Maitland/AMO Morning Monitor – Tuesday 9 June 2020
In the news
- Home Secretary Priti Patel toughened her rhetoric against a minority of protesters whom she condemned for “hooliganism” and “thuggery” during the Black Lives Matter protests at the weekend. She accepted that most people had made their points peacefully but said that “justice would follow” those who had been violent or injured police officers.
- BP has announced plans to cut 10,000 jobs following a global slump in demand for oil because of the coronavirus crisis. It is thought that around 2,000 of those affected will be in the UK. The oil giant had paused redundancies at the start of the pandemic but told staff on Monday that around 15% will leave by the end of the year.
- The World Bank has issued a report predicting the deepest global recession since WW2, with world GDP set to contract by 5.2% in 2020. Economic activity among advanced economies is anticipated to shrink by 7%, with emerging and developing economies expected to shrink by 2.5%, their first contraction as a group in at least 60 years, according to the bank.
- New Zealand has lifted most of its coronavirus restrictions after reporting no active cases in the country for two weeks. Under new rules, social distancing is not required and there are no limits on public gatherings, but borders remain closed to foreigners.
- 9.30am - Boris Johnson chairs the weekly meeting of the UK Cabinet
- 12.30pm - Michael Gove responds to Urgent Question in the House of Commons on the latest round of the Brexit talks
- 1.30pm - Gavin Williamson statement to the House of Commons on schools
Stock market moves
- US stocks rallied again on Monday, pushing the Nasdaq to an all-time high and the S&P 500 into positive territory for the year.
- Asian markets are higher today as Chinese and Hong Kong shares show gains.
- Dow Jones futures is up 0.03%, with S&P500 down 0.17% and Nasdaq futures up 0.05%.
- In Europe, the FTSE 100, CAC and DAX have opened down.
Corporate announcements* Maitland Client
AVEVA Group PLC Final Results
- Revenue grew 8.8% to £833.8m (FY19: £766.6m).
- Growth across all geographic regions with Asia Pacific showing particular strength.
- Final dividend maintained at 29.0 pence per share reflecting confidence in AVEVA’s resilience, strong balance sheet position and ongoing cash generation, balanced with prudence regarding the global economic crisis. The Company has not furloughed any employees or made any reductions to headcount related to Covid-19.
- Business outlook resilient with digitalisation key to driving customers’ efficiency and high levels of recurring revenue for AVEVA.
- Craig Hayman, CEO, said: “Looking forward, AVEVA is well placed to navigate through the challenges of the current environment, with the benefit of recurring revenue from multi-year contracts. AVEVA is in a strong position and our strategy and medium-term objectives remain unchanged.”
- Construction activity has recommenced on around 230 sites, with a continuing focus on ensuring safe working practices, and on those homes which are in the latter stages of production.
- The balance sheet remains strong, with net bank debt of only £157m at 31 May (2 June 2019 – £261m) and committed bank facilities of £545m.
- All furloughed employees have remained on full basic pay throughout April and May and Bellway has no current plans to claim grant using the Government’s Coronavirus Job Retention Scheme.
- Jason Honeyman, CEO, said: “Our priority remains the health, safety and wellbeing of our colleagues, customers and subcontractor workers. With this in mind and following updated Government guidance with regards to restarting the housing market, we have carefully and gradually recommenced onsite construction and sales activity in England and Wales, whilst introducing strict social distancing requirements.”
- Results in developed markets (c.75% of Group revenue) are strong, with continued good pricing, little evidence of accelerated downtrading to date and a particularly strong performance from business in the US, which has been highly resilient throughout the COVID-19 crisis.
- The impact of COVID-19 in emerging markets has been more pronounced, including in Bangladesh, Vietnam and Malaysia.
- Together with the previously announced impact on International Travel Retail sales, this means that the company now anticipates, in total, a FY headwind of c.3% from COVID-19 on constant currency adjusted revenue.
- The company believes it prudent to anticipate a FY20 constant currency adjusted revenue growth in the 1-3% range.
- Whilst the company continues to invest more in New Categories and make further progress towards its £5bn revenue ambition, growth this year will be slower and it now anticipates reaching the £5bn target in 2025 (previously 2023/24).
- Reported revenue increased by 1.1% to £317.4m (a decline of 0.7% at constant currency).
- Order book of £175.0m (31 March 2019: £153.2m), up 14.2% (12.1% at constant currency), assisted by finished goods not shipped or installed at the year end.
- Following the uncertainty created by Covid-19, the Group suspended payment of the interim dividend of 4.1p per share. As a result of continued uncertainty, the Board will defer a decision on payment of dividends but will keep this under review as the year progresses while they assess the impact of Covid-19 on markets and trading performance.
- Ian Barkshire, CEO, said: “With the increasing demand for electric vehicles and digital communications infrastructure, and the need for improved energy‑efficient devices, medicines and diagnostic tools, we are confident that our end markets are resilient and should not be weakened in the long term by covid-19 headwinds.”
- 3.1% revenue increase to £129.3m largely driven by increases in average rate.
- Adjusted profit before tax up 5.2% to £71.0m.
- 1.8% increase in total dividend to 33.8 pence per share.
- Nicholas Vetch, Executive Chairman, said: “We will continue with our long-held strategy of building new stores in our core area of activity in London and its commuter towns, where we may see more opportunity in the next few years. We are actively continuing to pursue this external growth strategy, whilst maintaining a conservative capital structure.”