Maitland/AMO Morning Monitor – Tuesday 14 January 2020

14th January 2020

What really matters... COVID-19

The FTSE is expected to open up this morning, while the CAC and DAX are both expected to open down.
In Asia, markets are mixed with the Shanghai Composite and Hang Seng down but the Nikkei closing up.

Stock market moves

In other news

  • The US has reversed its decision to brand China a currency manipulator
  • Cutting air passenger duty on all domestic flights could save regional airline Flybe from collapse
  • The Gambling Commission has announced a ban on using credit cards to gamble

Politics today

  • US warns Boris Johnson it would be 'madness' to give Huawei a role in Britain's 5G network
  • Boris Johnson's Brexit deal 'bad for the Union and economy', says Theresa May's former top aide
  • Chancellor Sajid Javid will hold talks with the business and transport secretaries today over a possible rescue deal for Flybe.

Corporate announcements

* Maitland Client

Taylor Wimpey PLC Trading Statement
  • The Company will report full year 2019 results in line with their expectations, delivering an operating profit margin of c.19.6% (2018: 21.6%), as previously guided, and a return on net operating assets of c.31% (2018: 33.4%).
  •  The Company ended the year with a strong net cash balance of c.£546m (31 December 2018: £644.1m net cash).
  • Pete Redfern, CEO, said: “Our results for the year to 31 December 2019 will be in line with our expectations. Despite an uncertain political and economic backdrop in 2019, we have continued to experience a good level of demand for our homes and trading in the second half of the year was as anticipated. The Group has again delivered a record sales rate and we increased home completions by c.5% in the year. In 2019, our focus was on strengthening the long term sustainability of the business, further improving our build quality and customer offering, as well as increasing operating capacity and flexibility. In 2020, we will continue with these initiatives and will also prioritise a renewed cost focus and process simplification improvements.”
Elementis PLC Trading update
  • Trading in the final quarter of the year has been somewhat subdued and as a result adjusted operating profit for 2019 is anticipated to be $122-124m.
  • In 2019, the Company’s operating cash conversion is expected to be in line with their medium term performance objective of at least 90%.
  • Net debt for the year is anticipated to be approximately $465m, representing around 2.8x net debt to EBITDA.
  • Paul Waterman, CEO, said: “Our overall performance in 2019 has been negatively impacted by a challenging market backdrop as the more cyclically exposed parts of the portfolio like Chromium and Energy have deteriorated through H2. However, as outlined at the recent Capital Markets Day, our priorities going forward are clear. We remain committed to delivering our medium term Group performance objectives of a 17% operating profit margin, operating cash conversion of at least 90% per annum and financial leverage of under 1.5x EBITDA, with further reduction thereafter.”
Grafton Group PLC Trading Update
  • Trading in November and December was better than anticipated and  the Group now expects to report full year Adjusted Operating Profit of circa £202m.
  • 2019 Group revenue from continuing operations increased by 2.7% to £2.67bn.
  • Reported property profit for 2019 is expected to be circa £7m, slightly higher than anticipated.
  • Gavin Slark, CEO, said: “2019 was a year of significant strategic progress with the acquisition of Polvo in July which increased our scale and consolidated our market leading position in the Netherlands.  We also reshaped our portfolio of businesses with the successful disposal of Plumbase and the Belgian Merchanting business in October.  While we remain cautious about the timing of any recovery in the UK merchanting market at this very early stage in the New Year, our expectations for 2020 are positive for the overall Group and we are optimistic about growth opportunities.  We are well placed to continue to successfully implement our development strategy supported by very cash generative businesses and a strong balance sheet.
Games Workshop Group Half-year Report
  • Revenue for the six months to 1 December 2019 is £148.4m (2018: £125.2m).
  • Operating profit is £59.2m (2018: £40.8m).
  • Dividend per share declared in the period is 100p (2018: 65p).
  • Kevin Rountree, CEO, said: Our business and the Warhammer Hobby continue to be in great shape. We are pleased to once again report record sales and profit levels in the period. The global team have worked their socks off to deliver these great results. My thanks go out to them all. Sales for the month of December are in line with our expectations. We are also announcing that the Board has today declared a dividend of 45 pence per share, in line with the Company’s policy of distributing truly surplus cash.”
  • For Q4 2019, net cash of c. £93m (Q3 2019: c. £92m, Q4 2018: c. £98m).
  • For the year 2019, Group gross profit increased 5.0% to £856m.
  • Operating profit expected to be in line with previous guidance of £140m to £150m.
  • Steve Ingham, Chief Executive Officer, said: “The majority of the Group’s regions were impacted by macro-economic and political uncertainty in Q4. Consequently, Group gross profit declined -0.4% in constant currencies from growth of 2.1% in Q3. The Group delivered strong performances in Germany, India, and the US, despite a slowing Financial Services market in New York. However, trading conditions were more challenging in many of our larger markets, including Greater China, the UK and France. We will continue to focus on driving profitable growth, while progressing our strategic investments towards our Vision of 10,000 headcount, £1bn of gross profit and £200m – £250m of operating profit. Despite the increased tough trading conditions in Q4, we expect FY 2019 operating profit to be in line with our previous guidance of £140m to £150m.”