(Alliance News) - PZ Cussons provided a bumper update to the market on Wednesday, reporting a strong first quarter of its new financial year on demand for hygiene products, while also publishing its results for the year that ended in May, which were less positive.
The maker of the Carex hand wash noted strong growth in its UK Personal Care business in the past three months, together with a modest recovery in revenue for Beauty products due to online sales, both driven by the Covid-19 pandemic.
"COVID-19 and its aftermath in terms of both economic factors and consumer confidence will clearly continue to have a significant impact on the consumption of our Personal Care, Home Care and Beauty products," PZ Cussons said.
"Despite the renewed momentum of our business in the first quarter of FY21 we expect volatility and risk to continue as well as increased investment in our brands and capabilities as we prepare for a multi-year turnaround of the business, starting with a comprehensive review of our strategy."
Total revenue was GBP158.1 million in the first quarter to August 31, up 19% on a year before or 23% at constant currency.
By contrast, revenue in financial year that ended May 31 was GBP587.2 million, down 2.6% from GBP603.0 million, knocking profit by 33% to GBP29.3 million from GBP43.6 million. In the UK, PZ Cussons said revenue growth in Personal Care was offset by a Covid-19 related decline in Beauty.
PZ Cussons responded to the full-year outturn by cutting its final dividend to 3.13 pence from 5.61p a year before, lowering its full-year payout to 5.80p from 8.28p. It said the cut was to reduce its dividend to a more sustainable level and to allow investment in key brands.
PZ Cussons shares were down 1.6% early Tuesday.
Here is what you need to know at the London market open:
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MARKETS
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FTSE 100: up 0.9% at 5,879.75
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Hang Seng: down 0.1% at 23,684.76
Nikkei 225: closed down 0.1% at 23,346.49
DJIA: closed up 140.48 points, 0.5% at 27,288.18
S&P 500: closed up 1.1% at 3,315.57
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GBP: down at USD1.2693 (USD1.2717)
EUR: down at USD1.1687 (USD1.1702)
Gold: down at USD1,878.00 per ounce (USD1,904.86)
Oil (Brent): soft at USD41.40 a barrel (USD41.60)
(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
0930 BST UK CIPS-Markit flash purchasing managers' index
0930 CEST Germany flash PMI
1000 CEST EU flash PMI
0900 EDT US monthly house price index
0945 EDT US flash manufacturing and services PMI
1000 EDT US Fed Chair Powell testifies to House subcommittee on virus crisis
1030 EDT US EIA weekly petroleum status report
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The UK government has warned that Britain could face much tougher measures if new rules to curb coronavirus fail to get the infection rate under control. On Tuesday evening, Prime Minister Boris Johnson said the nation faces an "unquestionably difficult" winter and warned the latest restrictions could last the next six months. In a televised address Johnson said "we must reserve the right to go further" if the pace of transmission continues to rise. The new strategy for England will see office staff once again working from home, the wider use of face masks and a 10pm curfew on pubs and restaurants. Businesses will face GBP10,000 fines or closure for failing to comply with regulations, and people risk GBP200 penalties for failing to wear masks or breaching the "rule of six".
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US President Donald Trump said he will announce his pick on Saturday for the crucial Supreme Court seat left open by the death of justice Ruth Bader Ginsburg – and his Republican Party vowed a quick vote to confirm the nominee. Democratic opponents, led by presidential candidate Joe Biden, have demanded that Republicans back off on replacing Ginsburg – who died last week – until after the November 3 election, when they'll know whether Trump is getting a second term. Republicans are ignoring this, giving Trump, who has already replaced two other justices, a chance to tilt the nation's highest court to the right for decades to come, whether he beats Biden or not.
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BROKER RATING CHANGES
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JEFFERIES RAISES POLYMETAL TO 'BUY' ('HOLD') - TARGET 2250 (1785) PENCE
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BARCLAYS RAISES MEDICLINIC INTL TO 'OVERWEIGHT'('EQUAL WEIGHT') - TARGET 350 (400) PENCE
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BARCLAYS RAISES CONVATEC TO 'OVERWEIGHT' ('EQUAL WEIGHT') - TARGET 240 (190) PENCE
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JEFFERIES CUTS CONVATEC TO 'HOLD' ('BUY') - TARGET 200 (240) PENCE
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JPMORGAN RAISES DIPLOMA TO 'OVERWEIGHT' ('NEUTRAL') - TARGET 1960 (1850) PENCE
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COMPANIES - FTSE 100
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Halma reported improving sales trends as the safety and hazard detection firm also revealed its chair is moving to business information provider RELX. Halma said it delivered a "resilient" performance in the year-to-date. The life-saving technologies company said revenue trends have gradually improved from the end of the first quarter. Halma continues to expect adjusted pretax profit for the current financial year to be 5% to 10% below the year before that. "There has continued to be a significant variation in demand in individual end-markets and geographic regions. The USA and Mainland Europe regions have delivered the most resilient overall trading performances. The UK and Asia Pacific have remained more challenging, although the latter has benefited from prior year acquisitions and a gradual recovery in China," said Halma. Separately, Halma said Paul Walker intends to retire as chair and step down from the board by 2021. Halma's search for a replacement has started. Walker will be moving to RELX to take up the same role.
