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(Alliance News) - InterContinental Hotels Group warned Friday demand for hotels is "currently at the lowest levels we've ever seen".
The company said global revenue per available room declined by 6% in January and February. While IHG reported a broadly flat performance in the US, the decline in Greater China reach almost 90% in February.
Looking ahead, IHG said it expects global decreases in March to be around 60%, with steeper declines in those markets most impacted by government restrictions.
"IHG has a robust business model, and the measures we are announcing today to reduce costs and preserve cash give us the capacity to manage the business through this unique environment and to support our owners during this incredibly difficult time," said Chief Executive Keith Barr.
The company noted that cost cutting measures are expected to result in a reduction of up to USD150 million in employee salaries and incentives.
"These were not easy choices," Barr said, "and we are mindful of the impact these decisions will have on our colleagues and shareholders. However, we believe that these are essential to ensuring that we come out of this as strong as we possibly can and ready to capitalise on what remains an industry with excellent long-term growth potential."
Here is what you need to know at the London market open:
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MARKETS
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FTSE 100: called up 222.69 points, 4.3%, at 5,374.30
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Hang Seng: up 4.7% at 22,736.19
Nikkei 225: Tokyo market closed for holiday.
DJIA: closed up 188.27 points, 1.0%, at 20,087.19
S&P 500: closed up 0.5% at 2,409.39
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GBP: up at USD1.1827 (USD1.1665)
EUR: up at USD1.0814 (USD1.0710)
Gold: up at USD1,507.65 per ounce (USD1,477.90)
Oil (Brent): up at USD30.07 a barrel (USD28.02)
(changes since previous London equities close)
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ECONOMICS AND GENERAL
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Friday's Key Economic Events still to come
Japan Vernal Equinox Day. Financial markets closed.
0930 GMT UK Bank of England quarterly inflation attitudes survey
0930 GMT UK public sector finances
1100 GMT Ireland wholesale price index
1000 CET EU euro area balance of payments
1000 EDT US existing home sales
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The UK chancellor is to unveil an emergency package aimed at protecting workers' jobs and wages as they face hardship in the fight against the coronavirus pandemic. Rishi Sunak has been under pressure from Labour, unions and even senior Tory MPs to do more to help workers and the stalling economy weather the crisis. He will reveal new measures on Friday at the daily Covid-19 press conference in Downing Street, where he is expected to be joined by Boris Johnson. The prime minister said he expects the tide to be turned in the fight within 12 weeks, as he urged the public to follow social distancing advice and for businesses to "stand by your employees".
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British rail services will be gradually reduced from next week as demand drops away during the coronavirus outbreak. The UK Department for Transport said it had agreed with rail operators across the country to scale back timetables from Monday as people change their travel habits to help stop Covid-19 spreading. Core services will continue to run to help people attend medical appointments and allow emergency services and NHS staff get to work. The coronavirus pandemic's impact on the public's travel patterns has seen demand for rail travel decline by up to 69% on some routes, the DfT said. The joint move from the government and rail industry will also enable freight services to continue. Northern Trains, South Western Railway, Govia Thameslink Railway and Great Western Railway said they were suspending or cancelling some services due to staff illness or to protect customers and employees. Transport for London said it will close up to 40 London Underground stations until further notice while the Night Tube, which normally operates on Friday and Saturday nights, has been suspended. Eurostar has slashed its timetables between UK and the continent due to demand collapsing. The Cross-Channel rail operator is running just 10 trains on Friday, compared with its usual schedule of 56.
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German producer prices slipped in February, reversing the previous month's rise. Producer prices were down 0.1% in February compared to a year ago, following a 0.2% rise in January. Month-on-month, prices were down 0.4% in February following a 0.8% rise the month before.
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Joe Biden has emerged as the Democratic presidential nominee-in-waiting, but amid the uncertainty of the coronavirus pandemic, the emphasis must be put on "waiting". In the three weeks since his blow-out win in the South Carolina primary, Biden has built an essentially insurmountable lead over his last remaining rival, Bernie Sanders. Yet the Vermont senator remains in the race. And with several states delaying their primaries to avoid the spread of the Covid-19 virus, Biden can not reach the required majority of pledged convention delegates until May or June.
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BROKER RATING CHANGES
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MORGAN STANLEY CUTS BP TO 'EQUAL-WEIGHT' (OVERWEIGHT) - PRICE TARGET 245 (520) PENCE
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CREDIT SUISSE CUTS BUNZL TO 'UNDERPERFORM' (NEUTRAL) - TARGET 1195 (2000) PENCE
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DEUTSCHE BANK RAISES BHP GROUP TO 'BUY' (HOLD) - PRICE TARGET 1450 (1750) PENCE
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COMMERZBANK RAISES RYANAIR TO 'BUY' (REDUCE) - PRICE TARGET 10.25 (13.50) EUR
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COMPANIES - FTSE 100
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Estate agent Rightmove said it is taking actions to help customers that will result in GBP65 million to GBP75 million in lost revenue for 2020."The speed of the slowdown in the UK housing market has been significant. Notably the number of property transactions failing to complete in recent daysand likely changes in tenant behaviour following the announcement of the renters' protections by the government may put further pressure on estate and lettings agents," it noted.
