Maitland/AMO Morning Monitor – Friday 5 June 2020
In the news
- Hundreds of mourners joined an emotional memorial service in Minneapolis yesterday for George Floyd, as civil rights leader Al Sharpton vowed mass protests will continue until "we change the whole system of justice".
- Berlin announced a €130bn stimulus package — worth around 4%of GDP. Environmental groups support the government's move to offer a €2.2bn car renewal scheme for green and electric vehicles, while economists mostly welcomed tax relief for businesses including a cut to VAT.
- According to the OBR (Office of Budget Responsibility) the UK furlough scheme will cost the Treasury less than expected due to a focus on low-paid and part-time workers.
- The ECB decided to expand its Covid-19 bond-buying programme (PEPP) by an additional €600bn, and to extend it to at least June 2021.
- Donald Trump has set a 60-day deadline for US financial regulators to recommend ways to limit listings of Chinese companies that fail to abide by US accounting standards. At the same time, Chinese stock exchanges are planning on bolstering ESG reporting guidelines to attract foreign investors.
- Chinese and Iranian hackers targeted Mr Trump’s and Joe Biden’s presidential campaigns, Google said
- On Thursday, US weekly new jobless claims hit 1.9m, bringing the total since lockdowns began in mid-March to almost 43m.
- With £2.7bn, UK retail investor paid in nearly twice as much into active funds than into passive funds (£1.4bn) in April according to the Investment Association.
- American Airlines prompted a surge in shares across the US sector on Thursday after it said it would fly more than half of its domestic flight schedule in July.
- EU and UK officials have acknowledged that little progress was made on trickiest issues concerning a Free Trade Agreement (FTA) between the EU and the UK in the fourth round of talks this week. After a wrap-up session today the EU chief negotiator Michel Barnier will brief the press on any progress this afternoon. Michael Gove insisted in the House of Commons yesterday that there will be “ample time to reach an agreement” before the transition period ends. At a summit between PM Boris Johnson, European Commission President Ursula von der Leyen and European Council President Charles Michel expected to take place on or around June 19, the FTA will be discussed at a more political level, with the UK having to decide if it wants to apply for an extension of the transition period.
- Donald Trump vowed to oust a critical Republican senator as the US president faced growing disapproval from his own party and military officers for his response to now largely more peaceful protests.
Stock market moves
- US stocks traded flat to moderately lower, with the S&P 500 closing down 0.34% and the DJIA up by 0.05%.
- European stocks also closed lower with the FTSE-100 down by 0.64% and the German DAX lower by 0.45%
- Ahead of the release of US unemployment data today, Asian stocks traded little unchanged. The US unemployment rate is forecast to have risen to almost 20 per cent in May, closing in on the record 24.9 per cent set during the Great Depression of the 1930s.
- Oil (Brent Crude) at $40.36 p/b rebounded by 0.93%
- The FTSE-100 rose by 0.64% this morning at opening whereas Germany’s Dax-30 opened up by 1.2% at time of writing.
Corporate announcements* Maitland Client
Taylor Wimpey PLC Business update
- Progressing construction on majority of the company’s sites across England and Wales, with Scottish sites now starting preparation for return to construction in line with Scottish Government guidance.
- Majority of show homes and sales centres open in England, on an appointment only basis, with a very high level of demand for appointments.
- All employees have now returned from furlough.
- Following a formal competitive and comprehensive tender process led by the Audit Committee, the Board has approved the appointment of PricewaterhouseCoopers LLP (“PwC”) as external auditor of the Company and its subsidiaries for the financial year ending 31 December 2021. This appointment remains subject to approval by shareholders at the Company’s 2021 AGM.
- Net revenue increased 7% to £1,102.8m (2019: £1,030.8m).
- Underlying Operating Profit up 10.8% driven by a strong Collections performance; with Operating Margin up to 7.8%.
- As part of the company’s COVID-19 cash conservation package of measures, no final dividend recommend.
- Michael Topham, CEO, said: “Events since March have, for obvious reasons, completely overshadowed what was otherwise a very successful year for Biffa. Although the crisis will continue to be tough for everyone and the short-term outlook remains uncertain, we are confident that the measures we have taken ensure we are able to be clearly focused on making sure Biffa emerges a stronger and better business.”
- Trading profit after interest up 12% to £81.0m driven by a 10% increase in net rental income to £122.0m.
- Profit before tax at £72.5m (2019: £137.3m), with a small reduction in underlying property valuation of 0.3% (£8m) compared to a £61m increase in the prior year.
- Total dividend up 10% to 36.16p per share (2019: 32.87p), with a final dividend of 24.49p per share
- Graham Clemett, CEO, said: “We have a strong balance sheet, prudent funding liquidity and substantial headroom on our covenants, which has meant we have not seen the need to take Government financial support.”
- The company has introduced heightened safety measures such as social distancing and hygiene measures in all of our plants to ensure the safety of its employees and follow the advice of the relevant local governments.
- Sales for the 21 weeks from 1 January to 24 May 2020 were 8.8% lower for the Group, on an organic constant-currency basis, compared to the same period last year.
- The company is taking steps to improve the structural cost position of the Group for the longer term, so that it emerges from this downturn with an improved cost position. These actions will further reduce costs by £20m per annum by 2022, with an anticipated cash cost of £30m to deliver these savings.