TUI suspend ‘majority’ of operations
TUI AG (LON:TUI) have announced that they have decided to suspend the majority of their operations, following the escalation of the current coronavirus crisis.
The firm noted in a press release this morning, that it this move would be affecting its’ “package travel, cruises and hotel operations”.
The firm commented: “In this rapidly changing environment the safety and welfare of our guests and employees worldwide remains of paramount importance and thus TUI Group has decided, in line with government guidelines, to suspend the vast majority of all travel operations until further notice, including package travel, cruises and hotel operations.
This temporary suspension is aimed at contributing to global governmental efforts to mitigate the effects of the spread of the COVID-19.
Due to the unprecedented escalation of COVID-19, the Board of TUI are continuously evaluating the situation and are considering a variety of actions to support our customers, colleagues and stakeholders.”
TUI added that it would be withdrawing its’ profit forecast for the current financial year following the outbreak of the coronavirus.
For 2018-19, TUI reported net profit attributable to shareholders of €416 million, down 43% on the year prior.
Arguably, the airline and travel operators have been hit the hardest since the coronavirus outbreak. Last week, it was noted that TUI had dropped out of the elite FTSE 100 – which reflects a tough period of trading for the firm.
Kingfisher shares dive 22% as European stores face closures
Kingfisher PLC (LON:KGF) have told the market that the coronavirus has not affected its’ trading in January – however the firm could see a bruising from ongoing restrictions in France and Spain.
Shares in Kingfisher trade at 106p (-22.20%). 16/3/20 11:19BST.
The firm commented: “We are committed to supporting local authorities and governments to limit the spread of the virus, and the health and safety of our colleagues and customers remains our top priority.
We have implemented a series of actions to protect the health and safety of our employees, including restricting travel and meetings, the adoption of flexible working arrangements for colleagues, and the recommendation to colleagues and customers to follow specific health protection protocols. Contingency plans have been drawn up to ensure continuity of customer service in stores and in head offices, including encouraging work from home where appropriate.”
Across February trading, the owner of B&Q said that like-for-like sales were 7.6% higher, which will please shareholders at a time where the macroeconomic environment has presented challenges.
In the first two weeks of March, the firm also noted that trading had been positive – with sales still maintaining their pace.
However, the firm said that all 221 of the company’s Castorama and Brico Depot stores were closed on France, starting Sunday, with this restriction expecting to last until April 14.
The former FTSE 100 listed firm also said that all stores in Spain had closed until March 29, following the government’s declaration of a two-week state of emergency.
Kingfisher said that their stores across the UK, Ireland, Poland, Romania, Portugal and Russia will remain open – unless these governments make a decision to put the state into a lockdown position.
The firm said that it is not able to fully assess the impact of the coronavirus, however its’ final results will be released on March 24.
Kingfisher concluded by adding: “There is significant uncertainty on sales and demand as the outbreak spreads, and as central governments and businesses take action to contain and delay its impact.
We are working to mitigate the implications of these closures, including via alternative routes to continue serving customers (e.g. via click & collect or home delivery).
Given recent government actions and the heightened impact and uncertainty of changes in the magnitude, duration and geographic reach of COVID-19, we are not yet able to predict the impact of COVID-19 on our 2020/21 full year results.
Further updates will be given as soon as we have greater visibility on external developments and the impact on our trading.”
Kingfisher give disappointing November update
In November, the firm saw its’ shares in red following a disappointing trading update from the firm. The former FTSE 100 listed firm said trading in the three months to October was “disappointing”, with sales falling 3.7% to £2.96 billion. Like-for-like revenue slipped 3.7%. Kingfisher said this “reflects continuing disruption from new range implementations, lower promotional activity and ongoing operational challenges in France, and softer market conditions in our main markets”. B&Q sales sank 3.5% year on year to £820 million, slightly offset by an eight per cent rise in Screwfix sales to £477 million. Last week, it was also noted that Kingfisher had slipped out of the FTSE 100 elite rankings. This reflects a tough time of trading for the firm, however Kingfisher will have to fully assess the impact of coronavirus on trading before making a statement to shareholders.Rio Tinto’s progress in Mongolia slows down due to COVID-19 restrictions
Shares in Rio Tinto (LON:RIO) have dipped modestly across the Monday session, as the firm gave an operational update on its’ Mongolia mine.
The mining titan said that it is continuing to work with the Mongolian Government to ensure that Oyu Tolgoi is operating within the capacity restrictions following the outbreak of the COVID-19 virus.
Rio Tinto noted that work is still commencing at this site, however progress has been stunted amid restrictions on access for teams from Rio Tinto, Oyu Tolgoi and its construction partners to oversee development and provide specialist technical services.
