LONDON (AFX) - Royal Dutch Shell PLC is expected to reveal today a slowdown in earnings growth in the third quarter after hurricanes Katrina and Rita cut its US oil and gas production.
The group, formed from the union of Royal Dutch Petroleum NV and Shell Transport and Trading PLC, is likely to turn in a net income, on an adjusted current cost of supply basis, of between 4.37 bln and 5.92 bln usd, or an average of 5.165 bln, up 18 pct from 4.38 bln previously.
That would be the slowest growth since the second half of 2004, when quarterly earnings surged by as much as 200 pct on the back of soaring oil prices.
But production weakened in the three months to September this year, putting Shell's guidance of 3.5-3.8 mln barrels of oil equivalent per day for 2005 and 2006 at risk, as two devastating hurricanes disrupted operations and damaged key facilities in the US.
Maintenance work at the group's North Sea fields and asset disposals also contributed to the output cut, which partly offset gains from strong oil prices and refining margins.
Credit Suisse First Boston expects volumes to fall 9 pct to 3.272 mln boepd in the quarter, including 130,000 boepd of hurricane-related production losses.
For the full year, CSFB sees output dropping 7 pct to 3.52 mln boepd from 3.8 mln in 2004, at the low-end of Shell's guidance.
"Weaker volumes and higher costs offset much of the increase in commodity prices," said CSFB.
Merrill Lynch is forecasting volumes will have fallen 11 pct to 3.2 mln boepd in the quarter, possibly taking the total for the year to 3.4 mln boepd, way off the oil group's guidance.
Analysts are concerned about the effect of the hurricanes on Shell's future output and costs, particularly after factoring in prolonged shutdowns and additional spending on repairs.
Shell in July raised exploration spending by 20 pct to 1.8 bln usd annually in 2005 and 2006, while maintaining the budget across the group at 15 bln usd this year.
Overall investment plans for 2006 and beyond were placed under review to reflect spending needed for new projects and cost pressures brought about by high oil prices, it said.
Shell will submit the revised budget to the board for approval before the end of the year.

AFX UK at a glance share guide

LONDON (AFX) - Leading shares are expected to open lower this morning, reflecting a weak performance by Wall Street last night, although much will depend on a raft of blue-chip UK earnings reports scheduled for release today, dealers said.
According to spread-betting firm IG Index, the FTSE 100 is seen opening around 35 points lower after closing at 5,227.8 yesterday.

MARKETS
FTSE 100 5227.8 up 47.7
FTSE 250 7633.4 up 97.8
DJIA 10,345 down 32.9
Nasdaq Comp 2100.05 down 9.4
S&P 500 1191.4 down 5.15
Tokyo: Nikkei midday 13,425.4 up 30.4
Hang Seng midday 14,390.2 down 68
Gold 473.50
Oil - Brent Dec 60.80 usd (60.66 usd)

TODAY'S PRESS
* A senior official of Refco Inc. who was head of the subsidiary at the centre of the alleged fraud is cooperating with prosecutors, according to sources -FT
* Regulator eyes end to big four auditor dominance - FT
* Prudential was under fire from shareholders after new strategy failed to impress - FT
* Nomura stuns the city by sacking 25 traders and sales staff - Times
* GLG Partners and one of its traders Philippe Jabre are under investigation by the FSA - Telegraph.

PRESS COMMENT
FT
THE LEX COLUMN comments on ANGLO AMERICAN (never before has the firm rushed out a statement so soon after its annual October confab), PRUDENTIAL (says it arguably takes more to initiate a strategic review and then decide that nothing needed to change) GOOGLE/EBAY (when Google turns to a new area rivals quake. But how much should Ebay fear its plan to encroach its territory) DCX (European car makers are clearly firing on all cylinders when DCX and FIAT can report positive surprises), ENDEMOL (has become the nadir of Western civilization according to many and its return to the stock market is consistent with the zeitgeist).
Telegraph
QUESTOR: MARKS & SPENCER (back on track) FIRST CHOICE (buy) KENSINGTON (sell)
Guardian
GLG (silence won't inspire investors) TUCKER (fails to score)
Independent
THE INVESTMENT COLUMN: FIRST CHOICE (buy); LONMIN (hold) EURO MOTOR HOLDINGS (hold)
Times
Directors' dealing PKL HOLDINGS (two directors bought stock for 144,375 stg)
Rumour of the day: CENTRE PARCS (drawn predatory interest from Pierre & Vacances)

