IHG swings to $153m loss following challenging year for hospitality industry

Liam Roche
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IHG swings to $153m loss following challenging year for hospitality industry

IHG scraps dividend again

IHG (Intercontinental Hotels Group) (LON:IHG) has swung to a loss in an unsurprisingly challenging year for the hospitality company. 

The group’s total revenue was $2.39bn, a fall of 48% compared to a year before. IHG posted an operating loss of $153m, having made a $630m profit in 2019.

In addition, IHG announced a pre-tax loss of $280m, compared to a $542m profit a year ago.

While global revenues per available room were down 53%.

The company scrapped its dividend for the year having done the same for the final dividend of 2019 and the interim dividend for 2020. The hospitality firm will consider reinstating its dividend “once visibility of the pace and scale of market recovery has improved”.

Following the results announcement, IHG’s share price shot up by 3.16% to 5,480p per share. The company’s shares began the year at 4,669p, while in March 2020, when lockdowns came into effect, they dropped as low as 2,385p.

Keith Barr, chief executive at IHG, commented on the unique challenge posed to IHG by the pandemic. 

“2020 was clearly the most challenging year in our history, with Covid-19 heavily impacting demand across our industry. 2021 has begun with many of these challenges still in place, with more meaningful progress towards recovery for the industry unlikely until later in the year and dependent on global vaccine rollouts, lifting of restrictions and an acceleration in economic activity,” said Barr. 

“The shape of recovery remains varied globally, but we’ve continued to outperform the industry in key markets thanks to the strength of our teams, business model and segments in which we compete. This includes our industry-leading position in upper midscale, where demand remains stronger.”

IHG Hotels and Resorts is a global hospitality company, with nearly 6,000 open hotels in more than 100 countries, and a further 1,800 due to open over the next five years.

HSBC sets sights on Asia as profits plunge by 43%

Liam Roche
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HSBC sets sights on Asia as profits plunge by 43%

HSBC to reinstate dividend

HSBC (LON:HSBA) announced a fall of 43% in profit for 2020 as its global operations were hit by the pandemic. 

The UK bank is looking to expand further into Asia, “by far the most profitable region” for HSBC, outlining plans to invest around $6bn.   

HSBC also confirmed on Tuesday that pre-tax profit was down to $8.8bn from $13.3bn in 2019. The bank’s adjusted revenue dropped by 8% to $50.4bn due to the impact of lower interest rates. 

Less than an hour after market opening on Tuesday, HSBC’s share price was down by 1.77% to 424p per share. Since the beginning of 2021 the bank’s share price is up from 380.35p. 

HSBC confirmed it would start paying a dividend of $0.15 a share, following guidance set out by the UK Prudential Regulation Authority, as a ban on dividends was lifted at the end of last year. 

The banking giant will now seek to expand further into Asia, with a focus on wealth management, in a hedge against low interest rates across Europe. 

Rob Murphy, MD, Financials at Edison Group, outlined HSBC’s strategy of expansion into Asia.

“As expected, HSBC announced plans to accelerate investment further toward Asian markets investing an extra $6.4bn over the next five years. As well as China and Hong Kong, the bank will invest heavily in the rest of Asia. Wealth management will be a key focus as well as technology in order to drive efficiency.”

Mark Tucker, group chairman of HSBC, reflected further on an eventful year. 

“In 2020, we experienced economic and social upheaval on a scale unseen in living memory. Even before the year began, the external environment was being reshaped by a range of factors – including the impact of trade tensions between the US and China, Brexit, low interest rates and rapid technological development. The spread of the Covid-19 virus made that environment all the more complex and challenging,” Tucker said. 

Earlier in the year HSBC announced plans to close 82 branches, as well as over 300 manager roles, as the bank moved online. In 2020 HSBC cut 11,000 jobs worldwide, moving staff to assist in the bank’s growth in Asia.

