Maitland/AMO Morning Monitor – Friday 16 October 2020
In the news
- Boris Johnson is expected to try force Brexit trade talks to a moment of crisis, amid claims Brussels is insisting that future concessions must come from Britain.
- Major changes to come into force across the UK today regarding COVID-19 restrictions.
- U.S jobless claims rise, holding back economic recovery.
- Donald Trump and Joe Biden both deflect key questions during meet-the-voter TV events.
- Boris Johnson will today spell out his next steps on Brexit after EU leaders called for further trade negotiations over the coming weeks.
Stock market moves
- In Europe, the FTSE 100 and Eurostoxx 600 have both opened up.
- Markets in Asia were mixed this morning, with the Shanghai Composite and Hang Seng both up but the Nikkei was down.
- In America, major averages suffered their third straight day of losses on Thursday. The S&P 500 futures and the Nasdaq 100 futures also showed slight declines.
- Sterling has fallen to both the Euro and the Dollar.
Corporate announcements* Maitland Client
Rio Tinto plc Q3 production results
- Total material moved was a record for the quarter with Pilbara iron ore production of 86.4m tonnes, 1% lower than the third quarter of 2019.
- Bauxite production of 14.5m tonnes, 5% higher than the third quarter of 2019.
- Third quarter mined copper was 18% lower than the same period of and refined copper was 57% lower.
- J-S Jacques, CEO, said: “We have delivered a good operational performance across most of our assets catching up on planned maintenance activity, particularly in iron ore, and continuing to adapt to new operating conditions as we learn to live with COVID-19. We have maintained our capex guidance and our 2020 production guidance across our key products.”
- In the third quarter, funds under management increased by 4% to $113.1bn at 30 September 2020
- $100m share buyback programme announced in September is proceeding at the maximum permitted pace.
- 50% of the $43.7bn of performance fee eligible FUM was at, above, or within 5% of high watermark.
- Luke Ellis, CEO, said: “We are pleased to report good performance in the third quarter and strong growth in funds under management. This was driven by robust net inflows into alternatives as anticipated, as well as performance gains across both alternative and long-only strategies. Engagement with clients remains good, although there is increasing uncertainty due to upcoming political events and current COVID-19 trends.”
- Revenue fell 30.6% to £1,262.0m.
- The Company made a loss of £34.1m, down from a profit of £102.5m in 2019.
- Earnings per share fell 136.6% to -27.6p.
- Tim Martin, Chairman, said:”Warren Buffett, chairman of Berkshire Hathaway, commented in 1989 (below) on the dangers of what he calls the ‘institutional imperative’ and how it compels companies to stay on the same course, even if it’s the wrong course – and how it compels companies to imitate competitors. The institutional imperative applies just as much to governments as it does to boards of directors. Professor Johan Giesecke, the Warren Buffett of epidemiology, is obviously perplexed in an April TV interview (appendix 1 below) as to how 100 countries all reacted, almost overnight, in the same way to the Covid-19 problem, based on the deeply flawed analysis of Imperial College.
- Mark Robson has resigned from his role as DCEO and CFO, effective 16 December 2020, in order to take on a new challenge outside of the Group.
- He will be succeeded as CFO by Paul Hayes. Paul will join Howdens on 2 November 2020 and will become an executive director and member of Howdens’ Board 27 December 2020.
- Andrew Livingston, CEO, said: “Mark has made a very significant contribution to the success of Howdens over the last 15 years and I am especially grateful for his advice, guidance and support since I first joined the business in 2018. I have enjoyed working with him enormously and, together with the whole team at Howdens, wish him the very best for the future.”
- Serco are upgrading is full year revenue guidance to around £3.9bn and Underlying Trading Profit to £160m-£165m.
- This would represent organic growth in revenues of around 15%, growth in UTP of over 30%, and a UTP margin of just above 4%.
- As announced in August, the company will take a decision about dividends previously withdrawn (2019 final) or deferred (2020 interim) in December.
- Outlook for 2021: as noted in our half year results, and as this unscheduled trading update underlines, the current crisis makes forecasting extremely difficult. We expect the uncertainties of 2020 will persist into 2021 as the world grapples with recurring outbreaks of infection. We have only just started our budget review process, and we would not have a view concerning 2021 today which is materially different from that which we had at the time of our half year results in August.
- Acquisition of Merian Global Investors introduced £16.6bn of AUM on 1 July 2020, with operational integration achieved by 30 September 2020.
- Net outflows in the quarter of £1.0bn, partially offset by £0.8bn of market returns.
- AUM at 30 September 2020 of £55.7bn, an increase of £16.5bn in the quarter driven by the acquisition of Merian.