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(Alliance News) - AstraZeneca on Wednesday quarterly growth in both profit and revenue as it got a boost from Covid-19 stockpiling.
The Anglo-Swedish drugmaker saw a 16% rise in revenue in the first three months of the year to USD6.35 billion, or a 17% rise at constant exchange rates, while pretax profit was up 23% to USD935 million. Core earnings per share rose 21% to USD1.05.
Astra estimated a "low-to-mid single-digit percentage benefit" from short-term inventory increases in the distribution channel, longer prescriptions, and improved treatment-regimen adherence - all indirect effects of Covid-19. The benefit is expected to reverse in the coming months, it added.
The pharmaceutical company said its 2020 guidance is unchanged, with total revenue expected to increase by a high single-digit to a low double-digit percentage and core earnings per share expected to increase by a mid- to high-teens percentage. It does, though, recognise "heightened risks and uncertainties" from Covid-19.
"Our focus ensured another quarter of strong growth across every therapy area and region. The new medicines performed extremely well, and our pipeline continued to deliver. Standouts included landmark news for Tagrisso, Farxiga and Koselugo, our latest oncology medicine. The progress made on all fronts provides confidence that we will, once again, meet our full-year commitments," said Chief Executive Pascal Soriot.
Astra shares were up 1.7% early Wednesday in London.
Still to come are peer GlaxoSmithKline's first-quarter results at midday.
Here is what you need to know at the London market open:
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MARKETS
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FTSE 100: marginally higher at 5,959.97
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Hang Seng: up 0.1% at 24,598.61
Nikkei 225: Tokyo market closed for holiday.
DJIA: closed down 32.23 points, 0.1%, at 24,101.55
S&P 500: closed down 0.5% at 2,863.39
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GBP: up at USD1.2464 (USD1.2436)
EUR: up at USD1.0846 (USD1.0834)
Gold: up at USD1,709.00 per ounce (USD1,701.40)
Oil (Brent): up at USD21.14 a barrel (USD19.98)
(changes since previous London equities close)
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US oil prices rebounded above USD14 a barrel, a day after a sell-off sparked by a major fund selling its short-term holdings of the commodity amid virus-triggered storage concerns. West Texas Intermediate, the US benchmark, for June delivery jumped 14.5% to USD14.13 a barrel in Asian morning trade. WTI is currently at USD13.56 a barrel. It had plunged by more than 21% at one point Tuesday after the US Oil Fund – a major US exchange-traded fund – started selling its short-term contracts of the commodity. Traders "are bargain hunting after a couple of days of massive sell-offs", OANDA senior market analyst Jeffrey Halley told AFP.
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ECONOMICS AND GENERAL
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Wednesday's Key Economic Events still to come
Japan Showa Day. Financial markets closed.
1000 CEST EU monetary developments in euro area (M3)
1100 CEST EU business & consumer surveys
1400 CEST Germany provisional consumer price index
0700 EDT US MBA weekly mortgage applications survey
0830 EDT US advance estimate gross domestic product
1030 EDT US EIA weekly petroleum status report
1400 EDT US Federal Reserve interest rate decision
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Shop prices in the UK declined at their fastest pace in over three years in April, numbers showed, with lockdown measures hurting the high street and despite a pick-up in food inflation. Non-food retailers saw sharp price falls in April, offsetting the rise in food inflation. Grocers opted to not saturate the market with promotions, in a bid to discourage consumer stockpiling during the virus pandemic. According to the British Retail Consortium-Nielsen shop price index, shop prices fell by 1.7% year-on-year in April, compared to a 0.8% decrease in March. "This is the highest rate of decline since January 2017," BRC noted.
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BROKER RATING CHANGES
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UBS CUTS HSBC PRICE TARGET TO 405 (450) PENCE - 'NEUTRAL'
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BERENBERG CUTS CAIRN ENERGY TO 'HOLD' ('BUY') - TARGET 130 (190) PENCE
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PEEL HUNT CUTS CENTAMIN TO 'ADD' ('BUY') - TARGET 170 (145) PENCE
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COMPANIES - FTSE 100
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Barclays reported a sharp drop in first quarter profit as the lender was forced to dramatically increase its credit impairments to handle the Covid-19 pandemic. Barclays also noted it will decide on future dividends and its capital returns policy at the end 2020, following the cancellation of its shareholder payouts following guidance from regulators in the UK. "Barclays is committed to supporting its customers, clients and the UK economy through the crisis. Despite the macroeconomic downturn caused by the Covid-19 pandemic, the group's position remains robust, reflecting our diversified business model," Chief Executive Jes Staley said. In the three months to March 31, the lender recorded pretax profit of GBP913 million, 38% lower than the GBP1.48 billion seen in the first quarter of 2019. Credit impairments in the quarter jumped to GBP2.12 billion from GBP448 million the year before.