Pound gains offset ahead of Prime Minister’s speech

Liam Roche
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Pound gains offset ahead of Prime Minister’s speech

Pound up to $1.404 in early trading before retreat

The pound rose again today against the dollar and the euro before falling back as news of a more gradual than anticipated lifting of UK lockdown measures leaked. 

Cable edged up to $1.404 before falling back slightly. This follows its move past $1.4 on Friday, its highest level in just under three years. 

The pound began the day by building on a similar recent trend against the euro early this week, getting just shy of €1.158. By mid-afternoon it edged back towards yesterday’s close at around $1.155. 

The UK currency has been steadily progressing upwards recently against both the euro and the dollar, coinciding with a rise in the FTSE 100. This trend came as news emerged that the vaccine roll-out is surpassing expectations, as well as the dollar weakening. 

However, things could be set to change, as Boris Johnson’s upcoming announcement around lockdown measures is expected to be less abrupt than anticipated. 

The Prime Minister’s statement will be a positive step for markets, however it has not sufficed to maintain the pound’s recent momentum, according to Connor Campbell, financial analyst at Spreadex. 

“This delay to the retail re-opening helps explain why the FTSE and pound have both opened the week in the red. For while investors are no doubt happy the country is loosening the restrictions once again, the reality is they don’t hold positions in schools and picnics,” Campbell said.

Looking forward, the Prime Minister’s speech on Monday could dampen the pound’s advance further.

“We think that the UK government would err on the side of caution with regards to exiting the lockdown, and this much could disappoint the GBP bulls,” says Valentin Marinov, Head of G10 FX Strategy at Crédit Agricole.

Boeing 777 planes grounded across the world following Denver engine failure

Liam Roche
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Boeing 777 planes grounded across the world following Denver engine failure

Boeing to inspect all planes with specific type of engine

Boeing, the American aeroplane manufacturer, has recommended grounding all of its 777-model aircraft with a specific type of engine. 

The engine in question is the same as that of the plane which went viral on social media on the weekend as it suffered failure above Denver.

The US Federal Aviation Administration ordered inspections of the aircraft with Pratt & Whitney pw4000 engines following the incident that saw debris from the plane scatter onto neighbourhoods in the state of Colorado. 

Soon after take-off, United Airlines flight 328 had to return to Denver airport after the engine cover fell from the plane. 

The timing is far from ideal for the aerospace manufacturer following a record net loss of nearly $12bn, in addition to diminished demand for aircraft due to the coronavirus pandemic.

“The grounding of the Boeing 777 is the latest setback for a company and industry that has struggled to find a path to recovery. Since the recovery began, air travel has struggled to recover as fast as many in the industry had hoped,” said Peter McNally, Global Sector Lead for Industrials, Materials and Energy at Third Bridge.

In November 2020 Boeing announced plans to cut its staff from 160,000 to 130,000 by the end of 2021 in an effort to “align with market realities”. 

Boeing’s share price is down by 1.23% to $212. It caps a difficult twelve months for the company which sat at 319.55p per share in February before worldwide travel restrictions came into effect. 

The company released a statement after United Airlines flight 382 was forced to make an emergency landing. 

“Boeing is actively monitoring recent events related to United Airlines Flight 328. While the NTSB investigation is ongoing, we recommended suspending operations of the 69 in-service and 59 in-storage 777s powered by Pratt & Whitney 4000-112 engines until the FAA identifies the appropriate inspection protocol,” the statement read. 

“Boeing supports the decision yesterday by the Japan Civil Aviation Bureau, and the FAA’s action today to suspend operations of 777 aircraft powered by Pratt & Whitney 4000-112 engines. We are working with these regulators as they take actions while these planes are on the ground and further inspections are conducted by Pratt & Whitney.”

FTSE 100 down as news of Prime Minister’s announcement underwhelms

Liam Roche
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FTSE 100 down as news of Prime Minister’s announcement underwhelms

The FTSE 100 dipped by 0.5% on Monday as news of the Prime Minister’s speech leaked through the media. It appears as though investors will have to exercise patience as the lifting of lockdown measures could be more gradual than first anticipated.

