RPS.L Share News (RPS)

LONDON (Alliance News) - Royal Dutch Shell Thursday confirmed that its pretax profit fell sharply in the first quarter of 2015 after its exploration and production division was hit hard by the drop in oil prices and this was only partially offset by an improved performance from the division that sells fuels and lubricants.

The oil major, which is in the process of acquiring BG Group, also said it has further cut its capital investment budget and reduced costs as part of its ongoing cost control programme.

Still, the company's results beat analysts' expectations. Shell's closely-watched current cost of supply earnings excluding divestment gains, tax credits and other items more than halved to USD3.2 billion from USD7.3 billion, but was still above consensus expectations of USD2.4 billion, according to Liberum.

"Our results reflect the strength of our integrated business activities, against a backdrop of lower oil prices. Meanwhile, in what is clearly a difficult industry environment, we continue to take steps to further improve competitive performance by redoubling our efforts to drive a sharper focus on the bottom line in Shell," said Chief Executive Ben van Buerden.

"In parallel we continue to reduce our operating costs and capital spending; and by deferring and reshaping new projects, we can achieve further efficiencies and savings in the global supply chain," he added.

Royal Bank of Scotland Group said it swung to a first-quarter net loss, as revenue fell and operating expenses rose due to GBP856 million in litigation and conduct costs and GBP453 million in restructuring costs.

RBS said it made a GBP446 million net loss in the three months ended March 31, compared with a net profit of GBP1.20 billion in the corresponding quarter of the prior year.

"It will be a tough year," Chief Executive Ross McEwan told reporters.

"The key problem remains that income is falling faster than costs," Investec banking analyst Ian Gordon said in a note to clients.

Its litigation and conduct costs included GBP334 million in connection with foreign exchange investigation and litigation, adding to the GBP320 million provision already in place at the beginning of 2015, GBP257 million for customer redress relating to investment advice and packaged accounts, and GBP100 million for compensating customers who were mis-sold insurance. In addition, a provision for litigation related to the issuance of mortgage-backed securities in the US before the financial crisis increased by GBP176 million to GBP2.05 billion.

RBS said it is in talks with authorities over failings in its foreign exchange businesses within its corporate and institutional bank, including "advanced settlement discussions" over the criminal investigation being conducted by the US Department of Justice and with other regulators.

In the FTSE 250, property portal operator Zoopla Property Group, which is facing competition in the UK online property sales market from a new competitor, diversified into the online price comparison market, saying it will buy Ulysses Enterprises, the operator of the uSwitch energy, telecoms and financial products comparison site for up to GBP190 million.

Zoopla said it will pay GBP160 million initially on a cash-free, debt free basis, and the a performance-based earn-out of up to GBP30 million.

The continued attraction of the price comparison market was highlighted by Moneysupermarket.com Group, which reported a 25% rise in revenue in the first quarter, with improvements across its price comparison lines and good trading in its MoneySavingExpert.com and TravelSupermarket.com divisions.

----------
Markets: London's stock indices are mixed, with the focus again on a heavy flow of corporate disclosure.

US stock futures point to a lower open on Wall Street. The DJIA and S&P are currently set to open down 0.3% and the Nasdaq 100 down 0.5%.