Boots H1 profit falls 9.6 pct

LONDON (AFX) - Boots Group PLC, the troubled health and beauty retailer that earlier this month proposed a merger with Alliance Unichem PLC, has reported a 9.6 pct fall in first half underlying profit, blaming lower UK consumer spending and higher infrastructure costs.
For the six months to Sept 30 the group, which is facing intense competition from the supermarkets and high street discounters, made a trading profit before tax of 163 mln stg compared to analyst expectations of 140-160 mln stg and 180 mln stg last time.
The outturn reflects a 45 mln stg rise in operating expenses due to increased investment in the core Boots The Chemists chain and was achieved on a 0.8 pct increase in group sales to 2.59 bln stg.
Within this sales at the 1400-outlet BTC grew 1.1 pct but were down 1.3 pct on a like-for-like basis, which strips out the impact of new and closed space.
Boots said BTC's underlying like-for-like sales were "broadly flat" year-on-year, before the effect of regulatory price changes in dispensing.
BTC's gross margins were down 30 basis points, while operating costs were 6 pct higher.
Group profit from continuing operations before tax increased to 258.9 mln stg from 70.5 mln stg. This result includes 151 mln stg profit from a sale and leaseback but excludes 51 mln stg of profit from Boots Healthcare International (BHI) and other discontinued businesses.
The interim dividend was held at 9.1 pence, payable Jan 20.
"The last six months has been a period of further significant progress for Boots, as despite a weak consumer environment, we have continued to invest in our infrastructure, our operations and our customer offer," said chief executive Richard Baker.
"This has led to lower profits as we continue to bear the cost of building a better Boots."
Baker joined the retailer from Asda in 2003 and put in place a strategy of re-investing in systems, infrastructure and stores, opening for longer hours and repositioning on prices to drive sales.
Over the last two years, prices on some 3,300 lines have been cut by an average of 18 pct, an investment of over 200 mln stg. Thousands of head-office jobs have also been cut.
Last month Baker admitted the BTC chain is unlikely to meet its full year sales target after it reported a fall in second quarter underlying sales. He also warned investors not to expect better trading conditions this side of Christmas.
In the spring Boots forecast BTC would achieve year to end-March 2006 like-for-like sales growth of 0-2 pct. However, Baker has recently refused to endorse this target.
BTC needs to notch-up like-for-like sales growth of 1 pct in the second half to achieve a flat performance for the year.
BTC's guidance on full year margins and costs remains unchanged -- "broadly stable" gross margins and operating costs up 6 pct.
Four days after the proposed "merger of equals" with Alliance was announced Boots confirmed the sale of BHI, its over-the-counter medicines business to Reckitt Benckiser PLC, the Anglo-Dutch household products group, for a much better-than-expected 1.93 bln stg. The merger with Alliance was conditional on the disposal of BHI.
Boots shareholders will receive 1.43 bln stg of the proceeds through a special dividend.
Boots investors appear unconvinced about the merits of the merger, which requires shareholder approval, despite a roadshow by Baker and chairman Sir Nigel Rudd, and Alliance deputy chairman Stefano Pessina. There has also been speculation that competition authorities could scupper the deal.

REUTERS' GLOCER FLAGS 'GOOD START' TO 'CORE PLUS' PLAN

Reuters repeats H2 targets after in-line Q3

LONDON (AFX) - UK financial news and data provider Reuters Group PLC reiterated its targets for the second half of 2005 after its third-quarter performance matched the City's expectations.
The group said recurring revenues -- the best measure of demand for its news terminals -- rose 1.5 pct to 574 mln stg in the three months to the end of Sept.
Total turnover rose to 611 mln stg, up 1 pct on an underlying basis from the previous year, thanks to the acquisition of financial data group Telerate, which completed in June.
Reuters was expected to report a rise in core subscription sales of around 1.5 pct amd third-quarter revenues of between 600-615 mln stg.
"Todays results reflect a solid third quarter performance for our core business," said chief executive Tom Glocer. "We have further enhanced the core by releasing significant product upgrades this quarter that prepare us well for 2006."
Reuters went on to say that it still expects underlying recurring revenues to rise by between 1-2 pct in the second half of 2005 following two quarters of consecutive growth. The group, which was badly hit by the post-2001 downturn in financial markets, is only just returning to underlying revenue growth after four years of decline.

Good morning all and thanks for the info. Digger.

Aviva 9-month sales in line with expectations

LONDON (AFX) - Insurance group Aviva PLC turned in nine-month life and pension sales in line with market expectations, with a strong performance in continental Europe offsetting flat sales in the UK market.
Aviva, the UK's biggest insurer, said life and pension sales for the nine months to Sept 30 came in at 16.260 bln stg, in line with the 16.159-16.157 bln stg range of analysts' forecasts. Total sales including investment products came in at 17.933 bln stg, 12 pct up on the same period last year.
The improvement was driven by robust growth in Europe, where life and pensions sales rose 20 pct on the year to 8.778 bln stg. In contrast, UK life sales dipped 3 pct to 6.586 bln stg. Total sales In the UK stood at 7.441 bln stg, slightly higher than the 7.438 bln stg in the previous nine-month period.
Aviva has achieved strong growth in Europe over the past two years through distribution agreements with retail banks. But progress in the UK has been held back by a slower overall market growth rate, and by stiff competition from the likes of Prudential, Legal & General, and Friends Provident.
"This is another strong performance from our international portfolio of life businesses. Bancassurance continues to go from strenght to strength and is a key part of our multi-distribution approach," Aviva chief executive Richard Harvey said.
The contribution to profits from new life and pensions business over the nine months was 575 mln stg, a 13 pct increase year-on-year. The new business margin stood at 3.5 pct, compared with a margin of 3.4 pct for the whole of 2004.
Aviva shares closed at 635-1/2 pence on Wednesday.

Morning all,

Nice to have you back digger! Been away?

Midday Market Summary

LW
Had a few things to do in UK , now at home in the sun like G

wish I could join you both

not a good day to be an "investor"

End-of-day Market Summary