Reckitt Benckiser posts record sales as demand for hygiene products soars

Liam Roche
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Reckitt Benckiser posts record sales as demand for hygiene products soars

Reckitt Benckiser sales grew by 11.8% in 2020

Reckitt Benckiser (LON:RB) reported its highest ever full-year sales growth as the coronavirus pandemic caused a surge in demand for the company’s products. 

The consumer goods company, which sells Dettol and Lysol disinfectants, announced its sales grew by 11.8% to £14bn, with e-commerce sales growing by 56%. 

Covid-19 has heightened the importance of hygiene among the public pushing up demand for Reckitt Benkiser’s leading disinfectant brands. 

Reckitt Benkiser made an operating profit of £2.16bn, compared to a £1.95bn loss the year before. 

The consumer goods company announced a full year dividend of 174.6p, matching 2019’s shareholder payout. 

Reckitt Benckiser shares are up 1.54% to 6,056p at early morning trade on Wednesday. Following a spike in July 2020 at 7,960p per share, Reckitt Benckiser’s share price has since retreated.

This could raise a question mark over the Reckitt Benckiser’s prospects beyond a surge in demand for sanitation products during the pandemic. The FTSE 100 consumer group had a bumper first quarter of 2020 driven by a jump in sales of hygiene products.

Laxman Narasimhan, chief executive at Reckitt Benkiser, commented on the results while looking ahead to further growth opportunities in 2021.

“This past year we delivered a strong revenue performance with nearly £14bn of sales and +11.8% like-for-like growth. eCommerce sales grew by a record +56% and now account for around 12% of group net revenue.  We have made a strong start to implementing our new strategy and proved that we can adapt and successfully respond to rapidly changing market conditions. Our portfolio is clearly resilient – with or without COVID-19 – and we are building a stronger business for the future,” said Narasimhan. 

“Our category-leading germ protection/disinfection brands have all seen substantial market growth, with around 80% of our consumers expecting to retain many of their new improved habits post pandemic. We capitalised on these new behaviours with Dettol and Lysol entering 41 markets, with plans to enter a further 29 markets in 2021.”

Lloyds surpasses analyst forecasts despite profits dropping by over 72%

Liam Roche
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Lloyds surpasses analyst forecasts despite profits dropping by over 72%

Lloyds seeking to double profitability in 2021

Lloyds (LON:LLOY) has announced its pre-tax profit dropped by 72% over 2020.  

The banking giant’s profit before tax fell to £1.2bn from £4.4bn the year before.

However, Lloyds’ Q4 performance was better than expected, with the bank reporting a £792m pre-tax profit for this period. This figure surpassed average analyst forecasts of £471m. 

The bank paid a £4.2bn impairment charge for loans that are expected not to be repaid due to the pandemic. 

In line with its rivals – HSBC, Natwest and Barclays – Lloyds will reinstate its dividend of 0.5p per share having been blocked last year by the Bank of England 

Lloyds shares are up by 2.3% early on Wednesday morning to 40.15p.

Lloyds will look to expand its insurance and wealth division, as the bank seeks to double its profitability over the coming year.  

António Horta-Osório, chief executive at Lloyds Bank, who will be succeeded by Charlie Nunn in August, commented on both the year gone and the bank’s future prospects. 

“The impact of the coronavirus pandemic on the people, businesses and communities in the UK and around the world in 2020 has been profound. We remain absolutely focused on working together with all of our stakeholders to support our customers and ensure a sustainable recovery,” said Hort-Osório

“Looking forward, significant uncertainties remain, specifically relating to the coronavirus pandemic and the speed and efficacy of the vaccination programme in the UK and around the world. I remain confident that the Group’s clear purpose, unique business model, significant competitive advantages and the customer focused evolution of our strategy we have announced will ensure that the Group is able to Help Britain Recover and in so doing, help transition to a sustainable economy.”

Lloyds is the last of the major banks to announce results over the last week, with all of them surpassing analyst expectations.

S&P 500 surge grinds to a halt as tech stocks dip

Liam Roche
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S&P 500 surge grinds to a halt as tech stocks dip

The S&P 500’s recent advances came to a halt on Tuesday as some of the index’s top performing companies saw significant losses. Moving towards lunchtime in the States the market is down by 0.29% following a sharp dip in the early-morning session. 

The dampening of the S&P 500 follows a recent climb to an all-time high amid economic optimism around the stimulus package, oil prices and the vaccine roll-out. While rising bond yields remain a cause for concern.

Shawn Quigg, a derivatives strategist at JP Morgan, remains optimistic about the US stock market. Quigg has told the bank’s clients they can expect to earn “gains sooner than later, particularly considering the numerous catalysts ahead, their impact on volatility, and the implications that will have on investor positioning.”

S&P 500 movers

Extra Space Storage (7.21%), CBRE Group (5.91%) and MGM Resorts International (5.21%) sat at the top of the pile of America’s top 500 companies. 

At the bottom end, Ledos Holdings (-9.69%), Discovery Inc (-7.60%) and DISH (-5.65%) Network Corp, were the biggest fallers on the S&P 500.

