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(Alliance News) - Low-cost airline easyJet on Thursday guided to a full-year loss after Covid-19 battered the travel market.
Passenger numbers for the financial year ended September 30 halved to 48 million, with capacity down 48% to 55 million seats. Full-year revenue is seen at GBP2.28 billion.
Capacity in the fourth quarter was 38% of previously planned levels, with revenue for the final quarter GBP620 million.
Due to "disciplined" cost control, easyJet's total cash burn in the fourth quarter is expected to be less than GBP700 million, lower than the GBP774 million seen in the third quarter.
The FTSE 250 constituent expects to report a group headline pretax loss in the range of GBP815 to GBP845 million for the recently-ended financial year. Its fourth quarter loss is expected to be slimmer than its third quarter one.
For the 2019 financial year, easyJet posted a headline pretax profit of GBP427 million and revenue of GBP6.39 billion.
easyJet will not be recommending a dividend payment.
Looking ahead, the airline said it expects to fly just 25% of planned capacity for the first quarter of financial 2021.
"We remain focused on cash generative flying over the winter season in order to minimise losses during the first half. We retain the flexibility to ramp capacity back up quickly when we see demand return," said easyJet.
Given ongoing uncertainty, easyJet said it "would not be appropriate" to provide guidance for financial 2021.
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 0.4% at 5,970.00
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Hang Seng: down 0.5% at 24,122.00
Nikkei 225: closed up 0.9% at 23,647.07
DJIA: closed up 530.70 points, 1.9%, at 28,303.46
S&P 500: closed up 1.7% at 3,419.45
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GBP: up at USD1.2948 (USD1.2919)
EUR: up at USD1.1777 (USD1.1766)
Gold: up at USD1,893.28 per ounce (USD1,887.20)
Oil (Brent): soft at USD42.15 a barrel (USD41.62)
(changes since previous London equities close)
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ECONOMICS AND GENERAL
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Thursday's Key Economic Events still to come
China National Day Golden Week continues. Financial markets closed
1100 BST Ireland CPI
0800 CEST Germany Foreign Trade
1330 CEST EU ECB publishes meeting accounts
0815 EDT Canada Housing starts
0830 EDT US Unemployment insurance weekly claims report - initial claims
1030 EDT US EIA weekly natural gas storage report
1200 EDT US Retail chain store sales index
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House sales are expected to be lower in a year's time as the tough economy weighs down on the market, surveyors have reported. Current market activity is strong, with a net balance of 52% of property professionals reporting an increase rather than a decrease in new buyer inquiries in September, the Royal Institution of Chartered Surveyors said. It said house prices are generally increasing across the UK, but more modestly in London compared with other regions. The supply of fresh homes coming to market has been increasing for four months in a row – the longest stretch of growing supply since 2013. But stock levels remain relatively low, averaging 42 properties per estate agent branch, the report said. A balance of 55% of professionals saw the number of agreed sales increase rather than decrease in September. Rics said this is mirrored in each part of the UK, led by exceptionally strong growth in East Anglia, the South West, and Yorkshire and the Humber. A balance of 17% of surveyors expect sales to increase rather than decrease in the next three months – but looking further ahead, the majority expect sales to fall. A balance of 34% of property professionals said in September that they expect sales to be lower in 12 months' time, moving deeper into negative territory than 17% who felt this way in August. Contributors cite potential job losses across the economy once the furlough scheme is withdrawn as a significant risk for market activity further ahead, Rics said. Looking ahead, a net balance of 23% of professionals see prices continuing to rise over the next three months. Price expectations for a year's time also remain modestly positive, but the outlook varies.
