Maitland/AMO Morning Monitor – Tuesday 8 September 2020

8th September 2020

In the news

  • The UK has reported close to 3000 new Covid-19 cases for the second day in a row
  • India has overtaken Brazil to become the country with the second-most Covid-19 infections
  • Donald Trump and Joe Biden have accused each other of attempting to politicise a coronavirus vaccine

Politics today

  • Michel Barnier will arrive in London for an eighth round of Brexit talks
  • Ministerial statement: Covid-19 update, Matt Hancock

Stock market moves

  • In Europe markets opened up with the FTSE100 leading the way.
  • Shares in Japan are higher with Japan’s Topix index rising 0.2% despite the recent drop in shares at SoftBank following investor unease over it’s high-risk bet on options tied to US tech stocks.
  • Futures linked to the S&P500 pointed to a gain of 0.3% when markets reopen after the Labor Day holiday.
  • The pound fell against the euro and the dollar following an FT article that revealed the UK government was planning legislation that would override key parts of the Brexit withdrawal agreement.

Corporate announcements

* Maitland Client

Smith (DS) PLC AGM Trading Update
  • The business has progressed well in the period with performance continuing in line with our expectations, despite the macro-economic challenges that resulted from Covid-19.
  • LFL corrugated box volume performance has improved over the period since the initial impact of Covid-19 and in August the company has seen a return to positive growth vs August 2019.
  • Given the performance over the last quarter, and the improved clarity in the outlook, combined with a strong financial position the Board intends to declare an interim dividend for the half year to 31 October 2020.
  • Miles Roberts, CEO, said: The underlying drivers of demand for corrugated packaging remain strong and our sustainable packaging solutions for resilient FMCG and e-commerce customers are more relevant than ever.”
Experian PLC Trading Update
  • In July 2020, the company stated that it expected organic revenue for Q2 FY21 would be in the range of flat to -5% and that organic costs for the first half would be held broadly flat.
  • Following stronger trading in July and August, Experian today revises its Q2 FY21 expectations. It now expects Group organic revenue growth for the quarter to be in the range +3 to +5%, helped by further strength in US mortgage, strength in the services we provide to consumers, as well as due to the naturally resilient qualities of parts of our portfolio.
  • With continued investment in its innovation agenda, the company now expects organic growth in costs of between 2 and 3% for the first half.
Ashtead Group PLC* 1st Quarter Results
  • Resilient performance during the COVID-19 pandemic.
  • Underlying rental revenue of £1,081m (2019: £1,165m).
  • Pre-tax profit of £208m (2019: £319m).
  • Record free cash flow of £447m (2019: £161m).
  • Brendan Horgan, Chief Executive, said: “Looking forward, the strength of our business model and balance sheet positions the Group well in these more uncertain markets.  Assuming there is no significant COVID-19 second wave leading to major market shutdowns, like we experienced earlier this year, we expect full-year Group rental revenue to be down mid to high single digits when compared with last year on a constant currency basis.  The benefit we derive from the diversity of our products, services and end markets, coupled with ongoing structural change, enables the Board to look forward to a year with free cash flow in excess of £1bn, continued strengthening of our market position and the medium term with confidence.”
JD Sports Fashion PLC Interim Results
  • Revenue decreased to £2,544.9m (2019: £2,721.2m).
  • EBITDA decreased to £337.0m (2019: £402.9m).
  • Profit before tax decreased to £41.5m (2019: £129.9m).
  • Peter Cowgill, Executive Chairman, said: “Assuming a prudent but realistic set of assumptions for the peak trading period that reflect an uncertain outlook for consumer confidence, the ongoing challenges of attracting footfall to stores and the potential for further operational restrictions; we would presently anticipate delivering a headline profit before tax for the full year of at least £265m when calculated under IFRS 16 ‘Leases’.”
Travis Perkins PLC Interim Results
  • Revenue decreased 20.2% to £2,781m (2019: £3,484m).
  • Adjusted operating profit decreased 80.9% to £42m (2019: £220m).
  • Restructuring programme underway to reduce overheads in line with the anticipated volume outlook, delivering cost savings of £120m on an annualised basis
  • Nick Roberts, CEO, said: “Although considerable uncertainty around the impact of the COVID-19 pandemic remains, the actions we have taken to adapt and innovate in our businesses mean that the Group is well placed to continue to service our customers, support our colleagues, outperform our markets and generate value for our shareholders.”
Hipgnosis Songs Fund Limited Appointments
  • Hipgnosis has announced the immediate appointment of Ted Cockle as President and Amy Thomson as Chief Catalogue Officer.
  • Ted Cockle arrives from his role as President of Virgin EMI. Under his guidance Virgin EMI achieved success as the UK’s number one label, year on year, for the previous seven years since the company was acquired by Universal Music Group.
