Shell plans more generous dividends, PageGroup’s jobs boost doesn’t extend to UK and Wetherspoon misses footie beer bonanza

“Resources stocks helped lift the FTSE 100 on Wednesday morning despite a mixed showing from Asia and last night in the US,” says AJ Bell Investment Director Russ Mould.

“A positive update from Royal Dutch Shell and oil prices touching six-year highs contributed to gains for these index heavyweights and helped outweigh any fears over the inflationary pressures the recent spike in commodity prices may create.

“This might change if meeting minutes from the US Federal Reserve, published this evening, sound the alarm on inflation.”

Royal Dutch Shell

“Today’s teaser from Royal Dutch Shell ahead of second quarter results will be getting its investors as excited as James Bond fans are by the trailer for the latest film in the series.

“The company has unveiled plans to return more cash to shareholders in the second half as the recent surge in the oil price benefits cash flow and helps with debt reduction.

“This news is an interesting coda to the recent court decision in the Hague which effectively forced Shell to reduce its emissions more quickly than planned. This is likely to require significant investment and for this reason Shell is likely to be wary of overstretching itself in terms of dividend commitments.

“The continuing volatility in oil prices means managing an oil and gas business like Shell remains a high-wire act. To put the see-saw nature of the market into context, oil has traded at multi-year lows and more recently at multi-year highs all in less than 18 months.

“The latest move reflects OPEC’s continuing influence over crude prices, with the collapse of talks over a supply increase providing a catalyst.

“Such wild swings in the oil price make the kind of long-term planning and investment Shell will require to successfully transform itself into an energy business fit for a post fossil fuels future a real challenge.”

PageGroup

“Economic recovery is music to the ears of recruitment companies as it can bring a bumper period for placing individuals into jobs.

“PageGroup’s latest results suggest there is a serious hiring spree going on around the world, perhaps a mixture of reactivating jobs that were lost in the pandemic and companies feeling more confident to invest in the future.

“For the second quarter of 2021, PageGroup made more gross profit than it did in the same period in 2019.

“Interestingly, the UK is a standout category in the trading update for negative reasons. Whereas income has soared from Germany and parts of Asia, the UK is down 9% compared to 2019.

“Anecdotally in the UK, there has been a shortage of people looking for their second or third job. They’ve lacked the confidence to move from their existing role for fear of being last in, first out should there be any Covid-related setback which causes job cuts in the months ahead.

“That’s meant companies have been faced with the prospects of candidates who are either inexperienced or have too much experience and potentially may lack the required hunger and enthusiasm to excel in a new role.

“Assuming the Government’s plan to remove more Covid-related restrictions goes to plan in the coming weeks and doesn’t lead to another big wave of infections, one might expect individuals to feel more confident about wanting to move jobs.

“One catalyst might be businesses who decide they won’t let staff work from home. After appreciating the benefits of not having to commute to the office every day, there is going to be a large chunk of people who want ongoing flexibility with their working locations so as to avoid the five days a week grindstone of traffic jams or tedious train rides.

“If they can’t get full remote working or a hybrid of office/work from home, they’ll move to an employer who can offer this benefit.”

JD Wetherspoon

“While pub operators across the UK have cheered on the Euro football championship as it has boosted sales, Wetherspoon is paying the price for not having televisions in its boozers.

“This disadvantage is a complete turnaround from last summer when its pubs had a strong advantage in that they were often bigger than rival outlets in the same area and were better placed to accommodate social distancing measures.

“Wetherspoon also had an established app which meant it could instantly switch to mobile-based ordering from the table, unlike some rivals who had to ship in the technology.

“As it stands, Wetherspoon is on track to make a loss for the year to 25 July. Apart from having some TVs in its pubs for the football, there was nothing else it could have really done to boost trade beyond what’s already in place, given how disruptive the year has been.

“Its chairman Tim Martin is never short of something to grumble about, but one cannot find any fault in its long-term business model of offering customers good value for money. Its future will likely follow the same formula – open more pubs, make sure the existing ones are presentable, and offer customers good quality products at affordable prices.

“It might have missed the opportunity for a few quid in the past few weeks, but it has never been one to chase a fast buck.”

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