(Alliance News) - Global markets were falling on Friday amid a ratcheting up of tensions between protesters in Hong Kong and the Chinese government in Beijing.
Highly dependent on sales to China, luxury goods firm Burberry became the latest prominent UK listing to skip paying a final dividend.
Burberry said it has made "strong" progress against its strategy during the 52 weeks ended March 28 and is well prepared to navigate through Covid-19.
The fashion house delivered revenue of GBP2.63 billion in its most recently ended financial year compared to GBP2.72 billion the year prior. Pretax profit dropped to GBP168.5 million from GBP440.6 million year-on-year.
Burberry highlighted that it had seen "strong" momentum in brand, product and sales before the Covid-19 outbreak, ahead of its previous expectations. Comparable sales grew by 4% in the first nine months of its financial year, but dropped by 27% in the final quarter, with around 60% retail stores closed at end of March.
However, "given current uncertainty", Burberry said it won't pay a final dividend, meaning its full-year payout dropped 73% to just 11.3 pence, having paid 42.5p a year earlier. It said future dividend payments will be reviewed at the end of financial 2021.
"We have a strong balance sheet and liquidity, with space for investment when markets recover. We have found new ways to strengthen our connection with consumers, drawing on our digital leadership. We have also mobilised our resources in support of the relief efforts," said Chief Executive Marco Gobbetti.
He added: "It will take time to heal but we are encouraged by our strong rebound in some parts of Asia and are well-prepared to navigate through this period."
Here is what you need to know at the London market open:
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MARKETS
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FTSE 100: down 1.7% at 5,911.30
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Hang Seng: down 5.0% at 23,075.78
Nikkei 225: closed down 0.8% at 20,388.16
DJIA: closed down 101.78 points, 0.4%, at 24,474.12
S&P 500: closed down 0.8% at 2,948.51
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GBP: down at USD1.2202 (USD1.2250)
EUR: down at USD1.0927 (USD1.1008)
Gold: down at USD1,732.70 per ounce (USD1,749.03)
Oil (Brent): down at USD34.36 a barrel (USD36.18)
(changes since previous London equities close)
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ECONOMICS AND GENERAL
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Friday's Key Economic Events still to come
1100 BST Ireland wholesale price index
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China has launched its fiercest assault on Hong Kong's treasured autonomy with its move to impose a security law, pro-democracy campaigners said as they vowed to take to the streets in protest. The proposal for the security law – expected to ban treason, subversion and sedition – was introduced into China's rubber-stamp parliament at the opening of its annual session on Friday morning. It followed repeated warnings from China's communist leaders they would no longer tolerate dissent in Hong Kong, a semi-autonomous city that endured seven months of massive pro-democracy protests last year. "This is the largest nuclear weapon the Chinese Communist Party has used in its mutual destruction of Hong Kong," Jimmy Sham, leader of the Civil Human Rights Front, which organised the million-person rally that kicked off last year's unrest. Sham appealed for millions to again take to the streets, while other activists used internet threads and chat apps to call for protests on Sunday.
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Retail sales in the UK fell by a record in April, following widespread store closures to combat the spread of Covid-19, the Office for National Statistics said. The volume of retail sales in April plunged 18% versus the previous month, following a 5.2% drop in March. Year-on-year, retail volumes were down 23%. In April, both value and volume retail measures had record declines - from 1988 when records began - the ONS said, as many stores paused trading from March 23 following official government guidance during the coronavirus pandemic. The statistics office noted the index was last at this level in December 2005.
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UK Prime Minister Boris Johnson would "follow" the travel advice in place at the time if US President Donald Trump decides to arrange an in-person G7 gathering next month, Downing Street has said. Trump, having cancelled the planned summer G7 meeting, said on Wednesday he was now considering rescheduling talks between the leaders of the world's most advanced nations so they could take place face to face in Washington DC. The White House incumbent said it would be a "great sign to all" of things returning to normal during the coronavirus pandemic. Number 10 was asked by reporters during a daily briefing whether it was "sensible" to consider holding a global summit in person with many of the nations involved, including the UK, still in the grip of the coronavirus pandemic. The prime minister's official spokesman said: "In the event of any travel, the PM would follow the guidelines at the time."
