Maitland/AMO Morning Monitor – Thursday 30 April 2020

30th April 2020

In the news

  • The controversy courting British pub chain Wetherspoons has announced that it is planning to reopen its venues "in or around" June. However, it has not outlined how it plans to reopen in June, given that the government has not yet lifted lockdown.
  • The new chairman of John Lewis has refused to rule out the permanent closure of some department stores when the government’s high street lockdown ends.
  • Congratulations to the Prime Minister Boris Johnson and partner Carrie Symonds on the arrival of a healthy baby boy yesterday!

Politics today

  • Boris Johnson will chair a cabinet meeting later and then lead the daily coronavirus briefing for the first time since his return to work.
  • The GMB trade union launches an investigation into allegations involving their departing General Secretary Tim Roache.

Stock market moves

  • U.S. markets saw a rally following Federal Reserve assurances that it will continue with its stimulus programs and on promising news on Gilead Sciences’ coronavirus treatment.
  • In Asia, Japan’s Nikkei 225 closed 2.1% higher, while Australia’s S&P/ASX 200 added 2.4%. The Shanghai Composite Index closed up 1.3%. Markets in Hong Kong and South Korea are closed for a holiday.
  • The FTSE 100 and the pan-European Stoxx 600 are both marginally down around 0.2% across early trading.
  • S&P 500 futures inched up 0.4%, suggesting U.S. markets could open higher.

