After a rally in London markets yesterday, the FTSE 100 closed last night at 6000 points only to be dragged down today by profit-taking and a cool response by investors to the full year results from oil and gas giant Royal Dutch Shell (LON:RDSA) . On a brighter note, figures from the UK’s service sector purchasing managers index (PMI) bounced back in January, offering some hope that the contraction in UK GDP in the final quarter of 2010 was a blip. As lunch approached, the FTSE 100 was trading down 25 points at 5,975.12.
Reporting its fourth quarter and full year figures, Shell was widely perceived to have disappointed investors with adjusted earnings in the final three months coming in at $4.1bn – off expectations of between $4.7bn-$4.9bn. Full year 2010 earnings, on a current cost of supplies basis, were $18.6bn, up from $9.8bn in 2009. Oil and natural gas production volumes were up 5% to 3.3m boepd. By late morning, the Royal Dutch Shell share price was down 3% to 2198.50p in its ‘A’ shares and down 3.1% to 2180p in its ‘B’ shares.
Home products group Unilever (LON:ULVR) reported an 11.1% rise in full year revenues to €44.3bn, with 7.3% of that down to currency variations. Underlying volume growth came in at 5.8% while underlying sales growth was 4.1%. Underlying pricing fell by 1.6% but the operating margin was up 20bps. Overall, net profits were up 26% to €4.598bn. The Hellman’s-to-Dove-to-Domestos giant said it was pleased with the result, particularly its strong volume growth in emerging markets, which continue to be group’s main growth driver. The Unilever share price fell slightly to 1846p.
Power station owner International Power (LON:IPR) has completed its tie-up with French multi-national GDF Suez, which will see the two sides combine their Energy International Business Areas (outside Europe) and certain assets in the UK and Turkey. The combined business creates a global leader in independent power generation with over 66,000MW of gross capacity in operation and committed projects expected to deliver 22,000MW of gross capacity by 2013. The International Power share price edged higher to 407.7p.
Investment banking group Investec (LON:INVP) said the majority of its six core businesses had recorded increased earnings in the nine months to December 31, pushing the Investec share price up by 1.5% to 498.1p. In particular, the group’s asset and wealth management businesses benefitted from substantial inflows and a good investment performance. Nevertheless, operating conditions within its banking and advisory businesses were mixed and, although improving, the demand for credit and levels of transactional activity remained subdued.
In telecoms, fierce cost cutting at BT (LON:BT.) helped drive pre-tax profits up by 33% to £531m in the third quarter despite a 3% fall in revenues to £5.038bn. BT Retail had a good quarter with growth in business revenues and its highest share of DSL broadband net additions for eight years. Openreach benefited from a stronger broadband market and growth in its copper line base. BT Global Services, the corporate and public sector managed IT services arm, is expected to be cash flow positive this year, a year earlier than targeted. The BT share price gained 3.4% to 184.6p on the news. Meanwhile, Vodafone Group (LON:VOD) reported its fifth successive quarter of growth in service revenues, with a +2.5% increase in the three months to December 31. Operations in Europe together with its Africa, Middle East and Asia Pacific arm both delivered faster growth rates. Elsewhere, the US division Verizon Wireless enjoyed a 7% rise in service revenues. The Vodafone share price fell slightly to 175.75p despite forecasts that adjusted operating profit is now expected to be towards the upper end of the £11.8-£12.2bn range in the full year.
Food service and support services giant Compass Group (LON:CPG) reported a good start to the year, triggering a marginal rise in the Compass share price to 559.5p. Positive trends in organic revenue growth seen in the second half of 2010 continued into the first quarter of the new financial year, with organic revenue growth of around 5.5%. Compass credited the performance to strong growth both in foodservice and in its fast growing support services business.
Finally, holiday company TUI Travel (LON:TT.) said the integration process that started with the merger of Thomson and First Choice back in 2007 was now complete and that £200m of synergies had been delivered. First quarter revenues were up 6% to £2.694bn, the underlying loss improved by £23m to £84m and TUI said the forward booking position was good. However, it warned that the geopolitical turmoil in Tunisia and Egypt could impact the Q2 result by £25m to £30m. As a result, the TUI share price dipped by 1% to 244.5p.
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