Maitland/AMO Morning Monitor – Tuesday 22 September 2020
In the news
- Boris Johnson set to announce 10pm curfew for pubs across England, as the government begins to reinstate national lockdown measures.
- Whitbread to cut 6000 jobs after announcing a fall in sales during the coronavirus crisis.
- The Czech government admits it was a mistake to ease restrictions in the summer, with national cases reaching 50,000.
- Donald Trump to make Supreme Court nomination over the weekend following the death of Ruth Bader Ginsburg.
- Boris Johnson set to unveil a series of national lockdown measures today.
Stock market moves
- In Europe, the FTSE 100 and Eurostoxx 600 have opened marginally up.
- Asian markets have been hit this morning as concerns that new waves of coronavirus could stall a global economic recovery heightened. The Hang Seng was down 0.4%, with the Shanghai Composite down 0.1%.
- US futures tipped the S&P 500 to fall 0.2%, with markets not confident over the Fed’s ability to generate 2% inflation.
- Sterling has risen to the euro, but fallen marginally against the dollar.
Corporate announcements* Maitland Client
Kingfisher PLC Half-Year Results
- Resilient performance in H1 with strong sales recovery in Q2.
- Sales down 1.1% in constant currency, reflecting adverse impact of COVID-19 in Q1 partially offset by strong recovery in Q2.
- Statutory pre-tax profit rose 62.4% to £398m.
- Thierry Garnier, CEO, said: “There remains considerable uncertainty around COVID-19 and our near term priorities have not changed – to provide support to the communities in which we operate, to look after our colleagues as a responsible employer, to serve our customers as a retailer of essential goods, and to protect our business for the long term. We remain proud of, and humbled by, the response of our teams to the current challenges. Looking forward, while the near term outlook is uncertain, the longer term opportunity for Kingfisher is significant. There is a lot more to do, but the new team and new plan is now established in the business and we are committed to returning Kingfisher to growth.”
- H1 total sales were significantly down year-on-year reflecting the closure of the vast majority of the group’s hotels and restaurants.
- Since reopening, UK accommodation sales performance has been ahead of the market.
- The group also announces its intention to enter into consultation on proposals that could result in up to 6,000 redundancies for its hotel and restaurant colleagues (representing 18% of its total workforce).
- Alison Brittain, CEO, said: “With demand for travel remaining subdued, we are now having to make some very difficult decisions, and it is with great regret that today we are announcing our intention to enter into a consultation process that could result in up to 6,000 redundancies in the UK, of which it is hoped that a significant proportion can be achieved voluntarily. In line with our longstanding values of treating our people fairly, our priority is now to ensure that this process is clear and transparent for all colleagues and that everyone impacted is supported throughout.”
- Prior to the C-19 pandemic, January 2020 saw the best booking month in the company’s history.
- TUI was on track to deliver a strong result for financial year 2020.
- Since the worldwide travel suspension in March, significant self-help actions have been taken to address the impact of the C-19 pandemic across the business.
- Friedrich Joussen, CEO, said: “We have successfully restarted our operations; customers are enjoying their holidays with newly adapted hygiene protocols and we have taken 1.4m customers on their holidays since restart1. Destination availability at present is highly influenced by government policy and development of the pandemic, meaning the environment remains volatile, and is likely to remain so for the next few quarters.”
- The group delivered a resilient performance overall, reflecting the disciplined application of its business model in a challenging environment.
- The loan book remained broadly stable at £7.62bn (31 July 2019: £7.65bn).
- Adjusted operating profit in the Banking division decreased 61% to £99.2m (2019: £253.7m) primarily due to higher impairment charges.
- The Asset Management division generated net inflows of 9%. Adjusted operating profit decreased 6% to £20.4m (2019: £21.8m).
- Winterflood delivered excellent trading performance and operating profit of £47.9m (2019: £20.0m), up 140%.
- The group maintained a strong capital, funding and liquidity position and is proposing a 40.0p dividend in respect of the full financial year.
- Adrian Sainsbury, CEO, said: “We entered the current crisis in a strong position and the group’s agility and operational resilience have allowed us to respond effectively in a rapidly changing environment, as we have introduced new ways of working to protect our colleagues and maximise assistance for customers and clients during this time. The impact of Covid-19 has been felt across our businesses and the outlook is still uncertain, but the fundamental strengths of Close Brothers remain unchanged.”
- Tritax Big Box REIT today announces exchange on the sale of three assets to two separate purchasers for a total consideration of £77m.
- The assets are less well aligned with the group’s long-term strategic and portfolio objectives.
- Colin Godfrey, CEO, said: “Ongoing portfolio evaluation is an intrinsic part of our strategy to deliver value to our shareholders. We continue to see strong demand for UK logistics real estate supporting attractive prices on assets which no longer align with our strategy and where we believe they have reached their full value potential in our ownership. So far this year we have disposed of £134m of assets, and we will be redeploying the proceeds into attractive opportunities, including those within our portfolio where we see the potential to secure higher returns for shareholders.”
- The group continues to see improving growth prospects across its portfolios of business. This is primarily driven by continuing rate improvements, with an overall rate change of 13% at the end of August.
- Investments returned $136m (or 2.2%) up to the end of August.
- As the group’s book of business is heavily weighted to the US and UK, with the largest segment being conferences, its clients are still largely unable to operate as restrictions on holding events persist.
- Total estimate for first party Covid-19 claims has moved from $170m to $340m net of reinsurance.
- Profit before tax for the full year ending 30 September 2020 is expected to be ahead of consensus expectations.
- Net cash at the end of August 2020 increased to £23.9m.
- At the H1 2020 results the group announced that it was making cash savings of £20m in the second half of the year. It is on track to achieve these savings.
- The group is undertaking a further restructure and cost reduction programme, which will mainly affect its events business.