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(Alliance News) - UK supermarket chain J Sainsbury on Wednesday revealed an annual loss as it shouldered nearly GBP500 million in Covid-19 related costs.
Sainsbury's reported a 0.2% rise in revenue for the financial year that ended March 6 to GBP29.04 billion, from GBP28.99 billion the year before, but swung to a pretax loss of GBP261 million from the prior year's GBP255 million profit.
Underlying pretax profit of GBP356 million, down 39% on the year before, was hit by GBP485 million of direct Covid-19 costs, offsetting a strong sales performance excluding fuel. Grocery sales were up 7.8%, general merchandise sales up 8.3%, and digital sales doubled. Fuel sales drop by 39%, however, and Financial Services sales by 24%.
Fuel sales were hurt by reduced demand during lockdown and the impact of lower crude oil prices on the petrol sales price.
The underlying profit figure was, however, ahead of market consensus at GBP338 million.
The grocer will pay a total dividend for the year of 10.6 pence, in line with the year before.
"This year's financial results have been heavily influenced by the pandemic. Food and Argos sales are significantly higher, but the cost of keeping colleagues and customers safe during the pandemic has been high," said Chief Executive Simon Roberts.
"We have a bold three-year plan to put food back at the heart of Sainsbury's and drive improved performance," said Roberts. "We are transforming the way we workn and I am encouraged by how all of our teams have responded and the early momentum and performance towards our plan."
Sainsbury's said it has carried good momentum into the new year, but noted it will come up against tough year-on-year comparatives as customer behaviour normalises. Sainsbury's expects underlying pretax profit in the year to March 2022 to exceed the GBP586 million reported in the 2020 financial year, and it is "comfortable" with consensus of around GBP620 million.
Sainsbury's shares were up 0.8% early Wednesday.
Here is what you need to know at the London market open:
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MARKETS
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FTSE 100: up 0.4% at 6,971.22
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Hang Seng: up 0.3% at 29,040.08
Nikkei 225: closed up 0.2% at 29,053.97
DJIA: closed up 3.36 points at 33,984.93
S&P 500: closed down 0.90 point at 4,186.72
Nasdaq Composite: closed down 48.56 points, 0.3%, to 14,090.22
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EUR: down at USD1.2063 (USD1.2085)
GBP: down at USD1.3872 (USD1.3915)
USD: up at JPY108.98 (JPY108.50)
Gold: down at USD1,768.58 per ounce (USD1,780.50)
Oil (Brent): up at USD66.68 a barrel (USD66.11)
(changes since previous London equities close)
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ECONOMICS AND GENERAL
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Wednesday's Key Economic Events still to come
US President Biden address to joint session of Congress
1100 BST Ireland retail sales index
0830 EDT US advance international trade in goods
1030 EDT US EIA weekly petroleum status report
1400 EDT US Federal Reserve interest rate decision
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Spain will be ready to welcome back tourists – including those from the UK – in June, the country's tourism minister has said. The EU has previously set out plans for coronavirus vaccine certificates that could be used by UK holidaymakers this summer. Digital Green Certificates will be accepted as "proof" a person had a Covid-19 jab, received a negative test result or recovered from the virus, according to the European Commission's proposal. And Spain – which welcomed 18 million Brits in 2019 – says a digital certificate scheme is currently being trialled with a view to a wider rollout in June.
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Retail trade in Japan rose ahead of expectations in March when compared with the prior year, figures from the Ministry of Economy, Trade & Industry showed. Japanese commercial sales in March were JPY50.554 trillion, about USD464.43 billion, an increase of 3.2% from the same month of the previous year. The wholesale trade was JPY37.56 trillion, an increase of 2.4%, and retail trade was JPY13.489 trillion, an increase of 5.2% year-on-year.
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BROKER RATING CHANGES
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GOLDMAN SACHS CUTS IMI TO 'BUY' ('CONVICTION BUY') - TARGET 1700 (1520) PENCE
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BERENBERG RAISES IMI PRICE TARGET TO 1485 (995) PENCE - 'HOLD'
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MORGAN STANLEY RAISES IMI PRICE TARGET TO 1680 (1500) PENCE - 'OVERWEIGHT'
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COMPANIES - FTSE 100
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Lloyds Banking boss Antonio Horta-Osorio went out with as bang as profit shot up in the first quarter of 2021. Pretax profit for the three months to the end of March surged to GBP1.99 billion from just GBP74 million a year ago, despite net income nudging down 7% to GBP3.66 billion. The impairment charge in the quarter was a net credit of GBP323 million, versus a charge of GBP1.43 billion a year ago. "The net credit in the quarter was driven by continued strong asset quality with a low charge of GBP209 million given the continued benign credit environment and a GBP459 million release of expected credit loss allowances resulting from improvements to the UK's economic outlook," the lender said. Given the "solid performance" in the first quarter of 2021, Lloyds enhanced its guidance for 2020. Its net interest margin is now expected to be in excess of 245 basis points, after posting 249 basis points for the first quarter, and operating costs to be reduced to GBP7.5 billion. HSBC Wealth & Personal Banking head Charlie Nunn will become the new Lloyds CEO on August 16. Lloyds Chief Financial Officer William Chalmers will be interim-CEO after Horta-Osorio departs and before Nunn comes in.