Tesla

At 10am local time Tesla’s share price fell by over 8%, wiping $15bn from CEO Elon Musk’s net worth. However, by lunchtime the S&P 500 company’s share value rebounded to 704.34 cents per share, 1.42% down on the day.

Tech stocks

The notorious “FAANG” tech stocks – Facebook, Amazon, Netflix, Alphabet (Google) and Apple – look somewhat vulnerable following a mass sell-off on Monday. Both Apple and Amazon dipped over 2% in a signal that “investors’ love affair with S&P 500’s tech stocks is cooling” as they look for alternative routes to prosperity following the pandemic, according to Russ Mould, investment director at AJ Bell.

FTSE 100 down as PM unveils cautious plan to ease restrictions

Liam Roche
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FTSE 100 down as PM unveils cautious plan to ease restrictions

With an hour to go before the close of play on Tuesday, the FTSE 100 dipped by half a percent to 6,575.25.

“Although the headline FTSE indices did not move much, there was a great deal of violent movement below the apparently calm surface,” said Russ Mould, investment director at AJ Bell.

Having snuck above the 6,600 mark yesterday the index retreated after Boris Johnson’s speech failed to capture the imagination of investors. However, the announcement by the Prime Minister did provide a timeframe for investors.

“The key dates see schools reopen on March 8, with the ‘rule of six’ from March 29, the reopening of non-essential retail from April 12, indoor restaurants from May 17, and something approaching pre-covid normality from June 21,” said Connor Campbell, financial analyst at Spreadex.

HSBC and IHG announced financial results for 2020, while bitcoin has fallen by over 10% in the last 24 hours following a tweet by Elon Musk.

FTSE 100 movers

The day’s top risers on the index were British Land Co (4.89%), Land Securities Group (4.65%) and Informa (4.17%).

At the bottom of the FTSE 100, Scottish Mortgage Investment Trust (-7.89%), Evraz (-4.66%) and Avast (-4.55%) saw significant falls in their valuations on Tuesday.

HSBC

HSBC (LON:HSBA) announced a fall of 43% in profit for 2020 as its global operations were hit by the pandemic. The FTSE 100 bank is looking to expand further into Asia, “by far the most profitable region” for HSBC, outlining plans to invest around $6bn.

IHG

IHG (Intercontinental Hotels Group) (LON:IHG) has swung to a loss in an unsurprisingly challenging year for the business. The group’s total revenue was $2.39bn, a fall of 48% compared to a year before. The FTSE 100 hospitality company posted an operating loss of $153m, having made a $630m profit in 2019.

Tech stocks starting to look vulnerable following market sell-off

Liam Roche
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0
Tech stocks starting to look vulnerable following market sell-off

Value investing showing signs of a comeback

The notorious “FAANG” tech stocks – Facebook, Amazon, Netflix, Alphabet (Google) and Apple – look somewhat vulnerable following a mass sell-off on Monday. 

The Nasdaq composite recorded its third daily fall of more than 2% with big technology companies taking sizable losses. 

Both Apple and Amazon dipped over 2% in a signal that “investors’ love affair with technology stocks is cooling” as they look for alternative routes to prosperity following the pandemic. 

This according to Russ Mould, investment director at AJ Bell.  

“Gathering concern over inflation, as wage growth accelerates, commodity prices surge and bond yields grind higher, also helps to explain the apparent switch in preference from secular growth plays like tech to cyclical growth and recovery plays – or ‘value’ stocks, for want of a better turn of phrase,” Mould adds.

This can be seen by measuring the relative performance of value stocks (stocks undervalued by the market) against growth stocks (stocks expected to outperform in long-term), such as Apple or Amazon. 

The Invesco QQQ Trust is designed to track the performance of the NASDAQ Composite index’s largest 100 non-financial companies. Its biggest holdings are Apple, Microsoft, Amazon, Alphabet, Tesla, Facebook and NVIDIA and so it is a good proxy for growth.

On the other hand, the iShares Russell 2000 Value ETF follows a basket of nearly 1,500 stocks that offer value characteristics.

While growth stocks have outperformed throughout the pandemic, there is reason to believe the FAANG stocks may not sustain their bullish run through the recovery. 

“Since the start of autumn 2014, when the NYSE FANG+ index was launched and the technology stocks and the FAAANM sextet of Facebook, Alphabet, Amazon, Apple, Netflix and Microsoft really began to come into its own, the Invesco QQQ is up by 223% and the iShares Russell 2000 Value ETF by 57%,” says Russ Mould.

“But the iShares Russell 2000 Value ETF has been making stealthy progress of late. Since Pfizer Monday it has gained 33% while the QQQ is up just 12%, the ‘value’ tracker has surged by 61% compared to 29% advance from the QQQ,” Mould continues. 

“In other words, even when it looked like tech and social media stocks were the only game in town during the second half of 2020, when they continued to post bumper earnings figures and the economic outlook seemed bleak, value and recovery plays were taking the lead.”

The million dollar question for investors is whether the stock market will see the return of value growth after a period of domination by FAANG stocks.

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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0
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.

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