Financial Times: BP and Royal Dutch Shell likely to disappoint: “Shell was hit by reserves downgrade scandal in 2004 and massive cost overruns on its new projects this year. But some analysts are beginning to see a light at the end of the tunnel.”: Monday 24 October 2005
Published: October 24 2005
TUESDAY
*BP and Royal Dutch Shell, respectively the second- and third-largest traded oil companies, are both expected to report disappointing profit this week, despite record oil prices. In an update this month, BP warned investors that trading conditions had been more difficult than expected and analysts expect it to report lower earnings than the previous quarter. Hurricanes Katrina and Rita wiped at least $700m (£395m) off BP's third-quarter profit and cut 145,000 barrels of its daily oil production. The company's marketing operation has also suffered as petrol stations have been unable to pass the full costof the fuel on to to consumers.
*Nigel Fee, chief executive-in-waiting at Westbury, will be hosting the housebuilding company's interim results before formally taking over from Martin Donohue next month. Analysts are expecting a pre-tax profit at the half-year of about £46m, giving 28.6p of earnings per share. That would be more than a 20 per cent drop in profit from the same period last year. Such a decline would not be the biggest decline reported by a leading housebuilder so far this autumn but investors will be hoping that the company will report some good news when it comes to reservations in September andOctober. In a trading update in September, Westbury warned that planning delays meant that it did not have the targeted number of sites open in the first half of the year but hoped to catch up in the second half.
*Whitbread reports interim results this week with investors in the UK leisure group looking for an update on the company's internal restructuring. The reorganisation will result in job losses as part of a drive to make the company leaner and more efficient, with Alan Parker, chief executive, telling staff recently that they had to "demonstrate very clearly to our shareholders that the team at Whitbread are the right people to run this business". Consensus pre-tax profit is forecast in the range of £121m to £128m. Morgan Stanley, which is at the top of the analysts' range, is expecting earnings per share of 33.7p.
THURSDAY
*Royal Dutch Shell is expected by CSFB to report clean net income of $4.8bn (£2.7bn) and earnings per share of 72 cents, with declines in both its exploration and production unit, as well as gas and power. The company, which this year unified its British and Dutch parents, was also badly hit by the hurricanes in the Gulf of Mexico, with its Mars platform suffering serious damage. Analysts will be looking to determine the full financial impact of the storms on the company. Shell was hit by reserves downgrade scandal in 2004 and massive cost overruns on its new projects this year. But some analysts are beginning to see a light at the end of the tunnel. Goldman Sachs says Shell has been unduly punished by investors and is trading at too large a discount relative to its peers. It sees a 20 per cent upside on the stock.
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