Results round-up: HSBC, InterContinental Hotels, Wood Group

HSBC threw in an extra £1bn share buyback and offered assurances about maintaining its dividend to try and keep investors onside as it reported a bigger than expected drop in annual profits and admitted it may need to move 1,000 jobs from London to Paris over the next two years due to Brexit.

Europe's largest lender and the largest FTSE 100 constituent delivered a reported profit before tax of $7.1bn that was down 62% on the prior year.

Fourth quarter adjusted pre-tax profits increased 39% to $2.62bn, but this was short of the consensus $3.78bn forecast as adjusted revenues slipped 3% to $11bn, again short of the market forecast of $12.4bn.

The reported annual profit was also less than half of analysts’ consensus forecast of $14.4bn, according to Reuters.

But as the reported figure included one-off items, most of which had no impact on capital, management maintained a positive opinion of last year, with adjusted profit before tax of $19.3bn only down 1.2%.

"2016 was a good year in which we delivered a solid performance from all our global businesses, made better-than-anticipated progress in reducing our cost base, and delivered a total return to shareholders of 36%," said chief executive Stuart Gulliver.

"We are investing over $2bn in digital transformation initiatives to improve our offer to customers, and are instigating a further $1bn buy-back programme reflecting the strength and flexibility of our balance sheet."

This buyback, which comes on top of the $2.5bn of repurchases made last year on the back of the Brazil sale, was largely expected by analysts.

Although operating costs grew 3% in the fourth quarter, adjusted operating expenses fell by 4% over the year and reported operating expenses were broadly unchanged as annualised run rate savings of $3.7bn were made.

The group said it will take an incremental $1.5-2.0bn of restructuring charges in order to make additional cost savings of around a net $0.6bn.

InterContinental Hotels

InterContinental Hotels posted a jump in full-year operating profit on Tuesday as it said it will return $400m to shareholders via a special dividend and share consolidation.

Operating profit in the year to the end of December was up 4% to $707m as global revenue per available room rose 1.8%. However, revenue declined to $1.72bn from $1.8bn.

The company said it will pay a special dividend in the second quarter of this year, as it lifted its total dividend by 11% to 94 cents a share.

Chief executive Richard Solomons said: "Our results clearly demonstrate our strong operational performance and the success of IHG's long-term strategy, which have delivered a 9.5% increase in underlying profit and a 23% increase in underlying earnings per share. Our cash generative business model underpins our decision to announce a $400m special dividend and to propose an 11% increase in the total dividend for the year.

“The fundamentals for the hospitality industry remain compelling. Despite the uncertain environment in some markets, we remain confident in the outlook for the year ahead, as well as our ability to deliver sustainable growth into the future."

Wood Group

Wood Group saw full-year 2016 profits sink amid challenging conditions in its core Oil & Gas market - describing the pricing environment as competitive - and said it remained cautious about the near-term outlook.

The oilfield services group saw total revenues shrink 15.7% over the twelve months ending on 31 December to reach $4.93bn.

Company boss Robin Watson said: "Despite challenging conditions in our core oil & gas market in 2016 the Group delivered financial performance in line with expectations. Results benefited from the robust management of utilisation and costs and one off benefits. We enter 2017 as One Wood Group, repositioned to enhance customer delivery and we are encouraged by their support for our services, albeit in a competitive pricing environment."

Together with a 0.6 percentage point drop in its earnings margins before interest, taxes and amortisation to 7.4%, that drove a 22.8% fall in its operating profits in EBITA terms.

Like-for-like revenues on an equity accounting basis were similarly weak, retreating 17.6% to $4.1bn.

Full-year profits plummeted 61.8% to $34.4m for adjusted earnings per share of 64.1 cents, 23.7% less than in the year ago period.