Tuesday, November 29

EMEA Earnings to Watch: Aramco, BP, Maersk, BNP, ING

If the rebound in the Stoxx Europe 600 Index since Oct. 12 is anything to go by, third-quarter earnings have been resilient so far. After Credit Suisse Group AG on Thursday, it’s the turn of French, Italian and Dutch banks to show how they fared in fixed-income trading and net interest income, with BNP Paribas SA, Societe Generale SA, ING Groep NV and Intesa Sanpaolo SpA all set to report next week.

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(Bloomberg) — If the rebound in the Stoxx Europe 600 Index since Oct. 12 is anything to go by, third-quarter earnings have been resilient so far. After Credit Suisse Group AG on Thursday, it’s the turn of French, Italian and Dutch banks to show how they fared in fixed-income trading and net interest income, with BNP Paribas SA, Societe Generale SA, ING Groep NV and Intesa Sanpaolo SpA all set to report next week.

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Recession fears notwithstanding, lenders are benefiting from central bank moves to tackle inflation, earning more on loans after years of navigating negative interest rates. The European Central Bank delivered its second straight three-quarter-point rate hike on Thursday, sending bank shares higher.

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With no letup in macro headwinds, AP Moller-Maersk A/S — a bellwether for global trade — may give a better glimpse of how exporters are coping when it reports on Wednesday. And after another bumper quarter by Shell Plc — first out of the block among oil and gas majors this week — attention is shifting to Saudi Aramco and BP Plc, who are also scheduled to report. They’ve been beneficiaries of Europe’s energy crisis, but margin pressure is building as prices recede.

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  • To subscribe to earnings coverage across your portfolio or other earnings analysis, run the NSUB EARNINGS function on the Bloomberg terminal.
  • Follow results, analysis and market reaction to BP’s report in real-time on the TOPLive blog next week.
  • For more on what’s going on in other regions, see the US Earnings Week Ahead or the Asia Earnings Week Ahead, and see the ESG Stock Watch for a selection of the environmental, social and governance themes that may come up on next week’s earnings calls.

Highlights to look for next week:

Monday: No major earnings of note

Tuesday: Saudi Aramco (ARAMCO AB) is due to report before 10 am local time. The world’s biggest energy exporter could see quarterly revenue fall from the previous three months on the back of lower oil prices, according to Bank of America. Ebitda is still expected to grow 40% year-on-year, with higher production volumes relieving the pressure on earnings. Aramco’s decision on additional shareholder distributions will also be in focus, along with any comment on the Saudi company’s spare capacity, especially with global oil markets so tight.

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  • BP (BP/ LN) is due to report at 7:00 am London time. The UK energy giant is expected to post sequentially lower but still strong results, supported by higher gas realizations and broadly flat upstream production. BP has seen booming cash flow after resolving its long struggle with excessive leverage, smoothing the way for buybacks and dividend recovery, Bloomberg Intelligence’s Will Hares says. The company’s exit of its interest in Rosneft led to writedowns of more than $24 billion, yet its effect on guidance is manageable and eased by decade-high cash generation. BP’s $4.1 billion deal to acquire US biogas company Archaea, expected to close by year-end, may have “a chilling effect” on the fourth-quarter buyback tranche, given management’s variable distribution policy for 60% of annual surplus cash flow, BI says.
  • ESG: Aramco has made recent forays into blue ammonia, a little-known fuel source with clean-energy potential, with Germany receiving Europe’s first test shipment in September. The ammonia receives the “blue” label when the CO₂ generated in the production process is permanently captured and prevented from entering the atmosphere. Yet, the majority of the captured carbon is injected into wells to extract more oil, obscuring how “green” the blue ammonia is when measured on net emissions. To read more, see the ESG Stock Watch .

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Read More: European Oil Stocks Trade at Record Discount to US Peers: Chart

Wednesday: Denmark’s Maersk (MAERSKB DC) is set to report before market open. The slowing pace of its profit growth is expected to have continued in the third quarter, with adjusted EBITDA seen increasing 40% year-on-year to $9.75 billion after more than doubling in the previous quarter, according to Bloomberg’s consensus. The macro environment is looking increasingly challenging, and spot prices are moving downwards, but Maersk’s earnings still could surprise on the upside, Kepler Cheuvreux analyst Anders Redigh Karlsen said. He expects stable results from the terminals business and continued growth in logistics. BI’s Stephane Kovatchev notes that Maersk’s credit metrics could remain vulnerable to freight-rate and macroeconomic volatility, adding that its free cash flow guidance of at least $24 billion in 2022 is achievable, but a possible peak.

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Thursday: BNP Paribas (BNP FP) is scheduled at 7:00 am CET. Strong results from Barclays Plc and Deutsche Bank AG this week mean expectations are high for France’s largest lender to similarly show a strong fixed income trading performance, as rising interest rates add momentum to its domestic business, according to BI’s Jonathan Tyce and Mar’Yana Vartsaba. Meanwhile, the scheduled closing of its BancWest sale is expected to leave BNP with a €7 billion cash pile waiting to be redeployed, though finance chief Lars Machenil in July ruled out using the proceeds to buy another bank.

  • ING (INGA NA) will report simultaneously at 7:00 am CET. Additional net interest-income upgrades and provision building ahead of a looming recession will be key for the Dutch lender, according to BI. ING, which ranks among the top 10 in Europe for exposure to leverage loans, could see the cost of risk rise to its highest level since the start of the pandemic. Its ability to keep deposit rates low and sustain 3% to 4% lending growth might offer respite, according to BI.
  • When Italian energy giant Enel SpA (ENEL IM) confirmed its targets for 2022 in July, Chief Executive Officer Francesco Starace warned the environment will continue to be tense for the electricity business amid the volatility in gas prices. The company, expected to report after the market close, likely had a “weak” third quarter amid pressure on retail margins in Italy and Spain, according to BI’s Patricio Alvarez. Costs to service Enel’s €62 billion debt pile are also rising. The utility recently engaged in talks with lenders over a revolving credit line of about a €16 billion to cover derivatives risks linked to spiking energy prices. This month, it agreed to sell 50% of Gridspertise unit to CVC in a deal that would generate a positive impact on Ebitda margin of about €500 million .

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Read More: NatWest Shares Drop as Lender Warns on Costs and UK Economy

Read More: BBVA Beats Estimates As Rising Rates Boost Loans Revenue (1)

Friday: Societe Generale’s (GLE FP) report, set for 6:30 am CET, isn’t expected to generate a lot of fireworks, as Frederic Oudea, the longest-serving CEO of a major European bank, prepares to hand over the reins to Slawomir Krupa next year, according to BI. A smooth handover — with tight cost control, capital return and solid CET1 — are the priorities in the third quarter and into 2023. As with cross-town rival BNP, fixed income trading will be particularly in focus.

  • Intesa Sanpaolo (ISP IM), expected to report during trading hours, has committed to distribute €22 billion to investors through 2025, one of the most generous targets in Europe. A “strong” net-interest income performance may be offset by declines in fee income from corporate and investment banking and asset management, according to BI’s Ilia Shchupko. CEO Carlo Messina has signaled he may fine-tune the 2022 outlook once again to reflect fallout from Russia’s war in Ukraine. With a significant portfolio of Italian bonds, Intesa may be affected by new Prime Minister Giorgia Meloni’s economic plans, which include measures to help protect Italians from high inflation while cutting taxes.

—With assistance from Jonas Cho Walsgard, Antonio Vanuzzo, Shaji Mathew, Ryan Hesketh and April Roach.

(Updates to add NatWest, BBVA results in Thursday section)



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