Results round-up

Sainsbury's annual results showed the severe hit to its finances by the industry price war and ensuring food price deflation but profits fell less than analysts expected.

Total sales from Sainsbury's 601 supermarkets fell 1.1% to £25.8bn, while like-for-like sales fell 0.9%. Pure retail sales rose 0.4%, however.

Underlying profits before tax slumped 13.8% to £587m, though this was better than the consensus forecast of £575m, leading to underlying earnings per share declining 8.3% to 24.2p. Consensus earnings forecasts were for a number nearer to 22.4p.

At the statutory level the company broke even with a £548m pre-tax profit, from the £72m loss the year before.

After the interim dividend was cut back last year, the final payment was trimmed less than feared, by only a tenth of a penny to 8.1p, meaning the full year dividend will be 8.3% lower than the previous year at 12.1p, with cover maintained at 2.0 times.

"Our core food business performed well, underpinned by our quality investment programme, our simpler pricing strategy and lower regular prices," said chief executive Mike Coupe.

"We also saw strong growth in clothing and general merchandise, as well as in our convenience and online channels."

He said the ongoing pricing pressures and food price deflation were the reason sales, operating margins and hence earnings were narrower.

Retail underlying operating margin shrank by 33 basis points to 2.74% despite the FTSE 100 grocer making operating cost savings of £225m this year.

Coupe said he expected the current 2016/17 financial year to see cost inflation at the lower end of the 2-3% range, with the company making operational cost savings of around £120m, consistent with hitting its three-year £500m cost saving programme by the end of 2017.

"Sainsbury's will remain competitive on price in the market. Food price deflation is likely to continue in to the second half of 2016/17."

Royal Dutch Shell posted a drop in first-quarter earnings on Wednesday in the oil giant’s first results since the takeover of BG Group.

First-quarter earnings on a current cost of supplies basis and stripping out one-off items fell 58% from the previous year to $1.55bn as weak oil prices continued to take their toll, but the results were still better than the $1bn pencilled in by analysts.

Meanwhile, net income fell to $484m from $939m in the first quarter of 2015.

Chief executive Ben van Beurden said: “We continue to reduce our spending levels, to capture cost opportunities and manage the financial framework in today’s lower oil price environment. The combination with BG is off to a strong start, as a result of detailed forward planning before the completion of the transaction.

“This will likely result in accelerated delivery of the synergies from the acquisition, and at a lower cost than we originally set out.”

Also on Wednesday, Shell announced plans to cut spending this year to $30bn from previous guidance of $33bn. This is around 36% lower than the combined Shell and BG investment in 2014.