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Standard Chartered reported a sharp drop in first quarter profit - due to rising credit impairments - but has vowed to come through the Covid-19 pandemic "with strength". In the three months to March 31, the Asia-focused bank's pretax profit plunged 29% to USD886 million from USD1.24 billion in the same period a year before. The lender's credit impairments in the first quarter jumped to USD956 million from just USD78 million in the first quarter of 2019. Standard Chartered's underlying pretax profit fell 12% to USD1.22 billion. In Greater China & North Asia, StanChart's underlying profit was down only 1% to USD650 million, despite being the region most impacted by the effect of Covid-19 in the first quarter.
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Clothing and homewares retailer Next said its finances remain secure, though the drop off in sales to date has been "faster and steeper" than anticipated in its March stress test. In the year to April 25, full price retail sales slumped 52% while online sales were down 32%, with total full price sales, including interest income, down 38%. Even with full year full price sales down 40%, Next said it can operate "comfortably" within its cash resources, achieve positive Ebitda and end the year with less net financial debt than at the end of last year. The fashion chain is now modelling lower sales for both the first and second half of the year, though it thinks it can achieve higher cost savings and stock cancellations than originally planned. Next said it has increased cash resources through asset sales and the suspension of its share buyback and dividend. It has also agreed with banks to waive financial covenants on its revolving credit facility for the coming year, and has secured additional borrowing facilities through the UK government's Covid Corporate Financing Facility. Next thinks it is unlikely it will needed to draw on these additional funds, it added.
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WPP said it had a good performance to February, with the impact of Covid-19 in March as expected. First quarter revenue from continuing operations was down 4.9% to GBP2.8 billion, with like-for-like sales down 3.8%. Like-for-like revenue less pass-through costs was down 3.3% with the impact of Covid-19 "felt more strongly in March" with a fall of 7.9%, as expected. Encouragingly, the advertising firm said it won USD1 billion in net new business in the first quarter, and there has been a "rapid" recovery in Chinese economic activity, with offices back to 90% occupancy. "We expect the impact of COVID-19 on our business to increase in the short term, but it is not possible to quantify the depth or duration of the impact. We are nonetheless confident that, through our scenario planning, we are well positioned to take further action if the downturn is prolonged and to respond positively when the market picks up," said WPP.
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John Lewis Partnership is to name a former J Sainsbury executive as the new boss of Waitrose, Sky News reported late on Tuesday. James Bailey, who spent 18 years at Sainsbury's and was most recently its grocery buying director, left the supermarket chain back in July. Bailey is set to be named as the new head of Waitrose on Wednesday, the broadcaster added.
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COMPANIES - FTSE 250
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Hiscox, noting press reports, confirmed it is mulling a possible equity raise. The insurer said it believes it has sufficient capital to meet expected liabilities as a result of exposures related to the pandemic and it expects "hardening" rates across the US wholesale and reinsurance markets.
While its liquidity position remains "robust," it is evaluating "possible sources of capital to respond in an appropriate way to these market dynamics", including raising new equity. "No decision has been made on whether to proceed with a capital raise or with regards to the timing or size of any such capital raise," said Hiscox.
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COMPANIES - INTERNATIONAL
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German automaker Daimler reported a sharp fall in profit for the first quarter of 2020, as the spread of Covid-19 led to a decline in vehicle sales. For the three months to the end of March, Daimler reported earnings before interest and taxes at EUR617 million, down 78% from EUR2.80 billion a year before, mainly due to an earnings drop in the Mercedes Benz Cars & Vans division to EUR510 million from EUR1.14 billion. Revenue declined by 6% to EUR37.22 billion from EUR39.70 billion the prior year, as unit sales for the quarter fell 17% to 644,316 vehicles from 773,796. Looking ahead, due to the continued effects of the pandemic, Daimler has withdrawn its original guidance for 2020 as a whole.
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Airbus reported a drop in quarterly revenue with its commercial aircraft business worst hit by the Covid-19 pandemic, which Chief Executive Guillaume Faury called "the gravest crisis the aerospace industry has ever known". The aerospace company's revenue fell 15% in the three months ended March 31 to EUR10.63 billion from EUR12.55 billion. This fall was driven by a "difficult market environment", which resulted in a drop in commercial aircraft deliveries to 122 from 162 the year before. The firm swung to a loss per share of EUR0.61 from earnings per share of EUR0.05 the prior year, including a EUR245 million hit "related to Dassault Aviation financial instruments" as well as a further EUR163 million hit on impairment of its loan to OneWeb, which filed for bankruptcy in March. Airbus swung to a EUR481 million net loss from net income of EUR40 million. Throughout the rest of 2020, Airbus will remain focused on preserving cash and shrinking cash outflows.
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Wednesday's Shareholder Meetings
Nichols
Synthomer
Grafton Group
Royal Bank of Scotland
Apax Global
Lancashire Holdings
Greencoat Renewables
Proteome Sciences
Spirent Communications
Witan Investment Trust
Unilever
Elementis
Persimmon
AstraZeneca
Shoe Zone (re cancel dividend)
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By Tom Waite; thomaslwaite@alliancenews.com
Copyright 2020 Alliance News Limited. All Rights Reserved.
