Shell says returns could be slowed by economy

Royal Dutch Shell said the worsening economy could slow the pace of returns to shareholders, overshadowing a strong third-quarter trading performance that yielded bumper profits.

While the company comfortably beat even the highest analyst estimate for third-quarter profit, shares dropped the most in almost a month after Chief Executive Officer Ben van Beurden warned of uncertainty around the current pace of share buybacks and reduction in gearing — Shell’s ratio of debt to equity.

The third quarter was difficult for energy producers, with crude prices sinking over worries about the impact of the U.S.-China trade war while natural gas markets endured a long stretch of oversupply.

“The prevailing weak macroeconomic conditions and challenging outlook inevitably create uncertainty about the pace of reducing gearing to 25 percent and completing the share buyback program within the 2020 time frame,” van Beurden said in a statement on Thursday.

Shell said adjusted net income was $4.77 billion in the quarter, beating the average analyst estimate of $3.92 billion. That compares with a profit of $5.62 billion in the same period last year and improves on a surprisingly weak second quarter. Cash flow from

operations including working capital, perhaps the single most important measure for Shell as it aims to distribute $125 billion to shareholders between 2021 and 2025, was $12.25 billion, little changed from a year earlier. Bloomberg News

Sunnova’s losses widen

Sunnova Energy, the residential solar and energy storage company based in Houston, reported steeper losses in the third quarter, reflecting higher costs for borrowing money, administrative fees related to the company’s initial public offering in July and higher expenses related to increasing its customer base.

Sunnova reported a $34.4 million net loss during the third quarter, which ended Sept. 30, compared with a loss of $6.6 million for the same period one year earlier. Revenues climbed 20 percent to $36.6 million, from $30.4 million in revenues in the third quarter of 2018.

“We’re confident in our future growth projections,” said John Berger, chief executive officer of Sunnova, during a conference call with analysts. The company released its earnings report before

the market opened Thursday.

Sunnova had 72,600 customers at the end of September, an increase of 15,600 from one year earlier. L.M. Sixel

Fluor’s revenues fall

Engineering, procurement and construction company Fluor said Thursday that its third-quarter losses widened and its revenues fell as it undertakes a companywide overhaul.

The Dallas company said its losses grew to $742 million from $77.3 million in the third quarter of 2018. Revenues fell 17 percent to $3.9 billion from about $4.7 billion a year earlier.

The earnings report comes as the company’s new CEO, Carlos Hernandez, is cleaning shop. The company recently completed a strategic review and has started restructuring efforts that include selling off $1 billion in assets as the company refocuses on energy sector projects. On the chopping block are the company’s government services and construction equipment rental divisions as well as surplus real estate and noncore investments.

The company’s third-quarter loss included a $249 million write-down in the values of a pair of joint ventures and $44 million of restructuring costs. Sergio Chapa

Frost Bank profit slips

The parent company of Frost Bank said Thursday that its thirdquarter profit slipped 5 percent on higher operating and overhead costs — some related to the move to a new downtown San Antonio headquarters and its Houston expansion.

Cullen/Frost Bankers Inc. said that it earned $109.8 million, or $1.73 a share, on $365.8 million in revenue in the three months ending Sept. 30. By comparison, the company earned $115.8 million, or $1.78 cents a share, on $353.3 million in revenue in the same period a year ago.

The bank holding company’s bottom line was affected by a $15.2 million increase in noninterest expenses, or nearly 8 percent, from the same period a year ago. That included an increase of $6.3 million, or 7.2 percent, for salaries and wages as it stepped up hiring and awarded raises. Real estate costs, which rose $4.3 million, or almost 22 percent, include the expansion in Houston.

It’s slightly behind schedule on the rollout but still expects it will open a total of 25 branches in Houston by the end of next year.