The firm noted: ‘The full impact of the slowdown on the Underground Project is unknown at this time and the company will update the market once more information is available. The mine design for the Underground Project currently remains on track to be completed in the first half of this year, with a definitive estimate to be provided for the development of this world-class orebody in the second half of 2020.
Despite the impact of COVID-19, the open pit of the Oyu Tolgoi mine continues to operate and deliver shipments of copper concentrate to its customers.’
The firm added that the operations remain largely on track with time schedules and that this mining is expected to be completed within the first half of 2020.
Rio Tinto Copper & Diamonds chief executive Arnaud Soirat said – “Our focus is on ensuring the safety and health of all of our people at Oyu Tolgoi and we support the decisive action taken by the government to limit the spread of COVID-19. It has inevitably resulted in a restriction on the movement of goods and people in the country and this is slowing down construction activity at the Underground Project. It is too early to determine the impact of this and the team is doing all they can to minimise the disruption in a challenging environment. We will continue to work with our suppliers, customers and the government.”
Rio Tinto’s annual results
At the end of February, Rio Tinto updated the market with their final set of results – which proved positive reading for shareholders. The firm said that revenues had risen across 2019, which was largely down to rising iron prices – however profits dipped slightly across the year. In Rio Tinto’s 2019 financial year, the firm noted that sales revenue climbed 6.5% to $43.17 billion from $40.52 billion, but pretax profit slumped 35% to $11.77 billion from $18.20 billion. Looking at net losses, the mining titan reported that they faced a $291 million net loss on consolidation and disposals, compared to a $4.6 billion surplus just one year ago. Notably, impairment charges faced were $3.49 billion, which was a significant increase from the $132 million gain in 2018. Rio Tinto added that its full year ordinary dividend per share was 24% higher at 382 cents from 307 cents – however total dividend fell 19% to 443.0 cents from 550.0 cents in 2018. Full year production guidance remained consistent, however full year guidance at the Pilbara iron ore operations were slashed following damaged caused by cyclone Damien. Going forward, mined copper production is expected lie within the 530,000 to 570,000 tonne ball park, which is below total 2019 output of 577,000 tonnes. Finally, aluminium production is expected to be between 3.1 and 3.3 million, which remains consistent with last year’s total figure. Shares in Rio Tinto trade at 3,152p (-3.73%). 16/3/20 11:12BST.PLUS500 remain confident as trading volumes rise
Plus500 Ltd (LON:PLUS) have given shareholders a confident update this morning, despite the ongoing market crash caused by the outbreak of COVID-19.
The trading platform service provider said that it is expecting 2020 results to beat market expectations, and has seen higher volumes of trading across financial markets.
Notably, PLUS500 continued to add saying that they had seen increased levels of customer activity since the end of February, and that revenue from customer income had been strong.
Customer trading performance has also risen, which has meant that PLUS500 have seen further gains – however these benefits are expected to be weighed out due to the effects of the coronavirus on global stocks.
The firm said: ‘We are at an early stage of the financial year and given the uncertainty regarding the duration of current levels of volatility or the unquantified potential impact from regulatory changes in Australia, it remains difficult to predict the outcome for the full year at this stage.
Notwithstanding this, we expect revenue and profitability for the full year to be substantially ahead of current consensus expectations.
The Company will issue further announcements as appropriate, with its first quarter trading update scheduled to be issued on 7 April.’
PLUS500 remain optimistic in tough market
In February, the firm gave shareholders a confident update – despite a slight slip in their 2019 fundamentals. The firm told the market that 2019 was a “year of two halves” and praised performance in the second half following the arrival of new trading opportunities. PLUS500 noted that pretax profit was $189.3 million in 2019, seeing a drop from $503.0 million in 2018, quite a substantial drop when comparing the figures. Revenue also suffered, and in 2019 totaled to a figure of $354.5 million, down from $720.4 million. PLUS500 declared an interim dividend of $0.3767 per share, a decrease from $0.6191 a year ago. This lowered the total dividend for 2019 to $0.6501 per share from $1.9977 in 2018. PLUS500 also announced a new share buyback program that would be commencing, which will run until August 31st managed by Credit Suisse. Shares in PLUS500 trade at 721p (-6.94%). 16/3/20 10:48BST.Flutter Entertainment face £110 million hit as global sporting events are cancelled
Flutter Entertainment PLC (LON:FLTR) have told the market that its’ full year earnings could be affected by the outbreak of the coronavirus, which has seen shares dive into red.
Shares in Flutter Entertainment trade at 5,748p (-11.24%). 16/3/20 10:30BST.
The firm noted that it could face a £110 million hit – if global governments continue to cancel events until the end of August due to the outbreak of COVID-19.