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The recovery in the jobs market accelerated in September as employers hired more staff following the reopening of parts of the economy, according to figures. The latest KPMG and REC report on UK jobs found there was an increase in the number of people placed in permanent and temporary jobs. The monthly figures, collected between September 11 and 24, revealed a reading of 56 on its permanent placement index, up from 50.9 the previous month. Any reading above 50 represents growth. The report revealed that hiring for permanent roles grew at the fastest rate since October 2018 as confidence grew among firms. Meanwhile, the report's temporary billing index also increased to 56 as firms reported that the reopening of the economy and the restarting of projects resulted in more temporary roles. Both indices continued to see a contraction in hiring in London, while all other areas of the UK reported growth. The figures also revealed that the umber of job candidates available "continued to rise at a substantial pace in September", linked to ongoing redundancies.
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Minutes from September US Federal Open Market Committee meeting on Wednesday showed that financial conditions had improved in the country in the recent months, in part reflecting policy measures to support the economy and the flow of credit to US households and businesses. Back then, the Board of Governors voted unanimously to leave the interest rates on required and excess reserve balances at 0.1%. The Board of Governors also voted unanimously to approve establishment of the primary credit rate at the existing level of 0.25%. However, the committee warned that the path of the economy would depend on the course of the virus and that the ongoing public health crisis would continue to weigh on economic activity, employment, and inflation in the near term and posed considerable risks to the economy's medium-term outlook.
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Democratic vice presidential hopeful Kamala Harris on Wednesday called Donald Trump's Covid-19 response a historic failure that disqualified him from a second term, in a pointed but mostly civil debate with Mike Pence who sought to portray her as extreme. With Trump's weekend hospitalisation for Covid-19 throwing a new importance on the role of the vice president, Pence and Harris spoke separated by plexiglass as a safety precaution 27 days before the election. Harris immediately attacked Trump's record on Covid-19, which has killed more than 210,000 people in the US, more than in any other country. "The American people have witnessed what is the greatest failure of any presidential administration in the history of our country," said Harris, a US senator from California and former prosecutor. "I want the American people to know, from the very first day, President Donald Trump has put the health of America first," Pence said, pointing to his ban on travel from China on January 31, a month after cases first emerged in Wuhan.
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BROKER RATING CHANGES
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PEEL HUNT CUTS CAIRN ENERGY TO 'ADD' ('BUY') - TARGET 159 (153) PENCE
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PEEL HUNT RAISES CLOSE BROTHERS TO 'ADD' ('HOLD') - TARGET 1202 PENCE
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PEEL HUNT RAISES CAPITAL & COUNTIES TO 'BUY' ('ADD') - TARGET 180 PENCE
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PEEL HUNT RAISES SHAFTESBURY TO 'ADD' ('REDUCE') - TARGET 600 (540) PENCE
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BERENBERG INITIATES BIFFA WITH 'BUY' - TARGET 270 PENCE
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JPMORGAN RAISES NETWORK INTL TO 'OVERWEIGHT' ('NEUTRAL') - TARGET 370 (440) PENCE
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COMPANIES - FTSE 100
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Imperial Brands said its net revenue performance is slightly ahead of previous guidance, though earnings per share will be in line with market forecasts and down around 6%. The tobacco business has continued to perform well despite an uncertain and disrupted trading environment, Imperial Brands said. The company has seen some Covid-related changes in customer behavior with increased overall demand versus its expectations. "This has resulted in better than expected volumes, driven by improved volume trends in several key European markets and in the US. These positive trends have helped to offset relatively weaker market volumes in the duty free channel and in some traditional summer tourist destinations, where reduced travel has impacted demand. Overall, we expect tobacco net revenue to increase by around 1% at constant currency," said Imperial. The focus in Next Generation Products - items like vapes - has been on improving performance. Trading has been "disappointing", albeit in line with revised expectations, and net revenue is expected to be around 30% lower than last year at constant currencies. Group net revenue is "slightly ahead" of the guidance provided at its half-year results, and is expected to be broadly flat year-on-year at constant currency. However, Imperial noted that it has taken Covid-19 costs and expects constant currency earnings per share will be down by around 6%, in line with current market expectations. As well as the trading update, the firm revealed some new hires, including the appointment of Murray McGowan as strategy & transformation director.