Corporate announcements

* Maitland Client

Reckitt Benckiser Group PLC* Q1 2020 Trading Update
  • Group LFL growth of +13.3%: led by strong demand for hygiene and health products, and compared to a weaker quarter for Health in 2019; improving market share trends in both businesses.
  • Hygiene LFL growth of +12.8%: strong growth in most markets, with double digit growth in North America, Europe / ANZ, and Latin America.
  • Health LFL growth of +13.6%: strong demand for Dettol, OTC and Other Health in North America, Europe and Australia, partially offset by lower growth in Developing Markets and decline in IFCN in China reflecting retail restocking in 2019.
  • Strong demand in the first quarter for Dettol, Lysol, Mucinex, Nurofen and VMS as the business sustained supply despite challenging conditions in many markets.
  • e-Commerce channel net revenues up over 50%, reflecting strong growth in both Hygiene and Health, particularly in March as consumers moved online during ‘stay at home’
  • 2020 performance now expected to be better than original expectations, although the outlook for the balance of 2020 remains uncertain, with significant COVID-19 challenges across the Group’s markets; fuller update on plans and guidance at the Half Year.
Royal Dutch Shell PLC Q1 Unaudited Results
  • Income/loss attributable to shareholders down 100% to -$24m (Q1 2019: +$6,001m).
  • Basic EPS down 100% to $0.00 per share (Q1 2019: $0.74 per share).
  • Dividend per share down 66% to $0.16 per share (Q1 2019: $0.47 per share). This is the first time the Group has cut its dividend since the second world war.
  • Ben van Beurden, CEO, said: “Under extremely challenging conditions, Shell is stepping up to protect our people and support communities around the globe while delivering strong safety and operational performance across our business. Our Integrated Gas and Marketing businesses continued to achieve robust results this quarter, bringing resilience to our cash flows. In March, we took decisive actions to reduce our spending, increase our liquidity and position our business to manage the deteriorating macroeconomic and commodity price outlook. Our integrated business model, the high quality of our assets and the resourcefulness of our people have allowed us to respond swiftly.”
Hikma Pharmaceuticals PLC Trading Statement
  • The Group is reiterating its guidance for global Injectables revenue growth in the low to mid-single digits for 2020, driven by demand for its broad product portfolio across all markets and new product launches. The Group continues to expect core operating margin to be in the range of 35% to 37%.
  • For the full year, the Group continues to expect Generics revenue in the range of $700m-$750m.
  • The Group remains confident in the outlook for the Branded business and continue to expect revenue growth in constant currency to be in the mid-single digits for the full year in 2020.
  • Subject to approval at today’s AGM, the Group will be paying a final dividend of 30 cents per share (approximately 23 pence per share) bringing the total dividend for the full year to 44 cents per share (approximately 34 pence per share), an increase of 16% on 2018.  In the current environment, this demonstrates the strength of the Group’s balance sheet and confidence in ith Group’s ability to maintain strong cash generation and low leverage.
St. James's Place PLC Q1 New Business Inflows and Dividend Update
  • Closing FUM for Q1 2020 was £101.67bn (Q1 2019: £103.52bn) due to the sharp decline in global markets during March.
  • The Board has made a decision to withhold 11.22 pence per share, or around one-third of the proposed 2019 final dividend, until such a time when the financial and economic impacts of COVID-19 become clearer.
  • The Board is therefore declaring a second 2019 interim dividend of 20.0 pence per share, equivalent to around two-thirds of the previously proposed final dividend, and withdrawing its recommendation to pay a final dividend.
Lloyds Banking Group PLC Q1 2020 Interim Management Statement
  • Net income of £3,952m down 11% on Q1 2019.
  • Statutory PBT of £74m down 95% on Q1 2019.
  • Statutory return on tangible equity of 5.0% with tangible net assets per share of 57.4 pence.
  • Trading surplus of £1,988m, a reduction of 19% compared to the first three months of 2019.
  • The impact of lower rates, lower levels of activity and higher impairment on the Group’s business will continue into the second quarter, but remains difficult to quantify given the significant uncertainty. The Group will update the market once there is greater clarity.
Sainsbury(J) PLC Final Results
  • Group sales including VAT down 0.1% to £32,394m (2018: £32,412m).
  • Underlying PBT down 2% to £586m (2019: £601m).
  • Underlying basic EPS decreased 4.3% to 19.8 pence per share (2019: 20.7p).
  • The Board believes it is prudent to defer any dividend payment decisions until later in the financial year, when there will be improved visibility on the potential impact of COVID-19 on the business.
  • Total steel product sales fell by 10.4% QoQ. Sales of semi-finished products dropped by 15.3% QoQ, due to higher than usual sales volumes from Russia at Q4 2019 on the back of good export market conditions.
  • Sales of finished products went down by 6.1%, due to seasonal decline in demand in the first quarter of the year in Russia as well as due to the sale of Palini e Bertoli in 2019. In addition, sales of finished products were impacted by lower tubular product sales volumes due to a lack of line pipe orders and deterioration of oil country tubular goods (OCTG) market demand in North America.
  • External sales volumes of coking coal products surged by 30.4% QoQ due to successfully completed task to maximise product shipments as well as higher sales volumes to China.
  • External sales of iron ore products jumped by 30.0% QoQ as most of the Q4 2019 sales volumes were delivered in Q1 2020 due to logistical limitations on shipments to China.
Glencore PLC First Quarter 2020 Production Report and General Update
  • The Group has introduced a number of precautionary measures across offices and industrial assets in response to COVID-19. This includes the implementation of enhanced hygiene and cleaning measures, application of social distancing and identification of higher risk groups, a near-total restriction on non-essential travel and remote working where possible.
