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(Alliance News) - UK housebuilder Persimmon on Thursday reported lower annual profit and said Chief Executive David Jenkinson intends to step down after a little over a year in the job.
Revenue in 2019 was down 2.4% to GBP3.65 billion. Pretax profit dipped to GBP1.04 billion from GBP1.09 billion in 2018. The firm sold 15,855 new homes, down 4%, though at a higher average selling price of GBP215,709 versus GBP215,563.
The level of customer activity through the initial weeks of 2020 has been "encouraging", said Persimmon, with sales rates tracking above prior years.
Persimmon said Jenkinson intends to step down as CEO "in due course". He has signalled his intention early to give the board ample time to fund a successor.
"Dave will remain in the CEO role and fully committed to leading the ongoing programme of change for as long as the business requires," Persimmon said.
Jenkinson has only been in the role for a little over a year. He was made interim CEO in November 2018, promoted from managing director, and confirmed as permanent CEO in February 2019.
Jenkinson replaced Jeff Fairburn, who had stepped down amid "distraction" over his high pay packet.
Persimmon shares were down 3.5% in early trade Thursday.
Here is what you need to know at the London market open:
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MARKETS
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FTSE 100: down 2.1% at 6,897.26
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Hang Seng: up 0.3% at 26,778.62
Nikkei 225: closed down 2.1% at 21,948.23
DJIA: closed down 123.77 points, 0.5%, at 26,957.59
S&P 500: closed down 0.4% at 3,116.39
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GBP: flat at USD1.2919 (USD1.2920)
EUR: up at USD1.0919 (USD1.0866)
Gold: up at USD1,647.82 per ounce (USD1,637.00)
Oil (Brent): down at USD52.64 a barrel (USD54.45)
(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
0930 GMT UK capital issuance
1000 CET EU monetary developments in euro area
1100 CET EU business climate & economic sentiment indicators
0830 EST US 2nd estimate gross domestic product
0830 EST US weekly initial jobless claims
0830 EST US advance report on durable goods
1000 EST US pending home sales index
1030 EST US EIA weekly natural gas storage report
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China reported 29 more deaths on Thursday from the new coronavirus epidemic, the lowest daily figure in almost a month, and the number of fresh infections rose slightly. The death toll now stands at 2,744 in mainland China, according to the National Health Commission. The daily tally of fatalities has fallen for three straight days now, hitting the lowest mark since January 29, when 26 new deaths were reported. The commission reported 433 new cases, with all but 24 in central Hubei province, the epicentre of the outbreak that first emerged in December in its capital, Wuhan. There are now nearly 78,500 cases in total.
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US President Donald Trump said he was considering travel restrictions on Italy and South Korea over coronavirus fears, as he sought to reassure Americans worried about the epidemic. But a short while after an upbeat press conference by the US president, health authorities said they had detected the first case of unknown origin in the country, signalling that the virus may be spreading within communities. "I think that there's a chance that it could get worse, a chance it could get fairly substantially worse, but nothing's inevitable," Trump told reporters at the White House. He appointed Vice President Mike Pence to lead the response to the disease. Trump's messaging was a step back from a senior health official who a day earlier had urged Americans to be prepared to cancel mass gatherings and said schools and businesses should look at developing teleworking plans. As of Wednesday, there were 60 cases in the US – 15 detected through the public health system and 45 repatriated from abroad, either from a cruise ship off Japan or from Wuhan, the Chinese city where the first cases were identified.
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Saudi Arabia suspended visas for pilgrims wishing to visit Mecca, the foreign ministry said, as the coronavirus spreads across the Middle East. The government is "suspending entry to the Kingdom for the purpose of Umrah and visiting the Prophet's Mosque temporarily", the Foreign Ministry said in a statement, referring to the Islamic pilgrimage to Mecca that can be undertaken at any time of the year. It has also suspended visas for tourists visiting from countries where the new virus is a "danger".
