(Alliance News) - Oil major Royal Dutch Shell on Monday added to a long list of UK listings announcing cost cuts and the postponement of payouts to shareholders.
Shell announced plans to heavily cut operating costs and spending proposals to help mitigate the impact of the coronavirus outbreak and tumbling oil prices, PA reported.
Shell said it will reduce its operating costs by USD3 billion to USD4 billion for the next 12 months.
It said it will also reduce its annual spending to a maximum of USD20 billion dollars for 2020 from its previous expectations of USD25 billion.
Shell said there will also be a material reduction in working capital as it said the actions are intended to "reinforce the financial strength and resilience" of the business.
Shell B shares opened down 3.5% on Monday, while A shares were down 3.0%.
Here is what you need to know at the London market open:
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MARKETS
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FTSE 100: down 4.5% at 4,956.58
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Hang Seng: down 4.9% at 21,683.77
Nikkei 225: closed up 2.0% at 16,887.78
DJIA: closed down 913.21 points, 4.6%, at 19,173.98
S&P 500: closed down 4.3% at 2,304.92
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GBP: down at USD1.1620 (USD1.1745)
EUR: unchanged at USD1.0703 (USD1.0700)
Gold: soft at USD1,487.42 per ounce (USD1,488.90)
Oil (Brent): down at USD26.02 a barrel (USD27.31)
(changes since previous London equities close)
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ECONOMICS AND GENERAL
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Monday's Key Economic Events still to come
US Financial Stability Oversight Council meeting to discuss coronavirus.
1600 CET EU flash consumer confidence indicator
0830 EDT US Chicago Fed national activity index
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A trillion-dollar Senate proposal to rescue the reeling US economy crashed to defeat Sunday after receiving zero support from Democrats, and with five Republicans absent from the chamber because of virus-related quarantines. Democrats said the Republican plan failed to sufficiently protect millions of American workers or shore up the critically under-equipped health care system during the coronavirus crisis. The bill proposed an estimated USD1.7 trillion or more in funding to cushion the blow for American families and thousands of shuttered or suffering businesses. Despite intense negotiations between Republicans, Democrats and US President Donald Trump's administration, the roll call was 47-47, far short of the 60 votes needed to advance.
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UK Prime Minister Boris Johnson is under mounting pressure to order a widespread lockdown after thousands of people ignored calls for "social distancing" to slow the coronavirus pandemic. Johnson said he will be thinking "very, very actively" about what steps to take if people continue to gather in large numbers in defiance of calls to stay apart. There was anger among MPs at scenes over the weekend of crowds flocking to parks, markets, beaches and beauty spots. Conservative former Cabinet minister Julian Smith said he would support "any measure" the Government brought forward to force people to comply with the guidance. For Labour, shadow health secretary Jonathan Ashworth said ministers should be making "immediate preparations" for the "next stage" while learning from other European nations. The calls came as an 18-year-old was thought to have become the youngest victim of the virus in Britain as the number of deaths in the UK rose to 281.
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The UK Financial Conduct Authority has asked companies due to produce preliminary financial statements in the next few days to delay publication due to disruptions caused by the coronavirus. The watchdog urged all listed companies to observe a moratorium on the publication of preliminary financial statements for at least two weeks. "The unprecedented events of the last couple of weeks mean that the basis on which companies are reporting and planning is changing rapidly," the FCA said in a statement. "It is important that due consideration is given by companies to these events in preparing their disclosures. Observing timetables set before this crisis arose may not give companies the necessary time to do this. In addition, listed companies and the audit profession are facing unprecedented practical challenges during the coronavirus crisis."
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BROKER RATING CHANGES
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HSBC RAISES FLUTTER ENTERTAINMENT TO 'HOLD' ('REDUCE') - TARGET 6800 (8100) PENCE
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DEUTSCHE BANK CUTS WEIR GROUP TO 'HOLD' ('BUY') - TARGET 950 (1300) PENCE
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BERENBERG RAISES DOMINO'S PIZZA TO 'HOLD' ('SELL') - TARGET 250 (225) PENCE
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BERENBERG RAISES PLUS500 TO 'BUY' ('HOLD') - TARGET 860 (790) PENCE
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GOLDMAN SACH CUTS KERRY GROUP TO 'SELL' (BUY) - PRICE TARGET 93 (125) EUR
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COMPANIES - FTSE 100
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Pearson said it has suspended its share buyback programme in light of the ongoing uncertainty caused by the coronavirus outbreak. The company noted that GBP167 million of the GBP350 million buyback was completed before the suspension. "We have already identified actions to reduce operating expenditure and discretionary spend to partially mitigate the potential impact from Covid-19, and we are actively exploring further efficiencies. We are also exploring whether we qualify for governmental relief in key territories, as a result of the closure of schools and testing centres," Pearson said. It said uncertainty from Covid-19 has meant its Pearson VUE, US Student Assessments and Higher Education institutions in South Africa - which rely on physical sites - will take a hit. However, it is seeing a significant increase in the use of its digital products and services. Pearson added that trading to the end of February was in line with expectations.
