LONDON BRIEFING: Shell launches GBP6 billion buyback as earnings soar

(Alliance News) - Shell on Thursday said earnings surged by two-thirds in the first half of 2022, as the oil major continued to benefit from a sharp rise in oil prices following Russia's invasion of Ukraine.

For the six months to June 30, adjusted earnings before interest, tax, depreciation and amortisation was USD42.18 billion, up 67% from USD25.20 billion last year. Income attributable to shareholders almost tripled to USD25.15 billion from USD9.09 billion.

Tuning to returns, the oil major declared an interim dividend of USD0.50, up 21% from USD0.41 last year.

In addition, Shell launched a share buyback programme of USD6 billion, which is expected to be completed by the third quarter of this year.

"With the current energy sector outlook and subject to board approval, shareholder distributions are expected to remain in excess of 30% of cash flow from operating activities," Shell said.

Shell's free cash flow jumped to USD22.99 billion from USD17.37 billion the year before.

"With volatile energy markets and the ongoing need for action to tackle climate change, 2022 continues to present huge challenges for consumers, governments, and companies alike. Consequently, we are using our financial strength to invest in secure energy supplies which the world needs today, taking real, bold steps to cut carbon emissions, and transforming our company for a low-carbon energy future," said Chief Executive Ben van Beurden.

Shell shares were up 0.9% 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 0.2% at 7,365.42

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Hang Seng: down 0.2% at 20,631.56

Nikkei 225: closed up 0.4% at 27,815.48

S&P/ASX 200: closed up 1.0% at 6,889.70

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DJIA: closed up 436.05 points, or 1.4%, at 32,197.59

S&P 500: closed up 2.6% at 4,023.61

Nasdaq Composite: closed up 4.1% to 12,032.42

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EUR: up at USD1.0225 (USD1.0133)

GBP: up at USD1.2175 (USD1.2045)

USD: down at JPY135.35 (JPY137.17)

GOLD: up at USD1,741.01 per ounce (USD1,718.59)

OIL (Brent): up at USD107.55 a barrel (USD106.68)

(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

1100 CEST EU business & consumer surveys

1400 CEST Germany consumer price index

1100 BST Ireland retail sales index

0830 EDT US jobless claims

0830 EDT US gross domestic product

1030 EDT US EIA weekly natural gas storage report

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Train services in the UK will continue to be disrupted on Thursday morning following a 24-hour strike which crippled the rail network, causing travel chaos across the country. Members of the Rail, Maritime & Transport union at Network Rail and 14 train companies walked out on Wednesday in a long-running dispute over jobs, pay and conditions. Talks are expected to resume on Thursday but there is little sign of the deadlock being broken. Strikes will be held on Saturday and next month by the RMT as well as members of the drivers' union Aslef and the Transport Salaried Staffs Association. Aslef has announced that drivers at nine rail companies are to stage a one-day strike on Saturday August 13, saying the firms failed to make a pay offer to help members keep pace with increases in the cost of living. Drivers are already set to strike this Saturday at seven companies and Aslef members at two more train operators voted overwhelmingly for industrial action.

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BROKER RATING CHANGES

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Bernstein raises Reckitt Benckiser to 'market-perform' (underperform) - price target 6,400 (5,300) pence

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JPMorgan reinitiates Flutter Entertainment with 'overweight' - price target 12,600 pence

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Morgan Stanley reinitiates Croda International with 'overweight' - price target 7,700 pence

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COMPANIES - FTSE 100

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Barclays reported a drop in first-half profit as the bank took a credit impairment charge, but also launched a share buyback. For the six months to June 30, total income was GBP13.2 billion, up 17% from GBP11.3 billion last year, but pretax profit was GBP3.73 billion, down 24% from GBP4.90 billion. Barclays took litigation and conduct charges of GBP1.9 billion for the first half of the year, including a previously disclosed GBP1.3 billion cost related to the "over-issuance of securities" in the US. Turning to shareholder returns, Barclays declared a half-year dividend of 2.25p per share and said it intends to initiate a further share buyback worth up to GBP500 million. "We are alert to the pressure that the rising cost of living will have on our customers and colleagues. We have a range of measures in place to help and are looking to do more. With our resilient income growth and balance sheet strength, we can provide that support while distributing excess capital," said CEO CS Venkatakrishnan.

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BAE Systems confirmed a Sky News report that it has hired Cressida Hogg as its next chair, succeeding Roger Carr. Hogg will join the board of the defence contractor on November 1 and replace Carr at the annual general meeting in May next year. Hogg currently is chair of property developer Land Securities. LandSec said it has started a process to find a new chair, noting Hogg will have served on the board for nearly nine years. BAE also reported half-year results. Pretax profit fell to GBP779m from GBP1.15 billion a year before, despite revenue rising to GBP9.74 billion from GBP9.34 billion. The company kept full-year guidance unchanged. "Trading in the first half has been in line with expectations delivering strong order intake and good operational performance," said Chief Executive Charles Woodburn. BAE declared a 10.4p interim dividend, up from 9.9p a year before.

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Ocado said Chief Operating Officer Mark Richardson will move to be CEO of its new business extending Ocado's product offering into new market sectors alongside grocery. The upcoming launch of the 'Re:Imagined Ocado Smart Platform' products follows the 2020 acquisitions of Kindred Systems and Haddington Dynamics. The online grocer said the new venture will be self-financing and not require any additional capital beyond it has already guided.

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COMPANIES - FTSE 250

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Indivior, which makes drugs to treat opioid addiction, said it plans to seek an additional listing in the US. It will ask for shareholder approval in September for a listing to take place in the spring of next year. "The group believes an additional US listing will be beneficial in elevating Indivior's visibility and profile in its largest market, and in potentially attracting a broader group of biopharma investors," it said. The plan, first revealed back in March, was discussed as part of Indivior's half-year results. Pretax profit slipped to USD106 million in the first half of 2022 from USD119 million a year before, even as net revenue rose by 12% to USD428 million from USD381 million.

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COMPANIES - GLOBAL

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Samsung Electronics reported a profit for the second quarter of KRW10.95 trillion, about USD8.4 billion, up 16% to compared with the previous year. Operating profit for the quarter grew 12% to KRW14.1 trillion from the previous year while sales for the second-quarter were KRW77.2 trillion, a 21% increase from a year earlier. Looking to the second half of the year, Samsung said fundamental demand for servers will remain solid as the investments in core infrastructure and new growth areas such as AI and 5G are expected to keep expanding. Demand for consumer products such as PCs and mobile devices is likely to stay weak, though there is a chance that the slump in demand in PCs may expand to enterprise segments. In the smartphone market, the company forecasts earnings to grow compared in the second half of the year compared with the first two quarters, as new products are due to be released by major customers.

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Thursday's shareholder meetings

B&M European Value Retail SA - AGM

Braemar Shipping Services PLC - AGM

CMC Markets PLC - AGM

CMC Markets PLC - GM re proposed related party transaction

CYBA PLC - AGM

De La Rue PLC - AGM

discoverIE Group PLC - AGM

Eight Capital Partners PLC - AGM

Eurasia Mining PLC - AGM

GB Group PLC - AGM

Global Smaller Companies Trust PLC - AGM

Graft Polymer (UK) PLC - AGM

Ingenta PLC - AGM

Mediclinic International PLC - AGM

Octopus Renewables Infrastructure Trust PLC - GM re investing in offshore wind farms

Oxford Instruments PLC - AGM

RentGuarantor Holdings PLC - AGM

Tate & Lyle PLC - AGM

Ted Baker PLC - AGM

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By Tom Waite; thomaslwaite@alliancenews.com

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