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Campaigners trying to block Heathrow expansion will find out if their Court of Appeal challenge against controversial plans for a third runway has succeeded. A group of councils in London affected by the expansion, environmental charities including Greenpeace, Friends Of The Earth and Plan B, and Mayor of London Sadiq Khan, brought legal action over the government's approval of the plans. Leading judges will give their ruling at 10am London time on Thursday, following a hearing in October last year. Lawyers for the campaigners previously told the court that, when considering the proposals, the then transport secretary Chris Grayling did not take enough account of environmental legislation or of climate change issues. The campaigners appealed against a High Court ruling in May, which rejected four separate judicial reviews of the government's decision to approve the plans.
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Japan's trade recorded surplus in February on a sharp fall in imports, the Ministry of Finance reported. Japan's trade surplus stood at JPY141.90 billion in February, compared to JPY62.79 billion deficit a year ago. The country's exports slipped by 3.3% to JPY1.977 trillion in February from JPY2.045 trillion a year before. Imports fell by much more, by 13% to JPY1.835 trillion from JPY2.108 trillion.
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BROKER RATING CHANGES
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UBS CUTS BURBERRY TO 'SELL' ('NEUTRAL') - TARGET 1415 (2258) PENCE
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EXANE BNP CUTS M&S TO 'UNDERPERFORM' (NEUTRAL) - PRICE TARGET 160 (185) PENCE
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EXANE BNP RAISES RYANAIR TO 'NEUTRAL' (UNDERPERFORM) - PRICE TARGET 14 EUR
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COMPANIES - FTSE 100
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Consumer goods giant Reckitt Benckiser posted an annual loss after a monster impairment of more than GBP5 billion. The impairment, worth GBP5.04 billion, has been made on goodwill related to its acquisition of Mead Johnson Nutrition. MJN, a US baby formula maker, was bought for USD18 billion in the summer of 2017. Slough-headquartered Reckitt as a result posted a pretax loss for 2019 of GBP2.11 billion, swung from a pretax profit of GBP2.72 billion the year prior. Net revenue rose 2.0% at actual exchange rates to GBP12.85 billion, and was 0.8% higher at constant rates. This compares to company-compiled consensus of GBP12.83 billion of net revenue. Like-for-like revenue growth at actual rates was 0.3%, and at constant rates, 0.8%.
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Pest control firm Rentokil Initial upped its dividend by 15% following a "strong" annual performance in which it beat revenue growth targets. The FTSE 100 company also said Chief Financial Officer Jeremy Townsend is to retire in the second half of 2020. Rentokil's North America finance chief Stuart Ingall-Tombs will become group CFO. Camberley, Surrey-based Rentokil has declared a final dividend of 3.64 pence per share, taking the total to 5.15p, just over 15% higher than the payout in 2018. The company has also swung to a pretax profit of GBP338.5 million, after a loss of GBP114.1 million in 2018. Rentokil's figure last year had been hit by a pension settlement worth nearly GBP350 million.
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Ad agency WPP reported a slump in profit for 2019 despite revenue edging up. Revenue for 2019 was up 1.4% to GBP13.23 billion, but pretax profit slumped 22% to GBP982 million. Like-for-like billings fell 1.0%. The profit hit was largely due to GBP68.4 million taken as revaluation of financial instruments, versus a GBP169.4 million gain the year before. Of 2019's charge, GBP63.4 million related to premiums on the early repayment of bonds. Headline profit before interest and tax was down 5.8% to GBP1.62 billion. "We said that we would make progress in the journey to return WPP to growth, simplifying our business and reducing our debt, and we have delivered against each of these goals - having met our guidance for 2019, achieved our restructuring targets and completed the sale of a majority stake in Kantar. The second half of 2019 was stronger than the first, with performance improving globally and in the United States, our largest market," said Chief Executive Mark Read.
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British American Tobacco's revenue for 2019 was up 5.7% to GBP25.88 billion, but pretax profit fell to GBP7.91 billion from GBP8.35 billion. Total cigarette and tobacco heating products volumes declined 4.4% to 677 billion sticks, with cigarette volumes down 4.7% and THP volumes up 32%. For 2020, BAT said it expects global industry cigarette and THP volumes to be down 4%, with adjusted revenue growth in the 3% to 5% guidance range. Adjusted revenue grew 5.6% at constant currency in 2019.
