(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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JD Sports Fashion, up 18%. The sportswear retailer was extending gains from Tuesday after it said while its websites continue to accept and fulfil orders, it believes the closure of its stores in the UK, Europe and US will hurt profit for financial 2021. JD Sports said it believes its strong balance sheet, net cash resources and substantial working capital facilities will be adequate to meet any cash deficiencies during the period of disruption. The stock closed up 19% on Tuesday.
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International Consolidated Airlines, up 12%, easyJet, up 10%. The airline stocks were higher after the Senate and White House reached agreement on a USD2 trillion stimulus package for the US economy and millions of Americans ravaged by the coronavirus crisis overnight. While the finer details are not yet known, investors are hopeful measures will contain support for the aviation sector which has been battered by the pandemic. "Airlines in particular saw some big gains, no doubt buoyed by the prospect that the US government might take some stakes in them, if it were to become necessary," said CMC Markets analyst Michael Hewson. However, in the UK, Chancellor Rishi Sunak has decided against creating a specific support package for the aviation industry. In a letter to airports and airlines, he said the government is prepared to enter into negotiations with individual companies once they have "exhausted other options" such as raising cash from existing investors.
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FTSE 100 - LOSERS
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Rentokil Initial, down 17%. The pest control firm withdrew its final dividend and full-year guidance due to the "unprecedented uncertainty" caused by the Covid-19 outbreak. The company said that it was only in the last ten days that its trading has been hampered by the virus. Until mid-March, its performance "was not materially impacted". Rentokil reported mixed demand for its products and services. With hotels, restaurants and catering sectors being forced to close due to government lockdown measures, demand has fallen, though it has been "strong" in hygiene services and food production markets. With the FTSE 100 firm looking to save cash due to the virus outbreak, it has withdrawn its final dividend of 3.64p and suspended all further payouts "for the time being".
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FTSE 250 - LOSERS
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Biffa, down 12%. The waste management firm warned it will be seeing a steep fall in demand from commercial customers due to Covid-19. High Wycombe-based Biffa said the disruption from Covid-19 will not have too much of an impact on its financial year ending on Friday. However, no final dividend will be declared for the year. Looking further ahead, it now expects "significant disruption" to operations over the next few months. The main impact will be on the Industrial & Commercial business which will see "very significant" reduced demand as customers are forced to stop operations. There will also be a fall in volumes of processing in the Resources & Energy unit, while all businesses will be hindered by workers either being ill or forced to miss work. To preserve cash, all M&A has been frozen, and all non-essential expenditure has been halted.
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Countryside Properties, down 4.5%. The housebuilder suspended all construction work on its sites and closed all of its sales offices. Countryside said these actions will "inevitably" hurt its financial performance, but it remains unclear how long the measures will remain in place. As a result, Countryside is withdrawing its financial guidance for the current financial year and is suspending dividend payments until further notice. Countryside said it has a "strong" balance sheet, with available cash of GBP110 million. It also has a current GBP300 million revolving credit facility in place until May 2023. The company noted its trading up until mid-March was in line with internal expectations, with improving visitor levels and strong reservation rates and a strong order book for affordable and Private Rented Sector homes.
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Diploma, down 4.2%. The technical products maker said it now expects a weaker interim performance after the Covid-19 outbreak hurt its trading starting last week. Up until the week beginning March 16, Diploma expected an interim revenue rise of 11% year-on-year. Now, due to "a rapid change in market conditions", Diploma now expects a weaker performance in the six months to March 31. "This change in market conditions as a result of Covid-19 is now affecting trading in many of our businesses. However, it remains too early to assess the impact that this unfolding situation will have on trading for the full year," Diploma said. The company said it has cash resources of about GBP55 million.
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OTHER MAIN MARKET AND AIM - WINNERS
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Silence Therapeutics, up 21%. The genetic medicines developer said it is collaborating with FTSE 100-listed drugmaker AstraZeneca on treatments for renal, cardiovascular, respiratory, and metabolic diseases. Astra will pay Silence USD80 million upfront - USD60 million in cash plus a USD20 million equity investment - under the deal. The collaboration is aimed as discovering, developing and commercialising small interfering RNA therapeutics to treat diseases. The Astra collaboration will also make Silence eligible for up to USD400 million in milestone payments for each disease target, as well as tiered royalties. Silence will have the option to negotiate to co-develop two programs discovered through the Astra collaboration, starting from phase 2. Astra shares were down 3.5%.
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Sumo Group, up 15%. The video game developer said it is "too early" to assess the financial damage of the Covid-19 outbreak, but the company said it could see an uptick in royalty income as government enforced lockdowns may lead to a rise in video game playing. Sumo added that it has delayed publishing its annual results by at least two weeks, following the advice of the UK Financial Conduct Authority. For 2019, Sumo expects revenue to rise 27% to GBP49.0 million from GBP38.7 million.
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Keller Group, up 12%. The geotechnical contractor said trading conditions slumped "swiftly" recently, but still expects a first-quarter performance in line with expectations. Trading in January and February was "largely unaffected" by the Covid-19 outbreak but market conditions deteriorated in late-March. Its Asia Pacific unit has only been "moderately impacted" so far. At the end of February, the company had undrawn committed and uncommitted borrowing facilities totalling GBP230 million.
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OTHER MAIN MARKET AND AIM - LOSERS
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Keywords Studios, down 8.4%. The video game services provider said it is unable to give any future financial guidance, but the firm achieved double-digit growth in 2019. Keywords was meant to report 2019 results on Tuesday next week. However, the UK Financial Conduct Authority asked earlier this week for a two-week moratorium amid the market volatility caused by Covid-19. The company expects revenue for 2019 to have risen 30% to EUR326 million, increasing 15% organically. Adjusted pretax profit is estimated to have climbed 8% to EUR41 million. Keywords said 2020 trading started in line with expectations with only minimal impact from Covid-19 in January and February, mainly in China. These operations are now back at near full operations. There has since been higher demand for some services, and Keywords said demand is likely to outstrip the company's ability to fulfil customer needs.
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By Arvind Bhunjun; arvindbhunjun@alliancenews.com
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