  • Amy Thomson arrives as Chief Catalogue Officer following on from her successes in management and marketing.
  • Merck Mercuriadis, Founder, said: “I don’t believe there’s a traditional publisher that has brought together this level of expertise to manage its songs. Our results have been strong and with Ted and Amy now on board I look forward to everything their passion and know how will help us to achieve.”
Royal Mail PLC AGM Trading Statement
  • Parcel volumes up 34% (177m more parcels) and revenue up 33.1% year on year.
  • Addressed letter volumes (ex. elections) down 28% (1.1bn fewer letters).
  • Letter revenue down 21.5%.
  • Total revenue up £139m.
Genus PLC Preliminary Results
  • Revenue increased 15% to £551.4m (2019: £488.5m).
  • Profit before tax increased 16% to £71m (2019: £61m).
  • Good strategic progress despite COVID-19.
  • Stephen Wilson, CEO, said: “Genus’s business model and strategy has again demonstrated its robustness and we anticipate further growth in constant currency across the business in the coming year and to perform in line with our expectations.”
Meggitt PLC Interim results
  • Group organic revenue down 13% to £917m (2019: £1,071m).
  • Underlying operating profit was 37% lower at £102m (H1 2019: £161m).
  • Statutory operating loss of £349m (H1 2019: profit of £91m) largely as a result of non-cash impairment of intangible assets and other asset write downs.
  • Tony Wood, CEO, said: “Based on the effective actions we’ve taken to strengthen liquidity and the resilience of the Group, underpinned by our diverse end market exposure and strong market positions, we believe we are well placed to benefit from the recovery and to continue the transformation of Meggitt to deliver long-term, profitable growth.”
Vistry Group PLC Half-year Report
  • Group revenue increased 28% to £606.4m (2019: £472.3m).
  • Record forward sales position with Group forward sales totalling £2.7bn (30 June 2020: £2.6bn) including Housebuilding forward sales up 17% to £1,478m (30 June 2020: £1,264m).
  • Full year profit before tax for 2020 expected to be in the range of £130m to £140m.
  • Greg Fitzgerald, CEO, said: “The Group is well positioned to capitalise on the opportunities available in the second half and into 2021 when we expect to deliver a step-up in completions and profitability, a reduction in gearing and a return to dividend payments.”
easyJet PLC Capacity Update
  • In response to the reduced demand for travel, based on current travel restrictions and quarantines in the markets where it operates, easyJet now expects to fly slightly less than the 40% of planned capacity for Q4 2020.
  •  Given the many changes to government restrictions since its Q3 update, the lack of visibility and the continued level of uncertainty, the company believes it not to be appropriate to maintain any forward looking financial guidance, for FY’20 and FY’21, at this time.
  • Johan Lundgren, CEO, said: “It is difficult to overstate the impact that the pandemic and associated government policies has had on the whole industry. We again call on the Government to provide sector specific support for aviation which needs to take the form of a broad package of measures including the removal of APD for at least 12 months, the alleviation of ATC charges along with continuation of the slot rule waiver.”
Signature Aviation PLC Interim Financial Report
  • Continuing Group organic revenue down 31.3%, reflecting the impact of COVID-19 on B&GA flight activity.
  • Continuing Group underlying EBITDA down 39.7% to $143.3m (H1 2019: $237.m).
  •  Continuing Group underlying operating profit $63.1m (H1 2019: $158.m).
  • Mark Johnstone, CEO, said: “Building on our effective cost management and with our flexible cost base now aligned with anticipated flight activity, we expect improved performance in the second half compared to the first half.”
Oxford Instruments PLC Chairman's AGM Statement 2020
  • The coronavirus has continued to have an impact on trading in the first five months of the year, with cumulative revenue down 2% against last year.
  • Although there remains considerable uncertainty as to the future impact and longevity of covid-19 disruption, the company has seen modest order growth over the first five months of trading and a good improvement in the order book. 
  • The Group’s robust trading performance and focus on protecting its strong balance sheet has resulted in an improvement in net cash to £70.0m as at 7 September 2020 (31 March 2020: £67.5m), in accord with normal seasonal trading patterns.
Fevertree Drinks PLC Interim Results
  • Revenue decreased 11% to £104.2m (2019: £117.3).
  • Gross profit decreased 20% to £48.7m (2019: £60.8m).
  • Asset light business model continues to support the Group’s secure financial position with net cash improving to £136.9m at period end.
  • Tim Warrillow, CEO, said: “We have had an encouraging start to the second half of the year and, while we certainly aren’t immune to the ongoing challenges of COVID-19, our performance and our investments so far this year, coupled with the growing interest in long mixed drinks, gives me confidence that we will exit the crisis in an even stronger position than we entered it.”