BG Group FY set to underwhelm

Following two separate profits warnings from the group, few will be expecting anything other than disappointment tomorrow. 

After the 20 January highs of 1355p, BG Group shares now sit almost 24% lower as they hover around the 1030p level. The catalyst for this collapse has been a fresh profit warning, issued less than a month before the release of full-year figures.

The latest profit warning is due to the fact that distribution from the company’s Egyptian fields has been badly affected by the political unrest sweeping the nation. A sizeable percentage of the company’s output in Egypt has been diverted away from global markets, to be used by the government to maintain the local market’s stability. This has forced BG Group into declaring a force majeure.

In full-year figures the company will therefore set out an impairment charge of $1.3 billion, while at the same time writing down US assets of $1.1 billion. This sets out BG Group as the first major international firm to use this as protection against ongoing corporate commitments; it will be interesting to see if any other firms follow suit.

Although the relative strength indictor would infer stock is oversold, newsflow coming from the company has left little to raise morale, and only the brave would be tempted into buying. 

BG Group chart

The information on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG Bank S.A. accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it and as such is considered to be a marketing communication.

Find articles by analysts