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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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Pennon Group, up 2.0%. Exane BNP raised the water company to Neutral from Underperform.
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FTSE 100 - LOSERS
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Aviva, down 8.7%, RSA Insurance, down 2.2%. The insurers bowed to regulatory pressure after withdrawing dividends due to the Covid-19 outbreak. Last Thursday, the European Insurance & Occupational Pensions Authority called on insurers to "suspend all discretionary dividend distributions and share buybacks". The UK Prudential Regulation Authority also last week wrote a letter requesting that insurance companies be prudent in their approach to dividends. Aviva said it "recognises the importance" of a cash dividend and will reconsider its payout arrangements in the fourth quarter of 2020. RSA said it intends to resume making payouts "when prudent to do so". It previously had proposed a 15.6 pence final payout for 2019. "The cash hasn't been lost, it's just retained within the company. Nonetheless, given dividend cuts in other sectors have already knocked a sizeable chunk off the market yield, this will be very unwelcome for income investors. Choosing not to a pay a dividend will also raise questions about Aviva's own view of the current market conditions, it's not exactly a vote of confidence," said Hargreaves Lansdown analyst Nick Hyett.
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Tesco, down 3.8%. The supermarket chain warned of costs as high as GBP925 million due to the Covid-19 outbreak, but upped its annual payout to shareholders and reported a boost in recent sales as UK consumers stockpiled over fears of shortages. In the financial year ended February 29, revenue excluding VAT climbed 1.3% to GBP64.76 billion from GBP63.91 billion. The firm's pretax profit fell 19% however, to GBP1.32 billion from GBP1.62 billion. Sales costs climbed 1.6% to GBP60.2 billion and administrative expenses edged 0.7% higher to GBP2.1 billion. Costs could rise again, Tesco cautioned, due to the Covid-19 outbreak. The grocer said it has "considered a range of scenarios" and predicted that it in its year ending February 2021, it could incur costs between GBP650 million and GBP925 million associated with the deadly virus. Compounding the share price decline, Shore Capital cut the stock to Hold from Buy.
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FTSE 250 - WINNERS
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Hyve Group, up 9.2%, The exhibitions and conference organiser cancelled its current year dividend but believes it is well placed for future growth. Hyve had previously reported a "strong" first-quarter performance - for its year ending September 30 - but on Wednesday said its second-quarter has been hit by the coronavirus. The company previously said it expects a hit of between GBP17 million to GBP19 million on revenue for its year ending September 30, translating to a GBP16 million to GBP18 million dent in profit. In order to combat this, Hyve has furloughed over 25% of its staff in the UK and its management team has taken a temporary 20% pay cut. Hyve also said it has secured a waiver for its June covenant tests under its debt facilities. The company has access to debt facilities of GBP250 million, which it has fully drawn.
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TUI, up 4.5%. The Anglo-German travel operator confirmed it has signed an agreement for a EUR1.8 billion loan from the German government to help keep it afloat as the coronavirus batters the travel industry. The bridging loan equivalent to USD1.99 billion will be issued through German public lender KfW and be used to bolster TUI's credit line. Global lockdowns to stem the spread of the virus have brought holiday travel to a standstill, forcing TUI's hotels, flights and cruise ships to stay empty.
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FTSE 250 - LOSERS
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Direct Line Insurance, down 5.3%. The midcap insurer joined its large-cap counterparts in withdrawing dividends due to the Covid-19 outbreak. Direct Line noted the announcement from the European regulator and the PRA, and explained it will call off its final payout "in recognition of the regulatory guidance and heightened uncertainty". Its solvency II coverage ratio stood at 176% at the end of March, within the targetted 140% and 180% range. The company added that claims in most of its units, motor in particular, have fallen as more people are forced to stay at home due to lockdowns. In the travel business however, claims have risen due to restrictions in international travelling.
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AG Barr, down 4.5%. The soft drinks maker said its annual earnings fell and said it will not pay a final dividend in order to save cash amid the Covid-19 outbreak. Revenue in the year ended January 25 slumped 8.4% to GBP255.7 million from GBP279.0 million. Pretax profit was down 16% at GBP37.4 million from GBP44.3 million. After an interim payout of 4.00p per share, the IRN-BRU maker said no to a final payout. It means its total dividend for the year is down 76% from 16.64p. AG Barr said its annual performance in the soft drinks unit faced "tough comparatives", due to what it labelled "record-breaking" summer weather in 2018.
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OTHER MAIN MARKET AND AIM - WINNERS
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ASOS, up 26% at 1,968.00p. The online fashion retailer said late Tuesday profit for the first half of its financial year increased sevenfold on a double-digit rise in retail sales globally. For the six months to the end of February, ASOS's pretax profit was GBP30.1 million, a sharp increase from GBP4.0 million the year before, as revenue grew by 21% to GBP1.60 billion from GBP1.31 billion, driven by a 21% rise in overall retail sales. In the UK, retail sales increased by 20%, as active customer growth increased by 10% and orders by 18% despite increased competition. ASOS said it will raise funds through a placing of new shares in the company. ASOS on Wednesday confirmed it raised GBP247 million through a 15.8 million share issue at 1,560p each.
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OTHER MAIN MARKET AND AIM - LOSERS
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IQE, up 5.8%. Deutsche Bank raised the semiconductor wafer products manufacturer to Buy from Hold.
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By Arvind Bhunjun; arvindbhunjun@alliancenews.com
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