Equities Update: Shell, Next, Tesco, M&S, B&M…

Shell faces challenges with LNG and renewable investments amid market volatility

 
Mark Crouch, market analyst at investment platform eToro, says: “Shell has revised its outlook for Liquefied Natural Gas (LNG) production in the fourth quarter, as oil and gas prices remain under pressure following a challenging year for fossil fuels. The oil giant’s chemicals and oil products division is also expected to report a decline in Q4, signalling a broader slump in its performance as it prepares to release earnings in the coming weeks.

“Additionally, Shell has announced that it is stepping back from new offshore wind investments. This move raises questions about the long-term viability of windfarms as a practical investment for the company’s shareholders, especially under the leadership of CEO Wael Sawan. Sawan’s relentless focus on pursuing projects that generate value for investors seems to prioritise short-term returns over longer-term renewable energy commitments.

“2024 proved to be a tough year for oil investors, with energy being one of the worst-performing sectors, marking a period many would prefer to forget. Shell investors, however, are no strangers to difficult times. The energy sector is notoriously cyclical, and this downturn is no exception. With political figures like Donald Trump continuing to champion policies that favour increased oil drilling, investors may be bracing for further downward pressure on oil prices, potentially extending the current slump.”
 

Next with late present to shareholders after bumper Christmas

Adam Vettese, market analyst at investment platform eToro, says: “As if a billion-pound profit for the year wasn’t enough, Next has gone and nudged the dial again, increasing full year profit outlook for the fourth time in the space of half a year. Sales were up 6% for the period leading up to and just after Christmas, significantly higher than the projected 3.5% increase, which has been the same story throughout the year much to the delight of investors. Next is often used as a barometer of the UK retail sector and so far so good with many others due to report this week.

“There will be challenges ahead, particularly with a huge cost increase, predominately from increased national insurance and wage cost inflation. The company seems to have a robust plan to offset these costs with improved operational efficiencies, sales increase and price increases. Whilst raising prices might cause concern that it could come at the expense of losing customers, this will be a small 1% hike, less than the 2% BoE inflation target.

“Shares came off their highs towards the back end of last year and investors will be hoping this update is the flavour of things to come throughout the year to see the price push on further.”

Tesco records biggest Christmas ever after sales boost

Adam Vettese, market analyst at investment platform eToro, says: “Kantar data earlier in the week highlighted Tesco as a Christmas winner in the UK grocery sector. Their update this morning seems to back that up with Christmas like-for-like sales up 4.1%. Tesco was able to take market share from both premium and discounter competitors alike, accruing the highest level of market share dominance since 2016. Premium grocers tend to do well at Christmas as consumers trade up and treat themselves, but a 15.5% uplift in Tesco’s finest range has managed to keep customers satisfied enough not to go elsewhere.

“Shares have made strong gains over the last 2 years and are approaching the highest level we have seen in 12 years. This morning’s update will please investors who will hope to see this momentum continue.”