LONDON MARKET PRE-OPEN: Astra Earnings Rise; Shell Targets Net Zero

(Alliance News) - Stock prices in London are seen opening slightly higher on Thursday, with traders awaiting more progress on US President Joe Biden's USD1.9 trillion stimulus plan and also awaiting this week's US jobless claims data this afternoon.

In the meantime, there were plenty of UK earnings reports to take in.

IG futures indicate the FTSE 100 index is to open 8.0 points higher at 6,532.36. London's blue-chip index lost 7.20 points, or 0.1%, to close at 6,524.36 on Wednesday.

"With no updates on stimulus measures amid the absence of significant macro developments to change the mood music, investors have little cause to chase any market," Axi analyst Stephen Innes said.

Financial markets in Tokyo are closed for National Foundation Day on Thursday. They were closed as well in Shanghai for Lunar New Year's Eve.

Hong Kong was open on Thursday for the morning session only. The Hang Seng index closed up 0.5%. Sydney's ASX 200 index lost 1.0%.

In early corporate news in London, AstraZeneca reported an annual revenue hike, helped by a double-digit fourth-quarter rise. Oil major Royal Dutch Shell outlined a plan to go net zero by 2050, while also aiming to reduce debt and maintain a "progressive dividend policy".

Soft drink bottlers Coca-Cola HBC and Coca-Cola European Partners posted falls in earnings during a year hit by pub, restaurant and bar closures. Among mid-caps, Royal Mail boosted its annual revenue forecast after a busy festive quarter.

Drugmaker AstraZeneca's 2020 revenue rose 9.2% to USD26.62 billion from USD24.38 billion, with pretax profit more than doubling to USD3.92 billion from USD1.55 billion. Revenue was up 10% at constant currency.

For the final quarter, revenue jumped 11% to USD7.41 billion, beating company-compiled consensus estimates of USD7.20 billion.

Its annual payout was unchanged at USD2.80.

For 2021, total revenue is "expected to increase by a low-teens percentage", though guidance does not account for any sales of its Covid-19 jab, nor does it include the contribution from soon-to-be acquired Alexion Pharmaceuticals. That deal is expected to close in the third quarter of the year.

The World Health Organisation said Wednesday that AstraZeneca's vaccine could be used on people aged over 65 and also in places where new variants of the virus are circulating, following recent questions over the efficacy of the firm's jab.

AstraZeneca commented on Thursday: "The University of Oxford, however, subsequently announced that a separate exploratory analysis of the COV005 Phase I/II South Africa trial, to be published in preprint in due course, showed that the vaccine had limited efficacy against mild-moderate disease caused by the B.1.351 South African variant. It was not possible to ascertain efficacy against severe disease and hospitalisation caused by this variant, given that subjects in the trial were predominantly young, healthy adults."

Oil major Shell on Thursday said it wants to reduce net debt to USD65 billion. It also aims to "maintain the progressive dividend policy", planning payout growth of around 4% per year.

The measures are part of the company's wider aim to go net zero on carbon emissions.

"Shell today set out its strategy to accelerate its transformation into a provider of net-zero emissions energy products and services, powered by growth in its customer-facing businesses. A disciplined cash allocation framework and rigorous approach to driving down carbon emissions will deliver value for shareholders, customers and wider society. Shell also confirmed its expectation that total carbon emissions for the company peaked in 2018, and oil production peaked in 2019," the company said.

"Shell will continue with short-term targets that will drive down carbon emissions as we make progress towards our 2050 target, linked to the remuneration of more than 16,500 staff."

Shell aims to reduce net carbon emissions by 45% by 2035 and to eliminate net emissions completely by 2050.

Coca-Cola HBC posted a 13% fall in net sales revenue in 2020 to EUR6.13 billion from EUR7.03 billion. According to the market consensus cited by Vuma, total reported revenue was expected to fall by 12% in 2020 to EUR6.15 billion.

Annual pretax profit was 10% lower at EUR593.9 million from EUR661.2 million. But the bottler edged its payout 3.2% higher to EUR0.64, with consensus forecasts tipping a 16% cut to EUR0.52.

Unit cases fell 5.7% annually, demonstrating how badly volumes were hit by Covid-19 lockdowns. However, a slightly greater fall of 6.0% was expected.

Coca-Cola European Partners posted a 9.5% fall in volumes in 2020, or 10% on a comparable basis.

Revenue dropped 12% to EUR10.61 billion from EUR12.02 billion and pretax profit plunged 52% to EUR1.45 billion.

The company noted that its takeover of Australian peer Coca-Cola Amatil remains subject to shareholder approval, court approval, and a green light from the New Zealand Overseas Investment Office.

"Further updates will be provided in due course," CCEP added.

Among London mid-caps, Royal Mail hailed its "busiest ever quarter", amid a surge in e-commerce related deliveries over the festive period.

Third quarter revenue jumped 20%, including a 43% rise in parcel revenue. The company said 496 million parcels were handled.

"On our busiest day we delivered 11.7 million parcels, 32% more than our busiest day during the first national lockdown in 2020," the company said.

"We now believe that Royal Mail revenue growth for the full year 2020-21 will be significantly beyond the top end of the scenario presented in November of GBP380 million to GBP580 million."

The pound was quoted at USD1.3847, largely flat from USD1.3845 at the London equities close on Wednesday.

The euro stood at USD1.2127, down from USD1.2135 at the European equities close. Against the yen, the dollar fetched JPY104.58, down from JPY104.66.

The US economy is a long way from a strong job market and the experience of past recessions shows it could take years to recover, Federal Reserve Chair Jerome Powell said.

In addition to mass vaccinations to halt the Covid-19 health crisis, it will take a full suite of government policies to repair the damage done by the pandemic to the US labour market, he said in a speech.

"Despite the surprising speed of recovery early on, we are still very far from a strong labour market whose benefits are broadly shared," Powell told the Economic Club of New York.

The economic events calendar on Thursday has US jobless claims at 1330 GMT. New claims are expected to be 757,000, a fall from 779,000 last week.

Brent oil was quoted at USD61.06 a barrel early on Thursday, down from USD61.40 at the London equities close on Wednesday. Gold was quoted at USD1,842.41 an ounce, up from USD1,837.45.

By Eric Cunha; ericcunha@alliancenews.com;

Copyright 2021 Alliance News Limited. All Rights Reserved.