“Despite some disappointment at the likely pace of reopening for different industry sectors, we may only be talking a matter of months and investors should really be looking much further into the future,” said Russ Mould, investment director at AJ Bell. 

“Investor sentiment should improve once the first lockdown restrictions start to be eased and that’s also the case for companies as well. You should expect to see a pick-up in recruitment for sectors that have sailed through the crisis such as technology and healthcare,” Mould added. 

Elsewhere, copper and bitcoin continue to soar, while Finsbury Food and Dechra announced their financial results.

FTSE 100 movers

Flutter Entertainment (4.35), International Consolidated Airlines (2.37%) and Evraz (2.10%) led the way on the FTSE 100 on Monday morning. 

The bottom three companies consisted of Scottish Mortgage Investment Trust (-4.23%), Avast (-3.28%) and Ocado (-3.28%), the top three biggest fallers at lunchtime on Monday.

Copper

Copper shot up on Monday by over 3%, moving above the $9,000 per tonne mark for the first time in nearly a decade. The news follows a recent rally of the brown metal. The base metal is now 10% lower than its peak of $10,190 a tonne, reached in February 2011.

Dechra

Dechra (LON:DPH) has announced a 22% increase in group revenue to £299m for the second half of 2020. This figure is up from £248.5m the year before.

Finsbury Food

Finsbury Food Group (LON:FIF) posted a fall in revenue of 4% to £152m on Monday. This followed an increase in revenue of 4.7% to £159.5m recorded the previous year.

Copper reaches $9,000 for first time in nearly ten years

Liam Roche
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Copper reaches $9,000 for first time in nearly ten years

Copper now 10% below peak reached in 2011

Copper shot up on Monday by over 3%, moving above the $9,000 per tonne mark for the first time in nearly a decade. 

The news follows a recent rally of the brown metal. At the end of last week, copper made a third consecutive weekly gain.

The base metal is now 10% lower than its peak of $10,190 a tonne, reached in February 2011. 

The news is further evidence of the “commodities supercycle” expected by analysts.  

This is a phenomenon which is expected to continue well into 2021, as copper becomes more useful, according to Brian Kloss, a portfolio manager at Franklin Templeton. 

“We expect to see a stunning economic upswing and a supportive environment for the copper market and for investors as the year unfolds,” Kloss said. 

“Longer term, copper is an important component in renewable energy and electromobility,” he added.

Led by massive and increasing demand from the growing Chinese economy, as well as the world’s transition to renewable energy resources, analysts are making bullish predictions for the metal. 

Canaccord Genuity mining analysts are predicting a significant price increase over 2021.

“We now expect copper prices to average $3.50/lb in 2021, an approximate 17% increase on our previous forecast of $3.00/lb,” Canaccord said. 

The recent copper resurgence has also benefited from a weakening dollar and expected inflation in the US.

With copper’s increasing value as a commodity, mining companies are being tipped for major gains over the coming year.

Investors could look to capitalise on funds which have significant holdings in mining companies.

Major mining companies have been among the FTSE 100s top performers in recent weeks as investors anticipate a strong year for the sector.

Dechra posts robust financial results amid pandemic

Liam Roche
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0
Dechra posts robust financial results amid pandemic

Dechra’s outlook for 2021 remains positive

Dechra (LON:DPH) has announced a 22% increase in group revenue to £299m for the second half of 2020. This figure is up from £248.5m the year before.

The veterinary manufacturer also saw a substantial profit rise of 32.2% to £80.8m.

Underlying earnings (EBITDA) rose by 30% to £88.2m, up from £67.9m over the second six months of 2019. 

Dechra’s outlook for 2021 remains positive, as market conditions are favourable and with forward progress being made in the pipeline. 

The company has said it expects its current financial year to be weighted in the first half as it is beginning to see the pre-Brexit inventory build unwind. 