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COMPANIES - FTSE 250
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SSP guided to a 86% fall in second-half sales. Weekly sales are running at approximately 76% below last year, the travel food concessions owner said, representing an improvement from the third quarter, when sales were 95% lower in April and May and 90% lower in June. This improvement has been driven by continental Europe, where weekly sales are 66% lower, while in the UK, North America and Rest of the World, sales remain around 80% to 85% down. SSP has reopened just over a third of its units, ahead of previous expectations. Overall sales in the second half of the year are expected to be down 86%, resulting in a reduction in revenue of around GBP1.3 billion compared to the second half of 2019. "Encouragingly, the extensive management action to reduce the cost base, notably rent, overhead and labour, means that despite the weaker sales the underlying Ebitda and operating loss (on an IAS 17 basis) are expected to fall broadly in the middle of the ranges set out in the Interim results in June," said SSP. While the decision to cut jobs across the group is "extremely regrettable", the company added, it has been a "necessary step" to protect the business.
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Diploma has raised GBP194 million to fund its proposed acquisition of Windy City Wire Cable & Technology Products. The technical products supplier said it raised GBP190 million via a share placing to institutional investors at a price of 1,711 pence each, while directors of the company subscribed for GBP265,000 worth of shares in total. Finally, retail investors subscribed via the PrimaryBid platform for a total of 222,200 shares, raising GBP4 million. Diploma late Tuesday said it agreed a deal to buy US low-voltage wire and cable supplier Windy City Wire for GBP357 million. Diploma said Chicago-based WCW is a highly attractive business in a "core Diploma market" and expands its presence in the US.
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COMPANIES - MAIN MARKET AND AIM
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Neither Platinum Equity nor Centerbridge Partners Europe intend to make a takeover offer for roadside rescue and auto insurance provider AA, the two said in separate statements. Both said talks between them and AA were mutually terminated. In early August, AA confirmed that several parties had made takeover proposals. Each of the three parties had until September 1 to lodge a firm intention to buy AA or make it known it was no longer interested in pursing a deal. The date was then extended to September 29. The three parties were Centerbridge Partners and TowerBrook Capital Partners UK, acting jointly, and Platinum Equity Advisors and Warburg Pincus International, acting individually. However, Centerbridge Partners on Wednesday confirmed that TowerBrook Capital is continuing to mull making an offer for AA.
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COMPANIES - GLOBAL
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Lone Star Funds has dropped out of the race to acquire UK grocer Asda after being unable to match the price sought by owner Walmart, the Telegraph reported on Tuesday. The US private equity firm was seen as a frontrunner along with asset manager Apollo Global Management after Walmart restarted an auction for a majority stake in Asda following a pause during the lockdown period. The US retailer was forced to put Asda back on the market after a merger with J Sainsbury was blocked last year by the UK Competition & Markets Authority with the regulator finding the merger would leave customers worse off. UK-based private equity firm TDR Capital also remains in the running for Asda.
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Tesla boss Elon Musk on Tuesday announced a new plan to halve the price per kilowatt hour of the company's car batteries in an effort to make the vehicles more affordable. The plan includes a new battery cell design with five times the energy, six times the power, and a 16% increase in driving range, which Tesla says will offer an improvement in both energy density and cost. The company has already started manufacturing the new battery cells. The news was met with enthusiastic car horn beeps from shareholders who were listening to the presentation during Tesla's 'Battery Day' from their vehicles in an effort to maintain social distancing.
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Wednesday's Shareholder Meetings
First Property Group
Hornby
Alpha Financial Markets Consulting
City Merchants High Yield Trust
Salt Lake Potash - GM re share conversion, issue and options issue
Mothercare
TwentyFour Income Fund
SDI Group
Tavistock Investments
Reabold Resources
Cairn Energy
Real Good Food
Joules Group
Aberdeen New India Investment Trust
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By Tom Waite; thomaslwaite@alliancenews.com
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