(Alliance News) - Stock prices in London are seen opening higher on Thursday, with the FTSE 100 set to benefit from a weaker pound, as investors await a Bank of England interest rate decision at midday.
In early company news, oil major Royal Dutch Shell slashed its dividend as annual earnings were hit hard by a collapse in oil prices. Consumer goods firm Unilever said it delivered a resilient performance in light of the Covid-19 pandemic and raised its fourth-quarter dividend.
IG futures indicate the internationally exposed FTSE 100 index is to open 10.78 points higher at 6,518.60. The blue-chip index closed down 8.83 points, or 0.1%, at 6,507.82 Wednesday.
Much like global peers, Shell swung to an annual loss in a year when the Covid-19 pandemic hit energy consumption.
Brent oil was quoted at USD58.90 a barrel Thursday morning, up from USD58.64 at the London equities close Wednesday. The North Sea benchmark was trading around USD68 a barrel at the start of 2020, but collapsed to a low of USD15.97 in April due to the global economic impact of the virus and a Russia-Saudi Arabia output war later resolved.
For 2020, Shell swung to a loss attributable to shareholders of USD21.68 billion from a profit of USD15.84 billion in 2019. Adjusted earnings were USD4.84 billion, down 71% from USD16.46 billion - missing consensus forecasts for USD5.05 billion.
For the fourth quarter alone, Shell swung to a loss attributable to shareholders of USD4.01 billion from a USD965 million profit in 2019.
Free cash flow for 2020 was USD17.63 billion, down 12% from USD20.1 billion in 2019. Net debt increased by USD1.9 billion to USD75.4 billion in the fourth quarter, hurt by lower free cash flow, including a small working capital outflow.
Shell slashed its fourth quarter payout 65% to USD0.1665 from USD0.4700. Its annual dividend was down 65% to USD0.6530. Shell expects its first quarter 2021 dividend to be USD0.1735.
Looking ahead to the first quarter, Shell said production was expected in a range between 900,000 to 950,000 barrels of oil per day.
"2020 was an extraordinary year. We have taken tough but decisive actions and demonstrated highly resilient operational delivery while caring for our people, customers and communities. We are coming out of 2020 with a stronger balance sheet, ready to accelerate our strategy and make the future of energy. We are committed to our progressive dividend policy and expect to grow our US dollar dividend per share by around 4% as of the first quarter 2021," said Chief Executive Officer Ben van Beurden.
Meanwhile, Unilever said it delivered a strong set of annual results under the most difficult of circumstances brought about by the coronavirus pandemic.
For 2020, Unilever posted revenue of EUR50.72 billion, down 2.4% from USD51.98 billion in 2019, just missing forecasts of EUR50.81 billion.
Underlying operating profit was EUR9.34 billion in 2020, down from EUR9.94 billion in 2019. The Anglo-Dutch company posted underlying sales growth of 1.9%.
Unilever declared a quarterly dividend of EUR0.4268, which it noted was up 4%. It also was better than the EUR0.4014 payout expected by analysts.
Looking ahead, Unilever said it would aim for underlying sales growth ahead of its markets, delivering growth in the range of 3% to 5%, as well as profit growth ahead of sales growth.
CEO Alan Jope said: "We progressed our strategic agenda, building on our existing sustainability commitments with ambitious new targets and actions, most recently with our plans to help build a more equitable and inclusive society. We completed the unification of our legal structure under a single parent company and we continue to work on separating out the tea business as we evolve our portfolio.
"Today we are setting out our plans to drive long-term growth through the strategic choices we are making and outlining our multi-year financial framework. While volatility and unpredictability will continue throughout 2021, we begin the year in good shape and are confident in our ability to adapt to a rapidly changing environment."
The pound was quoted at USD1.3600 early Thursday, down from USD1.3651 at the London equities close Wednesday.
The BoE's latest monetary policy decision is at noon in London on Thursday, alongside the release of the Monetary Policy Committee meeting minutes and the quarterly Monetary Policy Report. A press conference will follow at 1300 GMT.
Analysts largely expect the central bank to stand pat on policy this week despite the surge in coronavirus cases since its December meeting and resulting third national lockdown in England. Focus will be on any discussion about the potential for negative interest rates.
The Bank Rate, the UK's key interest rate, currently lies at a record low 0.10%, cut to that level back in March last year as the pandemic first hit.
"The US futures fell and activity in European indices hint at a lacklustre open, but the FTSE could benefit from strong oil prices and a slightly cheaper British pound before the Bank of England decision," said Swiss Quote analyst Ipek Ozkardeskaya.
Gold was quoted at USD1,820.55 an ounce, lower against USD1,835.90.
The euro stood at USD1.2012, down from USD1.2022. Against the yen, the dollar was trading at JPY105.17, higher from JPY105.05.
The Japanese Nikkei 225 index ended 1.0% lower on Thursday. In China, the Shanghai Composite closed down 0.4%, while the Hang Seng index in Hong Kong is down 0.8%. The S&P/ASX 200 in Sydney closed down 0.9%.
In the US on Wednesday, Wall Street ended slightly higher, with the Dow Jones Industrial Average and S&P 500 up 0.1%, while the Nasdaq Composite closed flat.
US President Joe Biden on Wednesday said he expects "some" Republican support for his huge new Covid-19 economic relief package but signalled that Democrats should stay united and push ahead regardless. "I think we'll get some Republicans," he said in an Oval Office meeting with Democratic senators.
The package being pitched by Democrats is worth USD1.9 trillion and includes USD1,400 stimulus checks to Americans hit by the drawn-out pandemic's drag on the economy. A Republican counter-offer would total only USD600 billion.
Biden, who came into office calling for unity in heavily divided Washington, said he was not open to reducing the cash payments, although he said that distribution of the checks could be "better" targeted.
In the economic calendar on Thursday there is a UK Markit construction PMI reading at 0930 GMT, followed by eurozone retail sales at 1000 GMT and US initial jobless claims at 1330 GMT.
By Arvind Bhunjun; arvindbhunjun@alliancenews.com
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