Newspaper article The Journal (Newcastle, England)

Shell Annual Profits Set to Be More Than Pounds 13.2bn; Taking Stock in Association with RBS

Newspaper article The Journal (Newcastle, England)

Shell Annual Profits Set to Be More Than Pounds 13.2bn; Taking Stock in Association with RBS

Article excerpt

Byline: By Iain Laing

MARKET sentiment will be tested this week when the City's full-year results season kicks off with figures from Royal Dutch Shell and AstraZeneca.

Royal Dutch Shell is expected to reveal full-year profits of more than pounds 13.2bn on Thursday despite a tough end to 2007 for the oil major.

Consensus forecasts put fourth-quarter earnings at pounds 2.95bn as higher operating costs and lower refining margins bite, even though oil prices soared to USEUR100 a barrel. This would leave full-year earnings at pounds 13.5bn, 5% ahead of 2006.

Shell has ratcheted up capital spending to seek out new sources of oil and gas since the reserves scandal of 2004, with chief executive Jeroen vander Veer's selling off maturing assets to rejuvenate the oil major's portfolio. But analysts predict production will be at the lower end of its guided 3.3 to 3.5 million barrels of oil equivalent a day.

Deutsche Bank said it expects Shell to spend more but cut production this year. Shell plans to cut 3,200 jobs to save cash, largely by outsourcing IT.

Drugs giant AstraZeneca unveils 2007 results on Thursday with profits under pressure from patent challenges to its top-selling treatments with its three leading products facing competition from rival manufacturers looking to market generic copies.

Concerns over the patent challenges - which should come to a head this year - have knocked AstraZeneca's share price by more than a third in the past three months.

Consensus forecasts put full-year profits 4% down at around pounds 4bn. It also faces the cost of integrating acquisition Medlmmune which includes axing 3,000 jobs.

All Bar One and Harvester owner Mitchells & Butlers posts its first quarter results on Thursday, with analysts braced for more gloomy news.

In November the group warned the first winter for the England and Wales smoking ban posed a challenge for its 2,000 outlets, especially as sales were already slowing ahead of the season. …

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