The firm said: ‘In recent days, many national governments and sports authorities around the world have made the decision to postpone/cancel high attendance sports events in an effort to delay the spread of the COVID-19 virus. This will obviously have a material impact on the revenue and earnings of the Group which, in 2019, generated approximately 78% of its revenues through bets placed on global sporting events.
Quantifying the precise earnings impact on the Group is difficult at this point as we do not have visibility on the duration of restrictions on sporting events. While most major global sports have been suspended/cancelled, there are some exceptions where events are now being scheduled to take place behind closed doors.’
Sporting associations across the globe have made the move to cancel fixtures and games until the outbreak settles down. Notably, fans of the Premier League will not see their teams in action until two weeks time, whilst Champions League fixtures have been postponed until further notice.
Flutter said that in 2019, 78% of its’ revenue was accounted from global sporting events – which have now been placed on hold.
The firm said that it is expecting to continue trading across its’ UK and Irish stores – as horse racing events such as Cheltenham Festival continue to run. If these events are cancelled then the firm could take a further bruising of £30 million each month.
Peter Jackson, Chief Executive noted: “The challenge currently facing our business and the industry more widely is unprecedented in modern times. Our focus, first and foremost, is on protecting the welfare of our employees and our customers and we will leave nothing to chance in this regard. While our near-term profitability will be impacted by the essential measures being taken globally, the Board will remain focused on protecting shareholder value and managing the business through these turbulent times.”
Associated British Foods feel coronavirus effect, as Primark sales stumble
Associated British Foods PLC (LON:ABF) have told shareholders that their Primark retail business could face significant bruising from the ongoing coronavirus pandemic – in an update published this morning.
“Our priority continues to be the health and safety of our colleagues, customers and partners. Each of our businesses are closely monitoring the current and potential effects of the outbreak on their operations” – the firm noted.
The firm noted that due to the recent outbreak of COVID-19, this could lead to a £190 million loss in sales over the next month – mainly due to store closures.
Associated British Foods mentioned that due to government lockdown’s in France, Spain, Austria and Italy, stores have been forced to close.
Looking at their UK business, Primark sales have declined over the last two weeks due to less foot fall and a challenging trading environment.
The firm said that for the first half, adjusted operating profit will be ahead of expectations – mainly due to higher margins for Primark and Grocery. As a result, adjusted earnings per share for the first half will now be ahead of last year on both a lease-adjusted and a reported basis.
The firm commented today: “In our February trading statement we described the risk to supply of goods from our suppliers in China. Since then, the situation in China has improved, with most factories supplying Primark having re-opened. As a result, supply shortages from that country are now expected to be minimal.
However, with developments over the last week in Italy and, more materially, over the weekend in France, Spain and Austria, stores accounting for 20 percent of Primark’s selling space are now closed until the respective governments permit them to re-open.
Importantly, in aggregate we have not seen a material impact in our sugar, grocery, ingredients and agriculture businesses.
Given the effect of COVID-19 on Primark’s sales, it is too early to provide earnings guidance for the remainder of the current financial year”.
Associated British Foods try to limit impact
Roughly three weeks back, the firm noted that the coronavirus could affect interim results – which gave shareholders a pre warning. The multinational firm have said that they expect to announce their interim results at the end of April – however the recent outbreak of the coronavirus may dampen these. Primark sales and performance remained strong – the firm said, and that this retail business is yet to be impacted by the coronavirus. The first half ends on February 29 for AB, and the firm said that expects growth in sales and adjusted operating profit to rise from £639 million from a year ago. Looking at the performance of their retail brand Primark, AB Foods have said that they expect first half sales to be 2.5% higher year on year, and 4.2% at constant currency. On a reported basis, Primark’s first half operating profit will be ahead of the prior year – with UK sales expected to be 3% higher and EU sales rising 5.3% at constant currency, helped by growth in France, Belgium and Italy. Shares in AB Foods trade at 1,629p (-11.17%). 16/3/20 10:20BST.Old Mutual meet expectations across 2019, however shares drop
Old Mutual Ltd (LON:OMU) have seen their shares dive on Monday morning, as the firm gave shareholder’s a mixed update.
Ian Williamson, Interim CEO commented: “Our business was resilient against significant headwinds in 2019. We faced challenging macroeconomic conditions in South Africa, our largest market, and many of our operating countries in the Rest of Africa. This put pressure on the disposable income levels of our customers and on the ability of our businesses to grow value for our customers and investors. We remain confident that our diversified business allows us to protect value for stakeholders in tough economic times.
The Board remains confident that the decision made was in the best interests of our stakeholders and that their duties were discharged in line with the high standard of governance and ethics expected of an established and respected organization like ours.”
The firm noted that its’ total annual profits had dipped, however profit increased after excluding the distribution of Quilter PLC (LON:QLT) and other factors.
