Maitland/AMO Morning Monitor – Wednesday 25 September 2019
What really matters... COVID-19
The FTSE, CAC and DAX are expected to open down.
Asian markets are lower today with shares in Hong Kong off the most.
Stock market moves
In other news
- Prime Minister Boris Johnson has cut short a trip to New York after the Supreme Court ruled that his advice to the Queen to suspend parliament was "unlawful, void and of no effect"
- Stock in Asia have slipped as US President Donald Trump faces an impeachment inquiry
- Adam Neumann has stepped down as CEO of WeWork after investors' loss of faith
- Parliament returns following yesterday's Supreme Court ruling that the Prime Minister’s decision to prorogue was unlawful. The House of Commons will sit from 11:30 and the House of Lords will sit from 15:00.
Corporate announcements* Maitland Client
Sainsbury(J) PLC Q2 Trading Statement
- Stronger trading across Grocery, General Merchandise and Clothing.
- Second quarter total retail sales up 0.1% (excl. fuel), with like-for-like sales down 0.2% (excl. fuel).
- The company is confident that it can grow sales and sustainably fund investment in its value, service, store estate and digital proposition.
- While retail markets remain highly competitive and the consumer outlook remains uncertain, the company remains on track to deliver full year 2019/20 underlying profit before tax in line with consensus expectations.
- Mike Coupe, CEO, said: “Sales momentum was stronger in all areas and we further improved our performance relative to our competitors, particularly in Grocery.”
- The Group’s performance was in line with the Board’s expectations and included further organic constant currency revenue growth against a strong comparative period in the first half of 2019.
- Order intake was ahead of revenue and was also ahead of the same period last year.
- All sectors delivered organic constant currency revenue growth.
- During the period there have been three changes to Halma’s Executive Board arising from planned succession processes and the evolution of the company’s operational and digital growth strategies.
- Andrew Williams, CEO, said: ‘These appointments bring important new capabilities to our Executive Board which are aligned with our organic and acquisition growth strategies.’
- Current trading is in line with the group’s expectations for the six months ending 30 September 2019.
- Group revenue is expected to be higher than the first half of last year, largely reflecting the allowed regulatory revenue changes.
- Underlying operating profit for the first half of 2019/20 is expected to be higher than the first half of 2018/19, largely reflecting the higher revenue and lower infrastructure renewals expenditure.
- The company expects a small share of losses of joint ventures.
- Trading across the Group is in line with expectations.
- The company has confirmed its full year guidance for revenue, operating profit and free cash flow as set out in May 2019, including the phasing between the first and second halves of the year, especially for cash generation.
- The company expects the first half to reflect the phasing of previously communicated step downs, the normal seasonality of its business and last year’s phasing of Fomedec equipment sales in its Aviation business.
- Balance sheet remains strong with cash generation in line with expectations.
- Early progress on the implementation of new Group strategy with disposal of food business in Greece and local Polish personal care brand Luksja for over £50m.
- Key markets continue to be impacted by consumer fragility, with the Nigerian economy remaining depressed, uncertainty in the UK and highly competitive markets in Australia.
- The company anticipate market conditions will remain challenging across its key geographies for the balance of the first half of the year.
- The company expects the full year results to be in line with prior year, adjusted for the impact of disposals, but dependent on no further worsening in its key markets, specifically the UK and Nigeria.
- West End remains busy and the company’s food, beverage, leisure and retail occupiers continue, on average, to report year-on-year sales growth.
- Continued good demand for the company’s regular space.
- Further acquisitions completed, totalling £34.9m since 1 April 2019.
- Brian Bickell, CEO, said: “Our exceptional 15.2 acre portfolio, located in some of the busiest parts of the West End, continues to perform well. Despite the uncertain political and macroeconomic backdrop, London’s global city status continues to draw businesses and visitors from across the World, reinforcing the West End’s long-term appeal and prospects.“
- The company today announces the disposal of two assets for £100m (Unite share £75m) to the Unite UK Student Accommodation Fund (“USAF”), representing a net initial yield of 5.5%. The assets are located in Birmingham and Newcastle and comprise a total of 1,155 beds.
- In addition, USAF announces the launch and pricing of £85m of bonds issued under its existing debt funding platform, the 3.921% bond due June 2025.
- Joe Lister, CFO, said: “The disposals by Unite to USAF form part of our plan to dispose of £150-200m of assets per annum during the next three years following the acquisition of Liberty Living. These planned disposals will fund our development activity and support our target to reduce LTV to 35% by 2021.”
- Group revenue £564.9m, up 43% (43% CER).
- Strong revenue growth across all brands and geographies (UK: +35%; international: +55%). International now 44% of group revenue (2019: 41%).
- Robust balance sheet with net cash of £207.4m (2019: £155.6m) with healthy operating cash flow of £55.9m (2019: £55.7m) and free cash flow of £30.1m (+22%).
- PrettyLittleThing revenue £237.6m, up 41%.
- John Lyttle, CEO, said: “It has been a fantastic first half of the year for the group. We have delivered significant market share gains across all of our key markets, and for the first time in our history, revenue has exceeded £1bn in the last 12 months. We have delivered strong growth and operating leverage in our more established brands and will continue to invest in both our more established and newly-acquired brands. We enter the second half of the year well-placed and confident that our platform, which combines the latest fashion, great prices and excellent customer service, all underpinned by a well-invested infrastructure, will deliver further market share gains.”