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Subprime lender Provident Financial boosted its dividend as it reported a substantial rise in profit for 2019. Pretax profit was up 32% to GBP128.7 million, reflecting lower exceptional costs, the firm said. Revenue dropped to GBP998.3 million from GBP1.09 billion. Exceptional items fell 52% to GBP26.3 million. Provident boosted its final dividend to 16.0p, from 10p a year ago, resulting in a total dividend for the year of 25p versus just 10p in 2018. Provident paid no dividend in 2017 amid issues with its consumer credit division, but restored payments in 2018. In 2016, it paid out 134.60p. "All of our businesses have progressively tightened underwriting over the last two years and we have built good momentum entering 2020 as we continue to adapt the group to the evolving regulatory landscape and to meet our customers' needs," said Chief Executive Malcolm Le May.
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NMC Health shares were suspended from trading Thursday after it said late Wednesday it has removed Prasanth Manghat as chief executive officer and director after an independent review revealed potential discrepancies in the company's finances. In January, NMC asked Freeh Group International Solutions, founded by former US federal judge and FBI director Louis Freeh, and law firm Glaser Weil to provide a independent report addressing allegations raised by short-selling firm Muddy Waters Capital.Muddy Waters in 2019 raised doubts over NMC's financial statements, including reported profit and levels of debt, and a USD107.4 million investment by NMC in the redevelopment of NMC Royal Women's Hospital, previously known as Brightpoint Royal Women's Hospital. The Abu Dhabi-based company late Wednesday said that independent review found discrepancies and inconsistencies in ledger entries and bank statements and that it has suspended a member of the treasury team until the review has been completed. NMC also granted Chief Financial Officer Prashanth Shenoy an extended sick leave.
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British Airways, a unit of International Consolidated Airlines Group, has cancelled dozens of flights serving Milan due to a drop in demand amid the coronavirus outbreak. The airline announced it is "merging" some of its flights between Heathrow and the Italian city's Linate airport. Around 22 return flights over the next two weeks are affected. British Airways' flights to and from Milan Malpensa are continuing as normal.
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COMPANIES - FTSE 250
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Aston Martin provided details of its GBP317 million rights issue as part of its planned GBP500 million total equity raise. Aston Martin said the share placing portion will raise GBP182 million, with 45.6 million shares sold at 400 pence to a consortium led by Lawrence Stroll, representing 17% the enlarged total. The rights issue will be at the discounted price of 207p at a rate of 14 shares offered for each 25 held, for 153.2 million new shares in total. Stroll will become executive chair on April 7 after the rights issue is completed. Aston Martin also reported Thursday that is pretax loss widened to GBP104.3 million in 2019 from GBP68.2 million in 2018, as both revenue and wholesale volumes fell 9%.
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COMPANIES - INTERNATIONAL
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Safran reported double-digit earnings growth in 2019, but said it expects mixed performance in 2020 due to the Boeing 737 MAX production halt. The French aircraft engine manufacturer said its profit grew by a third in 2019 to EUR2.73 billion compared to EUR2.06 billion reported a year earlier, as revenue jumped by 17% to EUR24.64 billion from EUR21.05 billion. On an organic basis, revenue increased by 9.3%, the company noted, as all divisions contributed positively. Safran said, in 2019, combined shipments of CFM56 and LEAP engines slipped to 2,127 units from 2,162 in 2018. The company is paying EUR2.38 dividend for 2019, up 31% year-on-year.
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Thursday's Shareholder Meetings
Gresham House Energy Storage Fund (re share issue)
BlackRock Throgmorton Trust
Legal & General Group (re share settlement structure)
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By Tom Waite; thomaslwaite@alliancenews.com
Copyright 2020 Alliance News Limited. All Rights Reserved.
