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What to Watch: Shell profit dives, Carpetright takeover, and Lloyds management reshuffle

Oscar Williams-Grut
·Senior City Correspondent, Yahoo Finance UK
Royal Dutch Shell chief executive Ben van Beurden speaks at a full year results conference in London on January 31, 2019. - Royal Dutch Shell today said that net profit surged 80 percent to $23.4 billion in 2018, thanks to higher oil prices and cost cuts. (Photo by Tolga AKMEN / AFP)        (Photo credit should read TOLGA AKMEN/AFP/Getty Images)
Royal Dutch Shell chief executive Ben van Beurden. Photo: TOLGA AKMEN/AFP/Getty Images

Here are the top business, market, and economic stories you should be watching today in the UK, Europe, and abroad:

Shell profit slides 15%

Shell’s (RDSA.L, RDSB.L) third quarter profits fell 15% compared to a year earlier, the oil giant said Thursday.

Net profit for the quarter was $4.7bn, compared to $5.6bn a year earlier and analyst expectations of $6.4bn.

The fossil fuel giant blamed “lower realised oil, LNG and gas prices, as well as weaker realised refining and chemicals margins.” The price of oil (CL=F) is around $8 per barrel lower than where it was this time last year.

CEO Ben van Beurden also cast doubt over the company’s $25bn share buyback programme.

“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 in a statement.

Shares fell over 3%.

Carpetright takeover

Carpetright’s (CPR.L) biggest creditor is considering buying the struggling flooring retailer, which has an unsustainable £56m debt pile.

Meditor, which bought Carpetright’s revolving credit facility in September, has indicated it will offer 5p a share, valuing the business at just £15.2m.

Carpetright has recommended shareholders accept the offer, if it is made formal, as the company needs about £80m to pay down its debts and continue trading.

“Shareholders will be aware that we have been engaged in comprehensive refinancing discussions to replace existing facilities which expire at the end of this calendar year,” Bob Ivell, chairman of Carpetright, said.

“The possible offer being announced today would put in place a new financing structure for Carpetright which would enable us to continue our recovery and make necessary investments in improving our business.”

Lloyds execs leave as profits fall

Lloyds Bank (LLOY.L) has announced a slew of board and management changes alongside weaker-than-expected third quarter numbers.

Chief operating officer Juan Colombás will retire from the bank next July after nine years at Lloyds. The company said it would announce succession plans “in due course.”

Deputy chair Anita Frew will also step down in May next year and chairman Lord Blackwell will depart in 2021. Alan Dickinson will replace Frew and the bank will begin a search for Lord Blackwell’s replacement early next year.

Separately, Lloyds has appointed former HSBC finance chief Sarah Legg and AIB board member Catherine Woods as non-executive directors.

The board and management shuffle came as Lloyds reported a 97% drop in third quarter profits, driven by a £1.8bn PPI mis-selling charge taken in the quarter.

Fiat and Peugeot agree merger

PSA Group (UG.PA), the French owner of Peugeot, and Italian-American Fiat Chrysler (FCAU) said on Thursday that the boards of both companies had agreed to merge in an all-share deal to form an “industry leader” worth around $50bn.

The merger, which the companies described as a “bold and decisive move”, would create the fourth-largest automaker in the world.

The announcement follows “intensive discussions” between the boards of both companies on Wednesday, when the firms first confirmed that they were considering the move.

BA hit by pilots strike

The owner of British Airways has seen its profits slide after a pilot strike forced it to ground 1,700 flights.

Operating profits at the International Consolidated Airlines Group (IAG) dropped 6.9% in the third quarter of the year to €1.43bn (£1.23bn), not including “exceptional items.”

But profits at the airline giant (IAG.L), formed from a merger between BA and Spain’s Iberia, were in line with analyst expectations after the industrial action. IAG shares were trading 0.2% higher at 8.30am in London.

European stocks in the red

European stocks were trading lower on Thursday, reacting to worse-than-expected survey data from China overnight.

PMIs, a measure of expected business activity, for both Chinese manufacturing and non-manufacturing came in worse than forecast for October. Chinese manufacturing activity has now declined for six straight months. The data adds to fears about a global slowdown in economic growth.

The FTSE 100 (^FTSE) was down 0.8%, Germany’s DAX (^GDAXI) was down 0.5%, France’s CAC 40 (^FCHI) was down 0.4%, and the Euronext 100 (^N100) was down by 0.4%.

Overnight in Asia, Japan’s Nikkei (^N225) closed down by 0.5%, the Hong Kong Hang Seng Index (^HSI) was down 0.4%, and China’s Shanghai Composite (000001.SS) was down by 0.5%.

What to expect in the US

US stocks futures are pointing to a lower open, with Bloomberg reporting that optimism about the signing of a US-China trade deal may be misplaced.

S&P500 futures (ES=F) were down 0.3%, Dow Jones futures (YM=F) were down 0.3%, and Nasdaq futures (NQ=F) were down 0.2%.

It’s another busy day for earnings. Companies reporting in the US later today include:

  • Dunkin’ Brands (DNKN)

  • Avis (CAR)

  • Blue Apron (APRN)

  • Lazard (LAZ)

  • Pinterest (PINS)

  • Kraft Heinz (KHC)

  • Western Union (WU)

  • Estee Lauder (EL)