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Moody's Investors Service downgraded the debt ratings of tourism company TUI and placed them on review for further downgrade due to TUI's decision to temporary suspend a vast majority of its operations amid the coronavirus pandemic. The ratings agency downgraded the corporate family rating of TUI to B2 from Ba3. The Anglo-German company's senior unsecured rating was downgraded to B2 from Ba3 and the probability of default rating was cut to B2-PD from Ba3-PD. Hanover, Germany-based TUI on Monday had said it was suspending the "majority" of its operations over coronavirus fears, and made a request for state aid.
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Moody's also damped its outlook on Informa but has not yet changed ratings. Moody's has affirmed its Baa3 issuer and senior unsecured credit ratings for the events and publishing firm. The rating has been altered to negative from stable. The change to a negative outlook reflects pressure building on revenue and earnings in 2020 due to the delay and cancellation of events prompted by Covid-19, Moody's said. Informa warned earlier in March no financial guidance would be given for 2020.
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COMPANIES - FTSE 250
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JD Wetherspoon reported revenue growth of 4.9% in the 26 weeks ended January 26 to GBP933.0 million. Like-for-like sales, meanwhile, grew by 5.0% over the first half. The pub chain achieved 15% growth in pretax profit before exceptional items and pre-IFRS 16, up to GBP57.9 million. Post-IFRS 16 and including exceptional items, pretax profit was GBP42.0 million, down from GBP48.6 million a year ago. Wetherspoon's said it will not be paying an interim dividend, having paid a 4.0 pence a share in the first half of its financial 2019. "The company has decided to delay most capital projects and to reduce expenditure, where possible, including the cancellation of the interim dividend," due to the virus situtation, explained Chair Tim Martin. Looking ahead, Wetherspoon's said in the six weeks to March 8, like-for-like sales increased by 3.2% and total sales by 2.9%. However, in the week to March 15, sales declined by 4.5%. "In the early part of the current week, following the prime minister's advice to avoid pubs, sales have declined at a significantly higher rate," Martin added.
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Frasers - formerly known as Sports Direct - said it expects that Covid-19 to cause "significant" disruption to its business, including reducing customer footfall. As a result, the sports clothing retailer said it no longer expects to achieve its previous guidance of 5% to 15% growth in earnings before interest, tax, depreciation and amortization growth - including House of Fraser but pre-IFRS 16 adjustments - previously given for the financial year ending to April 26. Accordingly, and given the ongoing uncertainty, the company said it is no longer giving formal guidance in relation to its current financial year.
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Marks & Spencer warned that trading over the next 9 to 12 months in its Clothing & Home and International businesses is likely to be hurt. Turning to the retailer's Food business, it has "so far" remained strong, illustrating the resilience M&S derives from having the combination of related businesses under one umbrella. Therefore, M&S said its full-year pretax profit could be at or below the bottom end of the range of between GBP440 million and GBP460 million, given probable very depressed trading in Clothing & Home. The retailer also said it does not anticipate making a final dividend payment for this financial year, give "the current circumstances". This will result in cash saving of GBP130 million.
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Banking & wealth management services firm Investec warned a "challenging" operating environment is going to lead to a drop in annual profit. Anglo-South African Investec, listed in both London and Johannesburg, forecast a 7% to 14% fall in adjusted operating profit for its year ended March. Adjusted earnings per share are guided to decline by 16% to 23%. In financial 2019, Investec posted an adjusted operating profit of GBP732 million and adjusted earnings per share of 60.9 pence. The company blamed challenging market conditions as well as normalisation in its tax rate. The environment was particularly tough in the second half of its year, Investec said, in both the UK and South Africa. Further, fourth-quarter operating performance is expected to have been held back by the effect of the Covid-19 pandemic on global markets.
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COMPANIES - INTERNATIONAL
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Tesla thinks it has sufficient liquidity to weather an "extended period of uncertainty", the electric car maker said. Tesla has decided to temporarily suspend production at its factory in Fremont, California. Basic operations will continue in order to support vehicle and energy service operations and charging infrastructure. The New York factory will also suspend production though operations of other facilities will continue, including Nevada and its service and supercharging network. Tesla said its cash position at the end of the fourth quarter of 2019 was USD6.3 billion, before a recent USD2.3 billion capital raise.
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American Airlines Group said it has seen "unprecedented" declines in demand in recent days. The airline said it has continued to reduce its schedule in response to government-imposed travel restrictions, with all long-haul flights "pulled down" with the exception of London Heathrow - which it is operating once daily from Dallas Airport and Miami - and Tokyo Narita, three times a week from Dallas. American Airlines said it has reduced international flying by 75% and its domestic schedule by 30% for April, with plans to lower this even further in May. In all, the carrier said it has reduced its April schedule by more than 55,000 flights.
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Friday's Shareholder Meetings
Blackrock North American Income Trust
Hadrian's Wall Secured Investments (proposed managed wind-down)
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By Tom Waite; thomaslwaite@alliancenews.com
Copyright 2020 Alliance News Limited. All Rights Reserved.
