Today marks the annual day dreaded by financial journalists and analysts alike, as a multitude of FTSE-100 companies simultaneously release their financial reports. This practice, while driven by regulatory demands for timely reporting and the convenience of having mid-year financial data available, can be detrimental to investors as it leaves less time for thorough analysis and increases the risk of share price anomalies.
Among the companies reporting today, the largest is oil major Shell, which announced adjusted earnings of $6.3 billion for the second quarter, a decrease from the previous quarter but a 25% increase from the same period last year. This can be attributed in part to cost-cutting measures implemented by Chief Executive Wael Sawan, who took over from long-serving leader Ben van Beurden in 2020. Sawan also announced a share buy-back of $3.5 billion and expressed his belief that the company is undervalued. As a result, Shell’s stock has risen by 1.5% in morning trading.
London Stock Exchange Group (LSEG), the 12th largest company in the FTSE-100, also exceeded expectations with adjusted operating profits of £1.6 billion for the first half of the year, up 9% from the same period in 2020. Under the leadership of CEO David Schwimmer, the company has shifted its focus towards data and analytics, which has contributed to growth in all divisions. Schwimmer also provided an update on the company’s partnership with Microsoft, announcing the upcoming availability of their first joint products. LSEG’s stock has risen nearly 4% following this news, bringing its market value to over £50 billion.
Two other major British engineering companies, BAE Systems and Rolls-Royce, also reported strong results today. Rolls-Royce’s stock surged by over 10% to an all-time high as it reinstated its dividend for the first time since the start of the pandemic, reporting an underlying operating profit of £1.1 billion for the first half of the year. BAE Systems, Europe’s largest defense contractor, also raised its dividend by 8% and upgraded its sales forecast for the year. Both companies have seen success in securing new contracts, including BAE’s selection to build Australia’s new fleet of nuclear-powered submarines under the AUKUS defense pact.
In the financial services sector, Barclays announced a pre-tax profit of £3.3 billion for the first half of the year, slightly ahead of expectations. While the bank upgraded its guidance on expected returns and announced a share buy-back, its stock has fallen by 1% as investors are concerned about declining returns in its UK corporate banking division. Schroders, the UK’s largest listed fund manager, saw its stock drop by 8%, despite a 6.5% increase in assets under management, as investors focused on the company’s comments about margin pressure.
Other companies reporting today include consumer healthcare giant Haleon, whose shares rose by 2% after reporting an 11% increase in adjusted operating profits, and paper and packaging group Mondi, which saw a 2.5% increase in its stock as its management highlighted potential for growth in the second half of the year.
While these results provide valuable insights into the performance of a diverse range of companies, it is difficult to draw general conclusions about the global or UK economy. However, one common theme among many companies is their ability to adapt to higher inflation through cost-cutting and increased efficiency. The next six months will reveal how they respond to decreasing inflation and interest rates, which may shape the next chapter of their stories.