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London Stock Exchange Group reported a good performance in the first quarter as it achieved first cost synergies from recently acquired Refinitiv. The stock exchange operator said first quarter total income was up 3.9%, with good growth in Data & Analytics and Capital Markets. The acquisition of Refinitiv was completed at the end of January, and integration is going to plan with around GBP40 million of cost synergies already realised on a run-rate basis and new products arising from the combination now launched. The sale of Borsa Italiana is progressing well, LSEG added, and is expected to complete "shortly" this quarter.
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Reckitt Benckiser reported like-for-like revenue growth in the first quarter, leaving its full-year guidance unchanged. Total net revenue for the first quarter of 2021 grew 4.1% on a like-for-like basis, though fell 1.1% on a reported basis. "2021 has started well with like-for-like net revenue growth of 4.1% in line with our expectations. This brings two-year growth to over 17% as we lap the pantry loading of March 2020," said Chief Executive Laxman Narasimhan. Demand for Lysol and Dettol continues to be strong, the company said, amid "ongoing, elevated demand" for its disinfection products overall. Reckitt continues to expect full-year like-for-like revenue growth of between flat to growth of 2%.
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COMPANIES - FTSE 250
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Electronics retailer Dixons Carphone said trading has remained strong as it revealed a decision to shutter its Dixons Travel business. Electricals sales were up 12% like-for-like in the 25 weeks to April 24, with UK & Ireland sales up 11% and International up 14%. Given its strong financial position, Dixons has reimbursed all government support for the GBP73 million of furlough paid to UK&I employees during the year. After this repayment, it expects full-year adjusted pretax profit to be broadly in line with current consensus of GBP151 million. However, it has made the "difficult decision" to close the Dixons Travel business, which historically made an annual profit contribution of over GBP20 million. "We do not expect passenger numbers to recover sufficiently to compensate for the removal of airside tax-free shopping by the UK government from 1 January," Dixons explained.
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COMPANIES - GLOBAL
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Banco Santander reported a sharp rise in first quarter profit - aided by a dramatic drop in loan losses - and boasted that its global diversification drove growth in its loan book and customer deposits. In the three months to March 31, the Madrid-headquartered financial services firm recorded pretax profit of EUR3.81 billion, up sharply from EUR1.96 billion the year before. This was driven by a dramatic drop in net loan-loss provisions, falling to EUR1.99 billion from EUR3.91 billion. Total income was down 4% year on year at EUR11.39 billion versus EUR11.81 billion, but net operating income improved 1% to EUR6.27 billion and operating expenses fell 8% to EUR5.12 billion. Net interest income slipped 6.3% to EUR7.96 billion from EUR8.49 billion. Santander noted lending returned to pre-pandemic levels in Europe and South America. Net interest income growth was particularly strong in the UK, up 24%, Spain, up 10%, and Brazil, up 6%.
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Wednesday's Shareholder Meetings
British American Tobacco PLC - AGM
Caerus Mineral Resources PLC - GM re acquisition of PR Ploutonic Resources Ltd
Capital Ltd - AGM
CPPGroup PLC - AGM
Eurasia Mining PLC - EGM re general power to allot securities
FDM Group PLC - AGM
Fintel PLC - AGM
Global Invacom Group Ltd - AGM
Grafton Group PLC - AGM
Greencoat UK Wind PLC - AGM
Hutchison China MediTech Ltd - AGM
KRM22 PLC - AGM
London Stock Exchange Group PLC - AGM
Mobius Investment Trust PLC - AGM
NatWest Group PLC - AGM
Nichols PLC - AGM
Pendragon PLC - AGM
Pershing Square Holdings Ltd - AGM
Persimmon PLC - AGM
RPS Group PLC - AGM
Spirent Communications PLC - AGM
Witan Investment Trust PLC - AGM
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By Tom Waite; thomaslwaite@alliancenews.com
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