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Hargreaves Lansdown said it started the new financial year well, with clients and assets growing. The fund supermarket recorded net new business of GBP800 million in the three months to September and net new clients of 31,000. Assets under administration totalled GBP106.9 billion at the end of September, up 3% since June 30. The net new business result was "pleasing", the FTSE 100 constituent said, given weakening investor sentiment in the period stemming from Covid-19 and Brexit uncertainty. Revenue for the period was GBP143.7 million, up 12% on last year. "Today we report a good start to our financial year, with growth in clients, assets and revenue. These results are against the ongoing backdrop of market uncertainty and highlight the resilience of our business model and client proposition," said Chief Executive Chris Hill.
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Sports betting and gaming firm GVC Holdings said its third quarter was "strong" as it upgraded its guidance. Net gaming revenue was up 12%, with online gaming revenue up 26%. Online gaming volumes remain ahead of pre-pandemic levels, GVC noted. It has also seen continued momentum in the US, with full-year net revenue for the territory now expected to be ahead of expectations at USD150 million to USD160 million. Full-year group earnings before interest, tax, depreciation and amortisation is seen in the range of GBP770 million to GBP790 million, around GBP50 million ahead of previous guidance. "While the risk of further restrictions as a result of Covid-19 mean that we remain cautious on the short-term outlook, in the longer term we are confident of being able to continue delivering sustainable growth for all our stakeholders," said Chief Executive Shay Segev. The company added that it has agreed to acquire online gambling operator Bet.pt in Portugal. The transaction is in line with GVC's strategy of expanding into new markets that are either regulated or regulating.
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COMPANIES - GLOBAL
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Facebook will stop running political or social issue ads after the US polls close on November 3 to reduce chances of confusion or abuse. The leading social network also said that any posts prematurely declaring a winner or contesting the count will be labeled with reliable information from news outlets and election officials. "If a candidate or party declares premature victory before a race is called by major media outlets, we will add more specific information in the notifications that counting is still in progress and no winner has been determined," said vice president of integrity Guy Rosen. Facebook and other social networks have been tightening rules as they gear up for post-election scenarios, including efforts by President Donald Trump to wrongly claim victory or contend the outcome is not legitimate. Separately, Facebook is allowing climate misinformation ads to proliferate despite claiming it is committed to rooting out the problem, a new report by a think tank said Thursday. InfluenceMap used the platform's own data to identify 51 ads denying the link between human activity and climate change that were viewed a total of eight million times over the first half of 2020. This was despite the fact that Facebook bans false ads, and stated as recently as September that it is "committed to tackling climate change through our global operations."
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US authorities fined Citigroup USD400 million over deficiencies in risk management practices and required an overhaul of internal controls at the global financial powerhouse, officials announced Wednesday. The US Treasury's Office of the Comptroller of the Currency issued the fine, in parallel with a related action from the Federal Reserve citing failings at the bank. The Fed said the crackdown reflected the fact Citi had "not taken prompt and effective actions to correct practices previously identified by the board in the area of compliance risk management, data quality management and internal controls." The Fed said the issues date back to 2013, but had not been adequately addressed. Under the settlement with the OCC, Citi promised to appoint a compliance committee that will provide quarterly updates to the company's board on actions to improve compliance. Other requirements include upgrades to data collection and a staffing assessment to ensure adequate resources for compliance. Citi said it was committed to righting its standing with regulators and would commit USD1 billion in risk management-related programs in 2020.
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Thursday's Shareholder Meetings
Artemis Alpha Trust PLC AGM
Hargreaves Lansdown PLC AGM
Restaurant Group PLC GM re share plan
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By Tapan Panchal; tapanpanchal@alliancenews.com
Copyright 2020 Alliance News Limited. All Rights Reserved.