FTSE 100: flat at 6,948.77
FTSE 250: down 0.1% at 17,460.25
AIM ALL-SHARE: up 0.3% at 754.52
GBP: down at USD1.5415
EUR: up at USD1.1184
GOLD: down at USD1,203.27 an ounce
OIL (Brent): up at USD66.07 a barrel
----------
Other Top Corporate News
----------
International Consolidated Airlines Group reported its first ever first-quarter operating profit, as all three of its airlines reported an improved performance and it was buoyed by the earlier timing of Easter and lower fuel prices, and it kept its guidance for the year as a whole. The owner of British Airways and Spanish airlines Iberia and Vueling reported an operating profit of EUR25 million for the three months to end-March, compared with a loss of EUR150 million a year earlier, as revenue rose 12.0% to EUR4.71 billion. Airlines typically make little or no profit during the slower winter months, booking most of their profit in the summer months when travel demand hits a peak.
----------
Schroders said its assets under management increased by GBP19.5 billion in the first quarter of the year, driven by strong net inflows and investment returns. In a statement, the asset manager and FTSE 100 constituent said assets under management amounted to GBP319.5 billion at the end of March, an increase from the GBP300 billion recorded at the end of 2014.
----------
Smith & Nephew reiterated its expectations for 2015 as it saw revenue rise 3% in its first quarter, although the strong dollar held back its performance, and it cautioned that it expects a "significant currency headwind" in 2015. The medical devices company estimated a hit of around 8% from the stronger dollar in the first quarter, which offset 8% growth contributed by acquisitions. For the quarter to March 28 the company posted revenue of USD1.10 billion, up from USD1.07 billion a year before. This was boosted by strong revenue growth in Emerging markets, which offset modest revenue growth in the US and challenging markets in Europe, it said.
----------
Shire has reiterated its guidance for 2015 as it posted higher earnings and an 11% rise in revenue for its first quarter to end-March, and announced the promotion of Interim Chief Financial Officer Jeff Poulton to a permanent position.
----------
Ophir Energy shares are down after Kulczyk Investments SA sold its entire 8% holding in the company at a discount. Kulczyk sold 56.6 million shares in Ophir for 140 pence per share, raising a total of 79.3 million.
----------
RPS Group said it has struck a deal to acquire Norway's Metier Holding AS, but warned its energy business has had a slower-than-expected start to the year as tough conditions in the oil market dragged on its performance. RPS said it will pay NOK267 million, or around USD22.3 million, in cash to acquire Metier, an Oslo-based project management and training services provider. It expects the deal to be earnings accretive in the current year and said the deal will expand its non-oil and gas-focused business further. The company added that the continued volatility in the oil and gas sector has resulted in a slower-than-expected start to the year for its energy consultancy business, with a market stabilisation it had though was developed in February proved to be fragile.
----------
Tullow Oil said revenue, costs and production all remained in line with expectations in the first quarter of 2015 and reiterated its capital expenditure and production guidance for the full year. The FTSE 250 oil and gas company said revenue and cost of sales were on target in the first quarter of 2015, adding that the business is "well funded" with a current net debt of USD3.5 billion and unutilised debt facilities and free cash totalling USD2.3 billion.
----------
Ferrexpo said it has agreed to sell its entire 15.51% stake in Brazilian iron ore company Ferrous Resources for USD41.8 million in cash to IEP Ferrous Brazil. Ferrous Resources has operating assets in the Minas Gerais region of Brazil. In 2014, the company produced 5.6 million tonnes of iron ore. In September, Ferrexpo fully impaired its investment in Ferrous, but Thursday said it expects to reverse the impairment if the deal goes through, meaning the entire cash consideration would be profit.
----------
Saga reported higher like-for-like profit for its last financial year as revenue rose thanks to strong demand for its travel products and margins improved, although it swung to a pretax loss due to losses from an operation it has earmarked for sale. The provider of travel and financial products tailored to the over-50s reported a pretax loss of GBP133.8 million for the 12 months to end-January, compared with a profit of GBP106.6 million a year earlier, as it booked a GBP220.2 million loss from the public parts of Allied Healthcare that it has earmarked for sale. It proposed a maiden final dividend of 4.1 pence a share, at the top end of the range it had set out at its IPO.
----------
Synthomer said trading in the first quarter of 2015 was in line with its expectations, as a continued good performance in Asia offset some weakness in its European business. Volumes in the group's Europe and North America business dropped slightly year-on-year in the quarter, against a tough comparable, but the group said it saw some margin benefits from falling raw material prices and said constant currency operating profit was slightly higher year-on-year, though it fell on a reported basis due to the weaker euro.
----------
James Fisher & Sons said its Marine Support, Specialist Technical and Tankships units have started 2015 in line but its Oil Offshore arm has taken a hit from the weak conditions in the oil and gas market, with the company expecting a weaker first half due to one-off contract wins secured a year earlier. The company said its Marine Support unit has seen a recent improvement in ship-to-ship transfer volumes and expects project revenue to rise, particularly in the second half.
----------
John Menzies shares are up after Swiss investment company and shareholder Lakestreet Capital Partners said it had started talks with the airport services and distribution company's senior management with a view to boosting its flagging revenue and profit margins and potentially breaking up the company.
----------
AIM Movers
----------
Thor Mining shares are up by a fifth after it agreed to buy the 49% stake in the Spring Hill gold project in northern Australia it did not already own for AUD210,000, after the holder of that stake went into liquidation. Alkane Energy is doing well after it said the improved trading conditions seen at the end of 2014 have continued in the early months of the new year, with output in the first quarter up 26% and revenue in its generation business up 43%. Optare shares are down by more than half after it said it will de-list from AIM because it's not getting any benefit from being a listed company. Ubisense Group is down after it said it is talks with its broker Numis Securities over a potential equity fundraising to strengthen its balance sheet, as it may not be able to recover an expected shortfall in revenue caused by contract delays in its second half. JQW is another faller after it confirmed the strong growth in 2014 revenue it had flagged back in February, but said profits grew by less as margins fell due to a higher proportion of sales being made through agents. The company also warned that its market has become tougher due to the slowing growth in the country's economy, although it said it has so far been able to react and said trading so far in 2015 has been positive. William Sinclair is down after it said it still expects its full-year results to be materially weaker, despite a pick-up in trading.
----------
Top Economics And General
----------
The Liberal Democrats claimed that the Conservatives tabled a series of welfare cut plans while the pair governed together, claiming the party has hidden the planned cuts from sight until after the election, while a new survey found business leaders are more concerned over a so-called Brexit than a Grexit. Liberal Democrat Chief Treasury Secretary Danny Alexander said the Conservatives proposed to "slash" child benefits while the two parties were in power together, as the Tories came under attack for so-called "secret" plans to cut welfare payments and the Lib Dems claimed they acted to stop the cuts while in coalition.
----------
An absence of clarity in UK pre-election polls remained, with the latest ComRes poll showing Labour pulling level with the Conservatives a week before the May 7 vote, while the parties swapped places again in the daily YouGov survey and a new Ipsos Mori survey found the Scottish National Party has consolidated its lead north of the border. The ComRes survey, on behalf of the Daily Mail, saw the Tories lose a point from the poll a week earlier and Labour gain three points, putting the pair level of 35%. In the daily YouGov/The Sun poll, the Conservatives moved back into the lead by a point, having been down by the same margin a day earlier. The Tories are at 35% to Labour's 34%.
----------
An index measuring consumer confidence in the UK was unchanged in April, the latest survey from GfK showed - holding steady at a 12-year high reading of +4. That was in line with expectations and unchanged from the previous month's reading.
----------
The US Federal Reserve is not ruling out tightening interest rates at its next meeting on June 17, even after a government report showed US economic growth screeched to a halt in the first quarter of 2015. The Fed said it expects the economy to grow at "a moderate pace" despite the first-quarter slowdown, which it attributed partly to "transitory factors." In its monetary policy statement after concluding Wednesday's meeting, the Fed left its benchmark interest rate at an unprecedented near-zero range, which has been unchanged since December 2008. Its statement offered no direct guidance about the Fed's interest-rate intentions for June. The Fed repeated its longstanding language to "take into account a wide range of information, including measures of labour market conditions, indicators of inflation pressures and inflation expectations, and readings on financial and international developments."
----------
Unemployment in the eurozone remained unchanged at 11.3% in March, with more than 18 million people jobless in the crisis-plagued currency bloc, new data showed. Unemployment is at its lowest level in almost three years, but the eurozone has struggled to push it down significantly since a record 12% was reached in 2013. Analysts had expected the seasonally adjusted unemployment rate to dip to 11.2%. The jobless ranks in the 19-country bloc did shrink by 36,000 people from February, but not enough to push down the overall rate, according to the EU statistics agency Eurostat.
----------
Eurozone consumer prices remained flat in April as expected by economists after falling for four consecutive months, flash data from Eurostat showed. Consumer prices dropped 0.1% in March and 0.3% in February. At the same time, core inflation that excludes energy, food, alcohol and tobacco remained unchanged at 0.6%. Core inflation also matched economists' expectations. Final data will be released on May 19.
----------
German unemployment declined less than expected in April, the Federal Labor Agency reported. The number of people out of work declined by seasonally adjusted 8,000 to 2.79 million in April. It was forecast to fall by 15,000. The jobless rate came in at a record low 6.4%, the same rate as seen in March.
----------
The Bank of Japan kept its monetary stimulus unchanged despite lowering inflation and economic growth outlook. In a statement released Thursday, the BoJ announced that the policy board headed by Governor Haruhiko Kuroda decided by an 8-1 majority vote to maintain the size of quantitative and qualitative easing. Accordingly, the bank will continue to increase the monetary base at an annual pace of about JPY 80 trillion.
----------
Protests in the eastern port city of Baltimore over a police custody death spread Wednesday across the US, with solidarity marches in Minneapolis, Boston, New York City and Washington DC. In New York, at least 65 people were arrested as they briefly shut down the Holland Tunnel - a major transit route - while chanting "black lives matter," according to the New York Daily News.
----------
Afternoon Watchlist (all times in BST)

