The global economic bounceback from Covid-19 fuelled a bumper crop of corporate earnings on Thursday as commodity prices surged and consumers returned to spending money outside their homes.
UK-listed companies alone announced more than $10bn of dividends and share buybacks, with groups from Royal Dutch Shell to distiller Diageo reporting resurgent sales and profits.
The commodity price surge, fuelled by stronger demand after the economic shock of coronavirus, enabled Shell to raise its dividend by 40 per cent after a cut last year, while Anglo American said it would return $4.1bn to shareholders following the strongest profits in the miner’s 104-year history.
Anglo chief executive Mark Cutifani said: “The first six months of 2021 have seen strong demand and prices for many of our products as economies begin to recoup lost ground, spurred by stimulus measures . . . The share buyback should tell you that we don’t think this is as good as it gets.”
France’s TotalEnergies reported its highest half-year profit in five years and announced share buybacks, while steelmaker ArcelorMittal posted its highest profits since 2008.
Miner Rio Tinto announced a record $9.1bn dividend payout on Wednesday as its half-year profits topped those for the whole of 2020 thanks to surging iron ore demand from a rebounding Chinese economy.
As the recovery aided demand for raw materials, consumers acted on new freedoms in countries including the US, UK and several European nations by returning to bars, restaurants and offices.
The easing of Covid-19 restrictions helped to fuel profit jumps at Diageo and the world’s largest brewer, Anheuser-Busch InBev, as well as the world’s largest exhibitions group Informa and pest control company Rentokil, whose hygiene business benefited from commercial premises reopening.
Lord Stephen Carter, chief executive of Informa, described “a progressive return of physical event activity” across the company’s main markets, with China “effectively back to what you would have recognised in 2019” and the US “picking up at pace”.
While earnings figures were flattered by the comparison with grim numbers as the pandemic set in a year ago, the gains went beyond that. Nestlé, the world’s largest foodmaker, reported its strongest first-half growth in a decade, propelled by a steep rise in sales of its food, drinks and confectionery outside the home.
A resurgence in air travel boosted the aerospace and defence group Airbus, which doubled its forecast for the year to €4bn on returning demand for aircraft.
The spread of the Delta variant of coronavirus, however, cast a shadow over corporate outlooks, with countries such as Brazil and India still grappling with the impact of their latest waves of the virus.
“Covid-19 is not over,” Airbus chief executive Guillaume Faury warned. “Levels of vaccinations are very diverse around the world and we cannot exclude that after the Delta variant there will be another one, so we believe we have to remain very prudent . . . It is going to be a bumpy road in terms of recovery.”
Even as it reported a jump in second-quarter net profit, South Korean electronics group Samsung warned of growing risks to its supply chain from fresh waves of Covid-19, particularly in Vietnam.
And for consumer-driven businesses, the commodity price surge threatened margins even as demand recovered.
Nestlé chief executive Mark Schneider said: “What we’ve seen this year is some kind of a turning point where, after several years of low inflation, all of a sudden it accelerated very strongly.”
Reporting by Neil Hume, Sylvia Pfeifer, Sam Jones, Alistair Gray and Alex Barker