Take advantage of the economic boom from the mines to the main street

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Corporate earnings updates

The global economic rebound from Covid-19 resulted in a bumper crop of corporate profits on Thursday as commodity prices rose and consumers started spending money outside of their homes.

Companies listed in the UK alone announced dividends and share buybacks totaling more than 10 billion US dollars, with corporations from Royal Dutch Shell to the Diageo distillery reporting rising sales and profits again.

The surge in commodity prices, fueled by stronger demand following the coronavirus economic shock, allowed Shell to increase its dividend by 40 percent after cutting last year, while Anglo American said it was after the strongest earnings of the year 4.1 billion 104-year history of the miner.

Mark Cutifani, CEO of Anglo, said, “In the first six months of 2021 there has been strong demand and prices for many of our products as economies begin to regain lost ground, driven 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 steel maker ArcelorMittal posted its highest profit since 2008.

Miner Rio Tinto announced a record $ 9.1 billion payout on Wednesday as its half-year profits surpassed all of 2020 thanks to soaring iron ore demand from a recovering Chinese economy.

As the recovery helped demand for raw materials, consumers in countries like the US, UK and several European countries responded to new freedoms by returning to bars, restaurants and offices.

The easing of Covid-19 restrictions helped drive profit leaps at Diageo and the world’s largest brewery, Anheuser-Busch InBev, as well as the world’s largest exhibition group Informa and pest control company Rentokil, whose hygiene business benefited from the reopening of business premises.

Lord Stephen Carter, CEO of Informa, described “a gradual return of physical event activity” in the company’s main markets, with China “effectively returning to what you saw in 2019” and the US “picking up at a pace”.

While earnings numbers were flattered by comparison to dismal numbers at the start of the pandemic a year ago, the gains went beyond that. Nestlé, the world’s largest food company, posted its fastest growth in a decade in the first half of the year, driven by a steep surge in its grocery, beverage and confectionery sales.

A resurgence in air travel spurred aerospace and defense company Airbus, which doubled its forecast for the year to € 4 billion due to returning aircraft demand.

However, the spread of the Delta variant of the coronavirus is casting a shadow on the business outlook as countries like Brazil and India are still grappling with the effects of their recent virus waves.

“Covid-19 is not over yet,” warned Airbus boss Guillaume Faury. “The vaccination rates vary widely around the world and we cannot rule out the possibility that there will be another variant after the Delta variant, so we believe that we have to be very careful. . . It’s going to be a bumpy road in terms of recovery. “

Although South Korean electronics giant Samsung reported an increase in net profit in the second quarter, it warned of growing risks to its supply chain from new waves of Covid-19, particularly in Vietnam.

And for consumer-facing businesses, the rise in commodity prices threatened margins even as demand recovered.

Nestlé CEO Mark Schneider said: “What we have seen this year is kind of a turning point where, after several years of low inflation, there has suddenly been a very sharp acceleration.”

Reporting by Neil Hume, Sylvia Pfeifer, Sam Jones, Alistair Gray and Alex Barker