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(Alliance News) - Shell on Thursday said it will book an impairment of between USD4 billion and USD5 billion in the first quarter of 2022 after exiting its operations in Russia.
"These charges are expected to be identified and therefore will not impact adjusted earnings. Details of the accounting treatment and impact of ongoing developments will be provided at the first quarter 2022 results announcement," the energy major said.
The firm last month said it would withdraw from involvement in all Russian hydrocarbons, including crude oil, petroleum products, gas and liquefied natural gas, following Russia's attack on Ukraine.
The London-based oil and gas company said the withdrawal would be done in a "phased manner" in alignment with new government guidance.
In addition, Shell on Thursday said operating cash flow is expected to be hurt by "very significant" working capital outflows, as price increases impacting inventory have led to a cash outflow of around USD7 billion.
"Reflecting the unprecedented volatility in commodity prices prevailing up to the end of the quarter, material additional movements could be seen in CFFO from margining effects on derivatives, changes in inventory volumes and in accounts payable and receivables," it cautioned.
Shell shares were down 0.8% in early trade.
Here is what you need to know at the London market open:
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MARKETS
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FTSE 100: down 0.1% at 7,578.87
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Hang Seng: down 0.9% at 21,880.38
Nikkei 225: closed down 1.7% at 26,888.57
S&P/ASX 200: closed down 0.6% at 7,442.80
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DJIA: closed down 144.67 points, or 0.4%, at 34,496.51
S&P 500: closed down 43.97 points, or 1.0%, at 4,481.15
Nasdaq Composite: closed down 315.35 points, or 2.2%, at 13,888.82
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EUR: up at USD1.0917 (USD1.0906)
GBP: up at USD1.3092 (USD1.3073)
USD: flat at JPY123.78 (JPY123.77)
Gold: down at USD1,925.71 per ounce (USD1,927.10)
Oil (Brent): down at USD102.45 a barrel (USD104.01)
(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
11:00 CEST EU retail sales
13:30 CEST EU ECB accounts of its last monetary policy discussions
11:00 BST Ireland CPI
08:30 EDT US jobless claims
10:30 EDT US EIA weekly natural gas storage report
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The US Federal Reserve confirmed that it is looking to tighten its monetary policy, the minutes from its most recent Federal Open Market Committee showed Wednesday, and strongly considered a 50 point rise in March. At their March policy meeting, several Fed officials supported raising interest rates by half a percentage point in the future to combat inflation, the meeting minutes highlighted."Many participants noted that - with inflation well above the Committee's objective, inflationary risks to the upside, and the federal funds rate well below participants' estimates of its longer-run level - they would have preferred a 50 basis point increase in the target range for the federal funds rate at this meeting" according to minutes from the Federal Open Market Committee's March gathering.
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The UK government has promised to take back control of energy prices with its long-awaited energy strategy which aims to make 95% of electricity low carbon by 2030. Ministers are promising "cleaner and more affordable energy" to be made in this country by boosting wind, new nuclear, solar and hydrogen. But opposition Labour said the prime minister had "caved to his own backbenchers" and that the plan would do nothing to help the rising energy costs faced by households. Boris Johnson said the strategy, including new nuclear and offshore wind plans, would reduce the UK's dependence on foreign sources of energy. There has been particular worldwide concern about the reliance on Russian oil and gas since the Kremlin's invasion of Ukraine. Under the government's fresh plans a new body, Great British Nuclear, will be launched to bolster the UK's nuclear capacity with the hope of up to 24 gigawatts of electricity by 2050 coming from the source of power, 25% of the projected electricity demand.