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BROKER RATING CHANGES
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GOLDMAN SACHS RAISES ITV TO 'BUY' ('NEUTRAL') - TARGET 96 (88) PENCE
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MORGAN STANLEY RAISES INTERTEK TO 'EQUAL-WEIGHT' ('UNDERWEIGHT') - TARGET 4900 (3950) PENCE
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JPMORGAN RESUMES G4S WITH 'OVERWEIGHT' - TARGET 110 PENCE
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COMPANIES - FTSE 100
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Keeping its payout intact was United Utilities. The water and wastewater services provider lifted its dividend for the financial year that ended March 31 by 3.2% to 42.60p from 41.28p paid a year earlier. United Utilities noted that intends to review its dividend policy going forward, after a clearer picture of the post-Covid-19 economic environment emerges. United Utilities reported revenue growth to GBP1.86 billion in the recent year from GBP1.82 billion the year before. However, pretax profit dropped to GBP303.2 million from GBP436.2 million, due to an increase in operating expenses to GBP1.23 billion from GBP1.18 billion.
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Vodafone Group said Jean-Francois Van Boxmeer will be appointed as a non-executive director following the telecommunication company's annual general meeting on July 28, subject to shareholder approval. Vodafone said Van Boxmeer then will succeed Gerard Kleisterlee as chair in November. Kleisterlee - who has been Vodafone's chairman for nine years - will step down and retire from the board on November 3. Van Boxmeer is currently chief executive of Heineken. He has been the Dutch brewer's boss since 2005 and will hand over the role to his successor in June.
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COMPANIES - FTSE 250
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Public transport operator Go-Ahead Group said it is providing vital regional bus services in England, supported by an essential government funding package, which the Department for Transport has indicated will continue beyond June. In recent weeks, the company said it has been operating between 40% and 50% of normal scheduled mileage, carrying around 10% of usual passenger numbers. Turning to rail operations, the company noted that its resilient financial performance in UK rail franchises is offset by weaker-than-expected German rail operation. Go-Ahead is currently operating around 80% of contracted services in its Norwegian rail business. This has increased from around 50% in April, as restrictions begin to be lifted in Norway. Looking forward, Go-Ahead said, with the impact of Covid-19 and support measures, its overall operating profit for the year ending June 27 is now expected to be in the range of GBP63 million to GBP75 million. A year ago, the company's operating profit totalled GBP104.3 million.
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COMPANIES - GLOBAL
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Hewlett-Packard Enterprise reported a second quarter swing to loss as Covid-19 dented performance. Revenue for the three months to April 30 was USD6.01 billion, down 16% from USD7.15 billion a year ago. The San Jose, California-based enterprise information technology company posted a net loss of USD821 million, versus earnings of USD419 million a year ago. HPE's loss per share was USD0.64, versus earnings of USD0.30 a year prior. The fall in revenue was largely due to supply chain constraints and delays in customer acceptance, which resulted in "significantly higher" levels of backlog. Further impeding earnings, HPE took a write-down of legacy goodwill totalling USD865 million, hitting earnings by USD0.67 per share.
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Nvidia reported a strong first quarter and believes its USD7 billion Mellanox Technologies acquisition post-period has "raised the bar" for the firm. In the three months to April 26, the US graphics processing unit designer recorded net income of USD917, more than double the USD394 million reported in the same period a year before. Diluted earnings per share rose sharply to USD1.47 from USD0.64. Revenue in the first quarter surged 39% year on year to USD3.08 billion from USD2.22 billion. The Santa Clara, California-based company noted it is authorised to repurchase up to USD7.24 billion shares through the end of 2022 but is "evaluating the timing of resuming share repurchases and will remain nimble based on market conditions". Nvidia added it was committed to continuing its quarterly dividends.
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Friday's Shareholder Meetings
Breedon group
Domino's Pizza Group
Centrica
Bango
Spectris
One Media IP Group
easyJet (re removal of directors)
SDX Energy
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By Tom Waite; thomaslwaite@alliancenews.com
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