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(Alliance News) - The following stocks are the leading risers and fallers within the main London indices on Tuesday.
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FTSE 100 - WINNERS
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BP, up 7.7%. Shares were higher despite the UK oil major cutting its dividend for the first time since the Deepwater Horizon disaster in 2010, as it swung to a loss. BP declared a quarterly dividend of 5.25 US cents per share, down 50% from 10.50 cents per share for the previous quarter. For the half-year ended June 30, BP swung to a replacement cost loss of USD18.29 billion from a profit of USD3.78 billion a year before. Adjusted replacement cost loss for the interim period totalled USD5.89 billion versus a profit of USD5.17 billion. In the three months to June 30, underlying replacement cost losses were at USD6.7 billion from a profit of USD2.8 billion in the same period last year. Consensus estimates were for a loss in the region of around USD8.45 billion. "The dividend cut was perhaps the worst kept secret in the market - there was some surprise BP hadn't acted sooner but nearly everyone expected a cut alongside these second-quarter numbers. The loss BP announced this morning, linked to the writedown of the valuation of its assets, was no worse than analysts had expected, likely prompting a measure of relief," said AJ Bell's Russ Mould.
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Melrose Industries, up 6.5%. The industrial turnaround specialist said it has agreed improved financial covenants with its lenders out to December 21, 2022. Melrose said the covenant amendments include a waiver of the test of net debt-to-earnings before interest, tax, depreciation and amortisation to the end of 2021. Melrose said it has extended the previously agreed waiver of the net debt-to-Ebitda covenant to include the June 30 test next year. After that, the test will be 5.25 times on December 31 next year, 4.75x on June 30, 2022 and 4.0x on December 31, 2022. The agreement also sets the Ebitda-to-net finance charges covenant at 2.5x on December 31 of this year, then 3.0x on June 30 and December 31, 2021, 3.25x at the end of June 2022, and 4.0x at the end of December 2022. The London-based firm said it now has the financial flexibility it needs to continue to focus on cash generation and adapt to current market conditions.
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BT Group, up 6.0%. Berenberg raised the former state monopoly to Buy from Hold.
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FTSE 100 - LOSERS
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Diageo, down 6.5%. The distiller said it put in a consistent first-half performance but its business was significantly dented by Covid-19 in the second half of financial 2020. Pretax profit fell 52% to GBP2.04 billion from GBP4.24 billion in the financial year that ended June 30, as sales slipped 8.3% to GBP17.70 billion from GBP19.29 billion. Net sales were GBP11.75 billion, down 8.7% from GBP12.87 billion the year prior. Organic net sales were down 8.4%, with growth in North America more than offset by declines in all other regions. According to company-compiled consensus for financial 2020, Diageo was expected to post a fall in organic net sales of 7.3%. Organic operating profit was down 14.4%, hurt by volume declines, cost inflation and unabsorbed fixed costs. Consensus had expected organic operating profit to fall 13.6%. Looking ahead, Diageo said that due to the continued uncertainty caused by the Covid-19 pandemic, it is unable to provide specific financial guidance.
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FTSE 250 - WINNERS
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easyJet, up 12%. The budget airline said it will expand its flying schedule following improved customer demand and third-quarter performance was in line with expectations, with a restart to flying during the period following lifting of Covid-19 related travel restrictions. Total group revenue for the third-quarter ended June 30 was GBP7 million, a small fraction of the GBP1.59 billion in the third quarter last year. easyJet swung to a quarterly pretax loss of GBP324.5 million from a GBP174.2 million profit recorded a year ago. The company's aircraft fleet was fully grounded on March 30 due to the Covid-19 pandemic. Having re-started flying on 15 June, easyJet carried 117,000 passengers with a total capacity of 132,000 seats in the remaining two weeks of the third-quarter. Looking ahead, easyJet expects to fly 40% of planned capacity for the fourth quarter ending September 30. The company previously estimated to fly 30% of its capacity in the fourth-quarter. Based on current flying schedule, easyJet expects to record a narrowed quarter-on-quarter loss in the fourth-quarter.
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Direct Line Insurance, up 7.7%. The motor and home insurer said it will make a special shareholder payout alongside an increased interim dividend, despite an almost 10% fall in first-half profit. The insurer said that the impact of Covid-19 on profit has been broadly neutral, as the additional travel and business interruption claims, alongside a reduction in investment returns and higher operating expenses, were offset by favourable claims frequencies in Motor and Commercial lines. For the six months to June 30, the London-based company recorded pretax profit of GBP236.4 million, down 9.5% from GBP261.3 million, on a total income of GBP1.60 and GB1.65 billion, respectively. Operating profit slipped 3.4% to GBP264.9 million. Direct Line declared an interim dividend of 7.4 pence per share, up 2.8% year-on-year. In addition, it has decided to pay a special interim dividend of 14.4p per share, reflecting a full catch-up of its cancelled 2019 final dividend.
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FTSE 250 - LOSERS
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Babcock International, down 12%. The defence contractor gave no guidance for its current financial year and skipped its final dividend for the past year, following a weak first-quarter performance as Covid-19 had a "significant impact". For the three months to the end of June, Babcock's underlying operating profit was 40% lower year-on-year, as a result of lower levels of productivity in its core business. This was on underlying revenue that declined by 11%. Although core business revenue increased slightly, Babcock said, there was the absence of revenue from the ended Magnox contract with the UK Nuclear Decommissioning Authority. Also hurting revenue was weakness in Babcock's Land sector, particularly in South Africa. Looking ahead, Babcock said it is unable to give financial guidance due to uncertainty around the duration and extent of the impact of Covid-19 on productivity and pipeline development. In addition, Babcock said has decided to not pay a financial dividend for the year ended March 31, due to the continued uncertainty. However, the group expects to see a gradual improvement from the reduction in operating profit, and anticipates its annual results to be weighted towards the second half.
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By Arvind Bhunjun; arvindbhunjun@alliancenews.com
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