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BROKER RATING CHANGES
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Jefferies cuts Energean to 'hold' (buy) - price target 1300 (1105) pence
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Jefferies cuts TI Fluids to 'hold' (buy) - price target 195 (350) pence
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Jefferies cuts Pagegroup to 'hold' (buy) - price target 570 (800) pence
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COMPANIES - FTSE 100
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Entain said it made a strong start year with a good performance across all areas of the business, and is confident in its financial performance for the year ahead. For the three months to March 31, net gaming revenue was up 31% compared to the first quarter last year, supported by the easing of Covid-19 restrictions. Retail arm volumes were within 5% to 10% of pre-Covid levels. However, first-quarter online net gaming revenue was down 8% on an annual basis, though it said this was in line with expectations. Entain also said its BetMGM partnership with MGM Resorts International was on track to be Ebitda positive in 2023. "We have started the year with a good performance across all areas of our business, driven as ever by the strength of our industry-leading platform. We have delivered strong performances in all of our major markets, and I am pleased to report that Retail is performing well with customers returning for our instore experience," said Chief Executive Officer Jette Nygaard-Andersen.
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COMPANIES - FTSE 250
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888 Holdings unveiled plans for a bookbuild to help fund its acquisition of some William Hill assets. 888 said it continues to believe the acquisition of the non-US business of William Hill represents a "transformational opportunity" to increase its scale, further diversify and strengthen its product offering. 888 said the enterprise value of the William Hill assets has been cut to between GBP2.0 billion and GBP2.1 billion from GBP2.2 billion previously. 888 intends to conduct a placing of up to 70.8 million new shares, representing around 19% of its issued share capital. The placing will be conducted through an accelerated bookbuild process which will be launched immediately. The price at which the shares are to be placed will be determined following the close of the process, it explained. 888 said the bookbuild plan replaces previous expectations of a GBP500 million fundraise. Completion of the acquisition is expected in June 2022. In addition, 888 said revenue for the first quarter of 2022 is currently expected to be in the range of USD222 million to USD226 million, an increase of 0% to 2% compared to the fourth quarter of 2021.
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COMPANIES - SMALL CAP
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Security printed products maker De La Rue said it expects full-year adjusted operating profit to be in line with market expectations with net debt "slightly better" than forecasts of GBP75 million.
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Recruitment firm Robert Walters reported net fee income of GBP98.4 million for the first quarter ended March 31, up 27% on GBP77.3 million a year before. The Asia Pacific, Europe and Other International regions all saw yearly growth in excess of 30%, while the UK saw just a 4% increase. "Activity levels across Resource Solutions clients in the UK were strong but the time taken to onboard new staff has lengthened," the firm noted.
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COMPANIES - GLOBAL
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US President Joe Biden sang praises for organised labour once again Wednesday, hailing last week's triumph by union backers at Amazon.com as a sign of what is possible throughout the US. "That's what unions are about in my view, by providing dignity and respect for people who" work hard, the US president said during a speech to a construction workers union. The Democratic president, a self-professed "union guy," alluded to his White House task force on union organizing to "make sure the choice to join a union belongs to workers alone," Biden said. "By the way: Amazon, here we come!" The remarks came after Friday's landmark ballot in which workers at a New York warehouse voted to establish the first US union at Amazon.
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Facebook's parent company Meta Platforms is exploring the potential of digital money referred to internally as "Zuck Bucks" in a play on the founder's name, the Financial Times reported Wednesday. Meta abandoned its effort to create a global cryptocurrency – first called Libra but eventually re-branded as Diem – in the face of fierce backlash by financial regulators around the world. However, founder and chief Mark Zuckerberg has spoken about the importance of e-commerce and financial tools to his vision for an immersive online world called the metaverse. "We continuously consider new product innovations for people, businesses, and creators," a Meta spokesperson said in response to an AFP inquiry. "As a company, we are focused on building for the metaverse and that includes what payments and financial services might look like."
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Samsung Electronics expects profit for the first quarter to rise 50%, the South Korean tech firm said in a statement Thursday, despite global supply chain woes. The world's biggest smartphone maker forecast 2022 first-quarter operating profits of about KRW14.1 trillion, about USD11.6 billion, up from KRW9.4 trillion in the same quarter last year. Samsung did not provide details on the performance of its various divisions. The company is expected to release its full results on April 28. Analysts said the forecast was likely driven by strong smartphone sales, but warned of an expected drop in profits in the memory chip division.
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Thursday's shareholder meetings
RM PLC - AGM
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By Lucy Heming; lucyheming@alliancenews.com
Copyright 2022 Alliance News Limited. All Rights Reserved.
