSHALLS WITH 'BUY' - TARGET 885 PENCE
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BERENBERG RAISES HOCHSCHILD MINING TO 'BUY' ('HOLD') - TARGET 200 PENCE
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BERENBERG RAISES GEM DIAMONDS TO 'BUY' ('HOLD') - TARGET 80 (70) PENCE
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COMPANIES - FTSE 100
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The UK Competition & Markets Authority said it has closed an investigation into refunds from British Airways and Ryanair due to a "lack of clarity" in the law. A probe was launched in June over concerns the airlines may have broken the law by failing to offer refunds for flights customers could not legally take during lockdown. Instead, International Consolidated Airlines Group's BA offered customers vouchers or rebooking, and Ryanair provided the option to rebook. "After a thorough examination of relevant law, and the evidence it had gathered during its investigation, the CMA has concluded that the law does not provide passengers with a sufficiently clear right to a refund in these unusual circumstances to justify continuing with the case," the CMA said. The case is different in the package holiday sector, the UK regulator explained, where customers are protected by a separate set of laws which give them refund rights.
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Packaging firm Mondi reported quarterly earnings growth despite higher costs, which it expects to persist. Underlying earnings before interest, tax, depreciation and amortisation for the third quarter of 2021 was EUR388 million, up 27% year-on-year and 9% higher on the prior quarter. This was despite higher input costs, with prices rising for energy, resins, transport and chemicals. It noted a sharp rise in energy costs in Europe at the end of the quarter. "Demand remains strong, and we are implementing price increases across the business that will support the recovery of ongoing inflationary pressures. While in the short term the fourth quarter will be impacted by recent input cost increases alongside planned maintenance and project-related shuts, the group remains well-placed to deliver sustainably into the future," said Mondi.
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COMPANIES - FTSE 250
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CMC Markets backed guidance after improved client trading volumes at the end of its first half. The online contracts-for-difference trading platform expects net operating income for the six months that ended September 30 to be around GBP126 million - which would be nearly half the GBP230.9 million achieved a year ago. Active clients were moderately lower in the period year-on-year, but increased market activity exiting September led to improved client trading volumes. CMC expects full-year net operating income in a range between GBP250 million and GBP280 million. Again, this would be down from the year before, when it achieved net operating income of GBP409.8 million.
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COMPANIES - MAIN MARKET AND AIM
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Pendragon upgraded full-year guidance as car supply issues has helped to bolster margins. It now expects underlying pretax profit for 2021 to be around GBP70.0 million, up from a prior guidance range of GBP55.0 million to GBP60.0 million previously. While supply issues has resulted in a reduction in the number of new vehicle deliveries achieved, margins have remained strong and helped to mitigate the volume shortfall. It also noted "unprecedented tailwinds" in used car margins. "Whilst we also continue to expect a realignment of used vehicle margins over time, we expect these to remain strong for the remainder of this financial year, providing us with some mitigation to lower new vehicle volumes in particular," said Pendragon. Rivals Lookers and Marshall Motor had lifted their outlooks on Wednesday amid strong car margins.
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Thursday's Shareholder Meetings
Anemoi International Ltd - AGM
Norish PLC - AGM
Tavistock Investments PLC - AGM
Thalassa Holdings Ltd - AGM
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By Tom Waite; thomaslwaite@alliancenews.com
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