Looking at the figures for Old Mutual’s 2019 trading, the firm noted that pretax profit from continuing operating surged 63% to ZAR13.80 billion from ZAR8.45 billion in 2018.
Old Mutual said that this was due to an increase in non-banking investment return to ZAR86.70 billion from ZAR20.51 billion, increasing total revenue and other income up 60% to ZAR176.12 billion from ZAR109.88 billion.
Looking at its’ profit after tax however, the firm saw this metric slump from ZAR42.71 billion the year before to ZAR9.66 billion. Profit after tax attributable to equity holders of the parent fell 74% to ZAR9.39 billion from ZAR36.57 billion – which met expectations in the fall between 74% and 76%.
Old Mutual decided to declare a final dividend of 5 rand cents per share dividend, up 4.2% from 72 cents the year before.
The firm also tried to best reassure shareholders on the current coronavirus pandemic, which has been affecting global businesses for a few months.
William added: “On 11 March 2020, COVID-19 (Coronavirus) was declared as a pandemic due to the rising rate and scale of infection observed. The rapid spread of virus since the start of 2020, and particularly in recent weeks, has caused significant disruption in global equity markets.
We are monitoring this situation on a daily basis. We have established a special committee to ensure that our employees in all of our locations can continue to work safely, whether that is from our premises or from their homes. We have placed restrictions on all cross border business and personal travel to ensure we limit the risk of infection to our employees and customers. We also regularly model the impact of ‘perfect storm’ scenarios on our solvency capital and liquidity levels. These stress tests have shown we remain sufficiently capitalized with appropriate liquidity levels through these scenarios”.
Shares in Old Mutual Ltd trade at 59p (-14.80%). 16/3/20 10:05BST.
Eqtec announces collaboration with German EPC company ewerGy
Eqtec plc (LON:EQT), the waste-to-energy and gasification technology company, has announced a collaboration framework agreement with ewerGy, a German EPC company.
The agreement will focus on the development of a portfolio of projects in Greece and the Balkans and utilise Eqtec’s advanced gasification technology.
The partnership will harness Eqtec’s waste-to-energy model to produce electricity and syngas for chemicals. The initial two projects will process feedstock sourced from local farmers including straw, corn and cotton stalks.
Under the arrangement, ewerGy will act as the EPC and O&M partner in Greece whilst engaging in business development across the portfolio. Consistent with prior Eqtec deals, Eqtec will provide the technology, equipment and engineering support.
The partnership has identified 11 potential projects of which two are currently under development. The first two in development are of 0.5MWe and 1MWe.
David Palumbo, CEO fo Eqtec PLC, commented:
“Since January, we have been working with ewerGy and its local partner, ECO Hellas, on the development of the first advanced gasification plant in Greece, for which we recently announced an MOU. This collaboration has already been very productive, and the expertise, professionalism and local know-how of ewerGy and ECO Hellas have made clear to us the value of a wider collaboration with them. We are looking forward to opening up Greece and neighbouring countries for advanced gasification plants, and we are convinced ewerGy and ECO Hellas are the right partners to do so and have, already inside their network, access to an interesting prospective pipeline of projects.”
Today’s announcement further cements Eqtec’s progress in establishing strategic partnerships. Earlier in the year Eqtec completed a deal with Californian Pheonix Energy which saw Eqtec receive a 20% stake in the operation in return for supply of equipment and engineering services.
As well as operations in Europe and US, Eqtec operates UK RDF, anaerobic digestion and waste gasification projects.
The Federal Reserve fails to inspire confidence with massive stimulus, shares sink
The Federal Reserve unveiled a significant stimulus package on Sunday, including a rate cut and the restarting of quantitative easing in reaction to the economic slow down caused by COVID-19.
The Fed announced it would cut rates by 100 bps to 0.00%-0.25% and would begin asset purchases of $700 billion.
Just a couple of weeks ago such a large stimulus package would have unleashed a wave of buying throughout markets, but with a back drop of coronavirus induced fear, markets sank overnight.
European markets opened on Monday deep in the red with many markets facing issues with price matching in initial trade. The FTSE 100 was down over 5%, as were the German DAX and French CAC 40.
Futures in the S&P 500 and Dow Jones triggered circuit breakers overnight while Asian sank.
The drop in equities was attributed to scepticism around the Federal Reserves motives and whether the package would actually provide any reprieve for the real economy.
There is also a concerns growing that the Federal Reserve has spent all of its monetary policy ammunition and has very little it can now do if economic conditions deteriorate further.Powell basically admitting that the volatility and drop in stock markets is causing them to act the way just did.
It’s all about the stock market and calming things down. So far it’s not working. At all. — Sven Henrich (@NorthmanTrader) March 15, 2020