  • The majority of the Group’s industrial assets continue to operate relatively normally, accounting for the various changed practices noted above. Various operations have been temporarily suspended, where national/regional lockdowns or other circumstances have dictated such.
  • Industrial Assets capex for 2020 now expected to be in the $4.0-4.5bn range (previous guidance: $ reflecting some assets curtailing production levels (with associated capex savings), various deferrals and lower equivalent USD costs due to generally weaker producer currencies and lower input costs, particularly through oil price changes.
John Laing Group PLC Appointment
  • The Group announces the appointment of Ben Loomes as CEO with effect from 8 May 2020. Following the announcement of his departure on 23 January 2020, Olivier Brousse will step down as CEO of the Company on 7 May 2020.
  • Mr Loomes has c.20 years of experience in the infrastructure sector. He was previously Managing Partner and Head of Infrastructure at InfraRed Capital Partners, a global infrastructure investment business focused principally on greenfield and operational PPP projects. Prior to this, Ben was Managing Partner of 3i Group plc’s infrastructure business and a member of the 3i Group Executive Committee.
FDM Group (Holdings) PLC First-Quarter Trading and COVID-19 Update
  • Trading in the first quarter was in line with the Board’s expectations, the period having been only marginally impacted by the national lockdowns in the territories in which we operate.
  • Revenues for the quarter were £71.0m (Q1 2019: £67.2m). The number of Mounties placed with clients currently stands at 3,802 (AGM, 25 April 2019: 3,848 Mounties; Y/E 2019: 3,924 Mounties).
  • The Group’s balance sheet remains strong with £44.3m of cash and no debt as at 31 March 2020 (compared with £37.0m of cash at 31 December 2019 and £37.0m of cash at 31 March 2019).
Vivo Energy PLC First Quarter 2020 Trading Update
  • Q1 Gross cash profit of $179m, up 6% year-on-year 
  • Strong available liquidity position of $1.6bn.
  • The Board believes prudent to withdraw recommendation of the payment of the 2019 final dividend, but will consider an additional dividend payment once more certainty in our markets.
Bellway PLC COVID-19 Update
  • The Group is postponing the decision in relation to the payment of the interim dividend until a time when there is more certainty with regards to the future economic outlook.
  • The Group is deferring all discretionary land expenditure.
  • The Group is introducing a moratorium on all new recruitment activity.
  • The Group is supporting customers, where appropriate and for properties where the construction process has concluded, to legally complete the purchase of their new home.
  • The Group is responding to all customer care queries via telephone or email, whilst at the same time suspending all but essential home visits.
Network International Holdings PLC Q1 2020 and current trading update
  • Payments and processing operations remain unaffected by the COVID-19 pandemic.
  • Delivery of a number of strategic and business initiatives: merchant wins and enabling online payments; alongside new issuer solutions and online wallet customers.
  • Group revenue broadly flat in Q1. Subsequent to lockdown measures being implemented; Merchant Solutions TPV and revenue declined c(60)% y/y, and Issuer Solutions more resilient with revenue down c(10-15)% y/y.
  • The Group has taken actions to protect cashflows including the deferral of the ordinary dividend (as previously announced) and pausing on capital expenditure related to Saudi Arabia expansion and the separation from Emirates NBD.
ConvaTec Group PLC Q1 2020 Trading Update
  • The Group reported revenue of $460m increased 6.9% year on year, up 8.9% in constant currency.
  • The Group demonstrated operational strength in challenging environments to meet robust demand.
  • Growth included the impact of customers increasing their inventories to ensure supply chain resilience, and a weak prior year comparator due to the rebate provision (220bps).
  • 2020 full year outlook maintained, but risk increased due to COVID-19.
G4S PLC Q1 2020 Trading Update
  • Group revenues were 2.5% higher than the first quarter of 2019, with 2.9% growth in Secure Solutions and 2.3% decline in Cash Solutions. Revenues in March were broadly unchanged year-on-year.
  • Group services have been designated as essential in all major markets.
  • The Group has taken significant steps to reduce costs and to underpin cash flows. The Group has identified direct and indirect cost savings of around £100m this year.
  • The Group has continued to make good progress with the completion of the sale of most of the Group’s conventional cash businesses and have to date completed around 71% of the transaction, realising £518m in cash proceeds.
Euromoney Institutional Investor PLC Updates on the strategic review of Asset Management and Covid-19
  • Asset Management strategic review: During an extensive process, the Board carefully considered a range of options, including continued ownership and a potential sale of all or part of the segment. The Board has concluded that the best outcome for shareholder value is for Euromoney to remain the long-term owner of all three businesses. The Asset Management businesses will no longer be reported as discontinued operations and as assets held for sale.
  • Covid-19 update: The Group has now taken the decision to postpone or cancel the majority of events originally scheduled to take place from July up to and including September (Euromoney’s Q4).  The financial profile of the 173 events originally scheduled in Q4 2020 is revenue of approximately £34m (£6m in July, £2m in August and £26m in September). The gross profit from these events was expected to be around £18m.
Lancashire Holdings Limited Q1 Trading Statement
  • Approximately $35.0m of COVID-19 claims estimated for the quarter, including the impact of reinsurance and reinstatement premiums.
  • Gross premiums written increased by 11.8% year on year to $242.8m.
  • Group Renewal Price Index of 108%.
  • Total net investment return, including unrealised gains and losses, of negative 1.9% in the quarter.