13:30 US Fed's Tarullo speech
13:30 US Jobless Claims
13:30 US Personal Consumption Expenditures - Price Index
14:45 US Chicago Purchasing Managers' Index
15:30 US EIA Natural Gas Storage change
----------
Friday's UK Corporate Events

Colt Group - Q1 Interim Management Statement
Lloyds Banking Group - Q1 Interim Management Statement
Capital & Counties - Trading Statement
Rentokil - Q1 Interim Management Statement
---------
Friday's Key Economic Events (all times in BST)

00:30 Japan National Consumer Price Index
00:30 Japan Unemployment Rate
00:50 Japan Foreign bond/stock investment
02:00 China NBS Manufacturing PMI
02:00 China Non-manufacturing PMI
02:35 Japan Nomura/ JMMA Manufacturing PMI
06:00 Ireland Purchasing Manager Index Manufacturing
09:30 UK Consumer Credit/Mortgage Approvals
14:45 US Markit Manufacturing PMI
15:00 US Construction Spending
15:00 US ISM Manufacturing PMI
15:00 US Reuters/Michigan Consumer Sentiment Index
18:30 US Total Vehicle Sales
20:45 US FOMC Member Williams speech
---------
Contact: +44 207 199 0340; newsroom@alliancenews.com; @AllNewsTeam

Copyright 2015 Alliance News Limited. All Rights Reserved.