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(Alliance News) - The following stocks are the leading risers and fallers within the main London indices on Wednesday.
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FTSE 100 - WINNERS
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Smith & Nephew, up 4.7%. The medical technology firm expects its trading margin for its first half of 2020 to be substantially lower than 2019 due to the negative impact of Covid-19. Smith & Nephew said it expects a second-quarter underlying revenue decline of around 29%. While performance has improved as the quarter progressed - with the year-on-year underlying revenue decline in June of 12% improving from a 27% decline in May and a 47% decline in April - the company said there continues to be significant uncertainty and geographical variation. Smith & Nephew said the damage from the pandemic was most pronounced in its orthopaedic reconstruction, sports medicine and ENT businesses, caused by less elective surgery in the quarter as hospitals focused on Covid-19 patients. Its noted that its advanced wound management and trauma businesses have been more resilient.
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FTSE 250 - WINNERS
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Meggitt, up 2.8%. The aerospace and defence contractor has sold its US subsidiary, Meggitt Training Systems, to Pine Island Capital Partners, a US private investment firm, for USD146 million. The sale completed on Tuesday and was subject to US regulatory approval, and followed a process which had commenced in 2019, Meggitt said. "The transaction is consistent with the group's strategy to focus on businesses of scale in markets where its leading positions offer greater potential for growth and operational efficiencies," Meggitt said. Meggitt Training Systems generated sales of GBP104 million in 2019 and had gross assets of GBP149 million with profit attributable to the assets of GBP11.2 million. "The net proceeds will be used by the group for general corporate purposes and will further strengthen the group's liquidity," the London-listed firm said.
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B&M European Value Retail, up 4.8%. The company reported double-digit revenue growth in the first quarter and said it intends to continue to grow profitability going forward. In addition, B&M launched GBP350 million senior secured notes due 2025 offering. The notes will be offered in connection with the refinancing of some of the company's existing senior credit facilities and existing notes, it said. Turning back to trading, the general merchandise retailer reported a "strong" start to the new financial year, which begun on March 29, as B&M's locations continue to prove "highly attractive" to customers. Revenue growth in the quarter to June 27 was 28% to GBP1.15 billion, with B&M UK revenue growth of 34% to GBP987.8 million. On a like-for-like basis, revenue grew by 27% against 3.9% a year ago.
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Babcock International, up 4.4%. The aerospace and defence contractor named David Lockwood as its new chief executive officer, taking over Archie Bethel who will step down in September. Lockwood will join Babcock's board on August 17, then become CEO on September 14. Lockwood was formerly CEO of Cobham, which was recently acquired by US private equity firm Advent International for GBP4.0 billion. He was also the boss of former FTSE 250 technology firm Laird between 2012 and 2016. Laird, like Cobham, was acquired by Advent back in 2018 in a GBP1 billion deal. Bethel's planned departure was announced back in February. He has been CEO since 2016 and has been at Babcock since 2004.
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Hammerson, up 2.6%. The property development and investment company has obtained an amendment to covenants on its private placement notes and increased its maximum liquidity by GBP300 million. The company negotiated an amendment of the covenants on its existing private placement notes, increasing available headroom on the unencumbered asset ratio covenant until the end of 2021. The amendment relaxes the covenant for unencumbered assets to no less than 125% of net unsecured borrowing from no less than 150%. At the end of 2019, unencumbered assets made up 189% of net unsecured borrowing. A condition to the amendment includes a temporary financial covenant requiring the firm to maintain 12 months' forward liquidity over GBP100 million.
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Close Brothers, up 3.9%. Royal Bank of Canada upped the merchant bank to Outperform from Sector
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FTSE 250 - LOSERS
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John Laing Group, down 10%. The infrastructure project investor expects a single-digit net asset value decline during a busy six months, which was hurt by the Covid-19 pandemic. John Laing expects net assets at June 30, before deducting dividends, to have fallen. Its NAV per share at December 31 was 337p and stood at 325p at the end of June 2019. Its first half NAV per share will take a 20p hit from "external factors, namely Covid-19". John Laing explained it has also increased discount rates at a number of assets, hurting NAV per share by 12p. "External factors, including the exceptional impact of Covid-19 and reductions in power price forecasts, have more than offset the underlying portfolio performance and gains from foreign exchange," the investor said. The pandemic has led to reduced power demand and tumbling energy prices.
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Unite, down 2.7%. Berenberg cut the student-home builder to Hold from Buy.
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SSP Group, down 2.2%. The travel food kiosk operator said the Covid-19 pandemic has had an "unprecedented" hit to the travel sector, so it is reorganising its UK business. Sales in April and May were about 95% below last year. During June, sales recovered "slightly" and are now running at about 90% below last year. "The reality is that passenger numbers still remain at very low levels, a reflection of the extent and duration of the current restrictions in place. In the Rail sector, which represents the majority of SSP's UK operations, passenger numbers remain about 85% lower year on year and the UK Air sector has to date been largely closed," SSP said. SSP expects only about 20% of its UK units will have opened by the autumn. "If the pace of the recovery continues at the current level, this could lead to up to about 5,000 roles becoming redundant from within the head office and UK operations. Clearly, these decisions are very difficult, and our priority is to conduct this process fairly and to support those affected." SSP expects this reorganisation to cost between GBP8 million to GBP10 million.
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OTHER MAIN MARKET AND AIM - WINNERS
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Topps Tiles, up 7.5%. The tile specialist retailer said its third quarter sales plunged 53% year on year but this was ahead of revised expectations. Average weekly sales in the 13 weeks to June 27 totalled GBP1.9 million, sharply lower than the GBP4.1 million recorded in the same period the year before. Topps noted, however, weekly sales rose throughout the period, rising to GBP3.3 million in June from GBP800,000 in April.
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Haydale Graphene Industries, up 85%. The materials firm agreed a new collaboration with IRPC Public Co in Thailand to develop the organic conducting-based printing smart fabric - by using Haydale's functionalised technology, potentially for medical use and related applications. Due to the Covid-19 pandemic, Haydale has been developing a functionalised graphene coated fabric. The Thailand Textile Institute has carried out tests on the coated fabric that show antibacterial finishes in excess of 99.3% on the textile material after 10 washes. Haydale has also signed a
Phase 2 collaboration agreement with IRPC - to develop transparent graphene and functionalized acetylene black conductive inks.
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By Paul McGowan; paulmcgowan@alliancenews.com
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