Dechra’s interim dividend was raised by 8% to 11.11p per share, a continuation of steady year-on-year increases.

In early-morning trade on Monday the Dechra share price is down by over 2% to 3,538p per share. Year-to-date the company’s share price remains at around the same level, despite a spike to 3,802p in mid-January.

However, over a longer period of 12 months, Dechra’s share price has made steady gains, despite a drop to 2,168p per share in March.

Ian Page, the chief executive at Dechra, described the results as “pleasing”. 

“Despite 2020 being one of the most challenging years in Dechra’s history, it is pleasing to report that the calendar year ended strongly resulting in an excellent performance in the first half of our financial year,” Page said. 

Dephra Pharmaceutics, dedicated to developing and manufacturing veterinary equipment, is a constituent of the FTSE 250.

Founded in 1997, the company is headquartered in Northwich. Dechra Pharmaceuticals is organised into two divisions; European Pharmaceuticals and US Pharmaceuticals.

Cake manufacturer Finsbury Food sees revenue drop by 4%

Liam Roche
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0
Cake manufacturer Finsbury Food sees revenue drop by 4%

Finsbury Food pre-tax profit down to £17.4m

Finsbury Food Group (LON:FIF) posted a fall in revenue of 4% to £152m on Monday.

This followed an increase in revenue of 4.7% to £159.5m recorded the previous year.

Finsbury Food Group also announced a 16% fall in its pre-tax profits to £7.4m.

The London-listed company’s share price was up 0.34% at 74.25p on Monday despite opening down on the previous day’s close. After crashing by nearly 50% in March, Finsbury Food Group  has struggled to make a full recovery over the past 12 months. 

The company has previously confirmed its dividend payment for the year to 27 June 2020 was being suspended to ensure the business could consolidate in the short-term. Finsbury Food has confirmed the company will review its dividend ahead of June 2021 in the coming months. 

The baking manufacturer’s revenue was impacted by economic uncertainty brought about by a number of factors. 

This is according to John Duffy, the chief executive of Finsbury Food Group. 

“The current operating environment continues to be characterised by near-term uncertainty and a challenging economic backdrop that is likely to remain for some time, but a combination of progress in the roll-out of the vaccine and the avoidance of a ‘no deal’ Brexit provides comfort around the Group’s medium-term prospects,” Duffy said. 

Duffy also praised the company’s ability to immediately adapt to the challenges caused by the pandemic. 

“The first half was a period in which Finsbury again demonstrated its resilience and ability to manage and adapt to the effects of the pandemic. Through careful management of resources, anticipating and responding quickly and effectively to changes in consumer demand, and maximising the benefits of operational initiatives both new and historical, we were able to deliver a robust performance.”

Finsbury Food Group is one of the largest ambient cake manufacturers in the UK, a market valued at over £963 million

Kanabo looks fully valued

Andrew Hore
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Kanabo looks fully valued

It took nearly two years to complete but the reversal of Israel-based cannabis-based products supplier Kanabo Research into standard list shell Spinnaker Opportunities, but it has been well received by investors. Kanabo Group (LON: KNB) has a significant valuation, but is there more to go in the short-term?
The reverse takeover was first announced on 27 February 2019 and completed on 16 February 2021. The initial value of the deal is £15m in shares and the company also raised £6m at a share price of 6.5p. Kanabo was valued at £23.4m when it was admitted to trading.
The share price has risen to...

Moonpig sparks upgrades

Andrew Hore
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Moonpig sparks upgrades

Little more than a fortnight after Moonpig (LON: MNPG) floated it has sparked a forecast upgrade with its trading statement. More customers are buying gifts as well as online cards.
Third quarter trading was strong and the growth rate in the period was inline with the first half figure. A deceleration of the growth rate had been anticipated. Valentine’s Day week trading was the best ever week for the company.
There have been additional costs due to higher marketing spending and staffing levels.
Revenues are expected to reach £350m in the year to April 2021, which is double the previous year. E...

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