Thursday preview: Shell, Astra, Croda

27th Oct 2010 16:23

Royal Dutch Shell kept its head down while long time rival BP was being pilloried for the Gulf of Mexico oil disaster, but it is due to take centre stage on Thursday when it announces its third quarter figures and kicks off the oil company reporting season.Charles Stanley has pencilled in $4.5bn for net income, up from $2.6bn last year. "Overall, in the quarter, the operating environment has been favourable. In the third quarter, the average oil price was about $76 a barrel (/bbl) compared to $68/bbl a year ago and the average Henry Hub gas price was about $4.4/mmbtu [millions of British Thermal Units] compared to $3.4/mmbtu a year ago. Downstream, industry refining margins have recovered though Royal Dutch Shell has a large presence in Europe where refining margins have been weaker," the broker said."Shell is positive about its deepwater production outlook despite the Gulf of Mexico oil spill tragedy. Upstream Americas is investing $10bn per annum to 2014, when oil production could reach 1 million barrels of oil equivalent per day. The third quarter outcome may be similar to Q2's and as such the results may not be a catalyst for short-term share price gains but longer term, Shell is entering a period of growth which should be positive for share price performance," the broker predicts.Panmure Gordon is forecasting replacement cost net income of $4.14bn, which it says is towards the bottom end of the market's expectations. "We believe that Royal Dutch Shell will see a similar operating performance [to the second quarter] although might get a slight boost from stronger Asian margins. Petrochemical and marketing margins are not expected to be too dissimilar to the previous quarter. This should lead to the group reporting downstream earnings of US$1,117 million compared to US$1,160 million in the previous quarter," the broker predicted.Drug giant AstraZeneca is tipped to reveal a tough third quarter after a good first half. Last year's third quarter was strong and profits and earnings may show a decline even though Astra upped its forecast for the year after the first six months.Expect sales of about $7.9bn and earnings per share of $1.47. Sales in the same quarter of last year were $8.2bn, boosted by the bird flu panic, but this time round the company is facing competition from generic alternatives to its Armimidex, not to mention what Nomura Securities terms "continued generic sales erosion of Pulmicort and Toprol XL."Nomura has had a stab at predicting third quarter sales numbers for Astra's major products and come up with the following: "Nexium US$1,172m (-1.4% vs consensus at US$1,189m), Seroquel US$1,300m (-2.1% vs consensus at US$1,328m), Crestor US$1,345m (-3.8% vs consensus at US$1,398m), Symbicort US$664m (+0.4% vs consensus at US$662m), Seloken/Toprol XL US$289m (+20.9% vs consensus at US$239m), Arimidex US$266m (-6.3% vs consensus at US$284m), Pulmicort US$207m (+6.6% vs consensus at US$194m)."Charles Stanley thinks group sales will be $7.85bn and earnings per share will be around $1.50."The outlook is likely to be coloured by regulatory filings for Dapagliflozin and by possible generic Nexium launches in Europe, however, the most significant development over the quarter is expected to be news relating to the FDA [US Food and Drug Administration] decision on Brilinta. The FDA's decision date has been put back by three months to 16th December in order to provide the US regulator with more time to assess the results of a US study which appeared to run at odds to the Phase 3 trial data," Charles Stanley notes. "Elsewhere, we look for more detail regarding AstraZeneca's emerging market operations which could generate further share price upside," the broker added.Specialist chemicals group Croda also issues third quarter numbers on Thursday. JPMorgan Cazenove is predicting sales of £252m, up from £213m in the third quarter of last year. That's not a million miles away from Charles Stanley's forecast of £255m. Charles Stanley is predicting profit before tax of £24.8m, up from £30.3m last year."We expect the company to deliver another strong quarter driven both by continuing strength in Consumer Care but also, increasingly, by a revitalised Industrial Specialities division. Sequential pre-tax profit may be down slightly from Q2 2010, however, this reflects seasonality within the business and should come as no surprise to investors," Charles Stanley said."Attention is likely to focus more closely on management comments regarding prospects which are expected to remain guardedly upbeat," the broker added. Outsourced services provider Mouchel said on 14 October that its pre-exceptional profit in the year to July 2010 will be £30.5m, compared with previous broker estimates of around £35m, so the full year figures should not contain many surprises. However, with the Comprehensive Spending Review (CSR) now out of the way investors will doubtless be keen to learn of Mouchel management's reaction to it. The GfK/NOP consumer confidence index is due to be released overnight and the expectation is that the October value will fall to a 14-month low of -23% from September's -20%. The papers were full of dire warnings about what would be in the comprehensive spending review (CSR) for much of October and that is bound to have had an effect on consumer confidence.The CBI Distributive Trades Survey in October is forecast to show that the percentage of retailers reporting year on year growth in sales will exceed those reporting a decline will narrow to +30% from +39% in September. See the comments above re the CSR for reasons why the picture may have deteriorated. INTERIMS B.P. Marsh & Partners, Hansen Transmissions International NV, Noida Toll Bridge Company Ltd. GDR, Rugby Estates INTERIM DIVIDEND PAYMENT DATE GVC Holdings, Henry Boot, International Power, InterQuest Group, Lighthouse Group, Martin Currie Portfolio Inv Trust, TT Electronics INTERNATIONAL ECONOMIC ANNOUNCEMENTS Retail Sales (JPN) Monetary Policy Committee Meeting (JPN)Target Rate (JPN)Producer Prices (FRA) (07:45)PMI Retail (GER) (08:55) Unemployment Rate (GER) (08:55) PMI Retail (EU) (09:00) Business Climate Indicator (EU) (10:00) Consumer Confidence Indicator (EU) (10:00)Economic Confidence Indicator (EU) (10:00)Industrial Confidence Indicator (EU) (10:00)Service Sector Confidence Indicator (EU) (10:00)Economic Sentiment Indicator (EU) (10:00) Initial Jobless Claims (US) (13:30) Continuing Claims (US) (13:30) Q2 Noida Toll Bridge Company Ltd. GDR Q3 AstraZeneca, Axis-Shield, Banco Santander SA, Royal Dutch Shell 'A', Royal Dutch Shell 'B' GMS Ultimate Finance Group FINALS Mouchel Group, Namakwa Diamonds Ltd. IMSS Aggreko, Arriva, Axis-Shield, Pace, Premier Foods, Promethean World, RPS Group, TT Electronics EGMS Air China Ltd. AGMS Alumasc Group, Argos Resources Ltd., Ashmore Group, Cubus Lux, Go-Ahead Group, Murgitroyd Group, Ransom(William) & Son UK ECONOMIC ANNOUNCEMENTS GFK Consumer Confidence (00:01) PMI Retail (09:30) CBI Distributive Trends Surveys (11:00) CBI Industrial Trends Surveys (11:00) CBI Reported Sales (11:00)FINAL DIVIDEND PAYMENT DATE Oxford Instruments