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Premarket London: PPI Drives Lloyds to Q3 Loss; Shell Warns on Buyback

Published 10/31/2019, 03:13 AM
Updated 10/31/2019, 03:16 AM
© Reuters.

Investing.com -- Here's a roundup of regulatory news releases from the London Stock Exchange on Thursday, 31st October. Please refresh for updates.

  • Lloyds Banking Group (LON:LLOY) swung to a net loss of 238 million pounds ($305 million) after taking a 1.8 billion charge for PPI mis-selling, at the top of the likely range it announced earlier. As with its major rivals, the charge ought to draw a line under a decade-long problem.

  • Revenue fell 2% on the year against a backdrop of lower interest rates but costs fell 5%, and it now expects its cost-income ratio to fall from last year’s level.

  • The bank warned that continued economic uncertainty could further hurt the outlook, but pointed to the fact that even in the current weak conditions, it had generated 75 basis points of capital in the quarter before the PPI hit.

  • Separately, it announced that chief operating officer Juan Colombas will retire in July 2020.

    • Royal Dutch Shell (AS:RDSa) said earnings on a current cost of supplies basis, its preferred measure of profit, rose 9% on the year in the third quarter to $6.08 billion, thanks to "very strong trading and optimization results."
    • Underlying CCS earnings fell 15% on the year to $4.77 billion.

  • It kept its quarterly dividend unchanged at 47 cents and upheld its intention to buy back $25 billion in shares, but CEO Ben van Beurden admitted that the timeframe for meeting its gearing target may slip due to the weak global economy.
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  • "The prevailing weak macroeconomic conditions and challenging outlook inevitably create uncertainty about the pace of reducing gearing to 25% and completing the share buyback programme within the 2020 timeframe," van Beurden said. Shell (LON:RDSa) follows BP (LON:BP) in warning that the economic slowdown could stop its cutting debt as planned.

  • BT Group (LON:BT) said revenue fell 1% in the first half of its fiscal year ending March 31, 2020, “mainly reflecting the impact of regulation, declines in legacy products, and strategically reducing low margin business.” Regulation contributed to a 5.5% drop in average revenue per customer on postpaid plans, as did the general trend to customers seeking SIM-only deals.

  • Profit before tax was flat at 1.33 billion pounds, while underlying EBITDA fell 3% to 3.92 billion.

  • The rollout of 5G services continues as scheduled and has now reached over 20 cities and large towns.

  • The interim dividend was unchanged at 4.62 pence a share and the company maintained its previous outlook.

  • Medical device group Smith & Nephew (LON:SN) raised its revenue guidance for the year after posting 4% organic revenue growth in the third quarter.

  • However, it indicated full-year profit margins would be at, or even below, the low end of the announced range. It cut margin guidance to “around 22.8%” from a range of 22.8% to 23.2%.

  • Overall revenue grew 6.5% as 390 basis points benefit of acquisitions outweighed 140 basis points of currency headwind. Recently acquired Osiris posted another quarter of growth over 10%, while emerging market revenues grew “in the mid-teens” thanks to strong sales in China.
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  • Packaging group DS Smith (LON:SMDS) upheld its guidance for the full year in a pre-closing statement for the first half of its 2020 fiscal year that didn't include hard figures.

  • The company said it expects "good margin progression...consistent with the upgraded target of 10% to 12% return on sales."

  • It said its new U.S. plant in Indiana will be operational by the end of the year, lowering its dependence on lower-margin exports.

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