Analysts expect a doubling of earnings on the Oslo Stock Exchange in the third quarter. The investment manager says it’s a complete bet on most things.
Sky-high commodity prices are good news for many of the largest listed companies, which in the coming weeks will present their third-quarter financial results.
While the price of gas has It rose further to record levels this fallThe price of oil reached its highest level since 2018 and the price of aluminum has not risen since 2008.
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According to stock strategist Paul Harper at DNB Markets, analysts expect earnings on the Oslo Stock Exchange to double in the third quarter compared to the same quarter last year.
Also compared to 2019, the year before the pandemic, strong earnings growth is expected.
Commodity prices are increasing rapidly
– The economy recovered the decline after Covid, but it also received an additional “boost” from raw materials in particular, as the rise was also marked by pressures in some sectors, which spread to other sectors, says Harper E24.
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Commodities are often driven by growth in the economy and often have a common cycle. We’ve now had a very strong year in terms of GDP growth globally, so it’s no wonder that commodity prices have been so strong.
Energy prices have skyrocketed in Europe and Asia this summer and fall. In the next round, it pressured, among other things, energy-intensive aluminum production and contributed to higher prices, according to Bloomberg.
“There was a greater imbalance between supply and demand that resulted in more pressure than most people would prepare — first of all very evident in gas, but you also notice it in most raw materials,” Harper says.
– He says that this affected the price of aluminum and the price of fertilizers as well.
– It’s going to be an exceptionally strong quarter
According to Harper, Equinor is expected to make the largest profit contribution to the Oslo Stock Exchange in the quarter, while Hydro and Yara occupy the third and fourth positions.
Hydro gets a pretty big boost. The price of aluminum rose 50 percent in the third quarter from the third quarter of last year.
– For Yara, gas prices are expensive. It won’t be as strong year after year, but it will still grow well. The price of urea and fertilizers has gone up a lot, but unlike Hydro and Equinor, Yara has also seen greater cost increases as well, he said.
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According to Harper, oil prices were on average 69 percent higher in the third quarter than in the same period last year.
– It helps a lot. For oil companies, you often have a greater impact on the bottom line because costs do not increase in line with the price of oil.
– Especially when gas prices are so high, I think one can assume that this will be an exceptionally strong quarter for Equinor.
A bowl full of most things
Raw materials are definitely important. But the other one is doing just fine, too. Banks are doing well, and the seafood sector is improving. It’s a perfect opportunity for most things, says Nordea investment manager Robert Ness.
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It highlights several factors that contribute to the expected results.
– It is clear that the performance of the global economy is better than expected. Then it means something with a capacity, a semiconductor, and everything else that it lacks.
– If this shortage was great, a crisis would occur. But the shortages are so minuscule that you get less production, which is like keeping companies in your ears. They don’t get to produce as much as they want. They produce less, and therefore get higher margins.
Nice also refers to inflation, which in a number of countries has risen to its highest level in many years.
The shock at some prices gives companies a chance. In such a situation, it is easy for players to increase their margins.
Storebrand director Hans Thrane Nielsen expects “large numbers” from companies such as Equinor, Aker BP, Hydro and Elkem.
It also envisions “good numbers” from banks and insurance companies. The background is “good lending growth, good college, relatively few insurance claims and little or no loan losses,” Nielsen wrote in an email.
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