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ITV said recent restrictions on working practices in the UK was hurting its ability to film productions, and it has had to pause a significant number of productions in the UK and internationally as a result. Further, the broadcaster said measures implemented by the UK government - which has led to the closure of shops, factories and entertainment facilities - has hurt advertising revenue. As such, ITV said forecasts for March and April have "deteriorated" since its last update earlier this month. "We have seen further deferrals in advertising which are now coming from across the advertiser categories rather than just in travel, and we are staying in close contact and working constructively with our client and agency partners. The situation remains dynamic and therefore we are not in a position today to give guidance for March or April," ITV said. As a result of the uncertainty of Covid-19, ITV has withdrawn its market guidance for 2020. Further, the board has decided not to propose the final dividend of 5.4 pence per share for 2019 at the forthcoming AGM in April. ITV said savings from this will ensure that more than GBP300 million of cash will be retained within the business.
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Fashion retailer Primark closed all 189 of its UK stores from Sunday evening as the coronavirus pandemic causes further damage to the high street. Some 37,000 employees will be affected by the closures but will be provided with full pay for 14 days, the company has confirmed. Primark is owned by Associated British Foods. It comes after other clothing and fashion chains including John Lewis, Kurt Geiger, Topshop and New Look announced store closures. "Primark has committed to supporting all employees who are directly affected by store closures, with full pay for their contracted hours for 14 days, after which the situation will be reviewed," a spokesperson said. The John Lewis Partnership said it is the first time in its 155-year history that it will not open its shop doors for customers – but its online services will continue. All 55 Kurt Geiger stores across the UK and Ireland shut on Saturday evening, with chief executive Neil Clifford saying he will suspend his own salary until stores open again. Other retailers have been forced to temporarily close, in line with UK government guidelines on social distancing.
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COMPANIES - FTSE 250
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Go-Ahead Group said it retains a strong balance sheet with good liquidity under its existing facilities and maintains a "positive dialogue with its lenders", as it moved to reassure investors over the coronavirus outbreak. However, the public transport operator has decided to suspend the proposed interim dividend of 30.17p, reflecting the "current priority of prudent cash management". Go-Ahead added that it was too early to provide earnings guidance for the current financial year.
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Stagecoach Group said it has taken decisive action to reduce its cost base and capital expenditure in order to limit the effect of the revenue downturn on cash flow. The company said no new business acquisitions are currently being considered and no new non-essential capital commitments are being made. Stagecoach said that due to the coronavirus, it was unlikely to propose any further dividends for the financial year ending May 2.
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FirstGroup said it has seen substantial volume reductions in its passenger businesses in North America and the UK because of the coronavirus. The transport company said it was no longer able to provide financial guidance for the remainder of the financial year to March 31.
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Some 800 cinema staff at Cineworld Group have written to Chief Executive Mooky Greidinger requesting their jobs back after many were made redundant, the Daily Mail reported. Last Tuesday, the cinema chain had announced plans to close its doors for the foreseeable future, following updated guidance on the Covid-19 outbreak. Many members of staff were let go, and staff with over three years of service were told they would be retained with 40% of their salary or average pay. However, a group of 800 staff protested the move, demanding reinstatement. A spokesperson for Cineworld responded: "Following the announcement by the government [Friday] around the support they are now offering the leisure industry, including cinemas and their employees, we have written to our employees to let them know that we are currently reviewing this and exploring whether there are alternative options."
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COMPANIES - INTERNATIONAL
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Gilead Sciences said it is working to rapidly assess the safety and efficacy of Remdesivir as a potential treatment for Covid-19 through multiple ongoing clinical trials. Remdesivir, a novel antiviral drug in the class of nucleotide analogs, was developed by Gilead Sciences as a treatment for Ebola virus disease and Marburg virus infections. "In recent weeks, there has been an exponential increase in compassionate use requests for emergency access to remdesivir, related to the spread of the coronavirus in Europe and the United States. This has flooded an emergency treatment access system that was set up for very limited access to investigational medicines and never intended for use in response to a pandemic," the company said. To streamline the emergency access process, Gilead is in the process of transitioning from individual compassionate use requests to expanded access programs.
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SoftBank Group said it will sell up to USD41 billion in assets to finance a stock buyback, reduce debts and increase its cash reserves. In a statement, it said it would buy back USD18 billion of its stock, with the remaining money to be used on debt, bond buybacks and cash reserves, setting a four-quarter timetable for the transactions. News of the massive buyback sent SoftBank stock limit-up, soaring more than 18% in the last hour of trade in Tokyo. "This program will be the largest share buyback and will result in the largest increase in cash balance in the history of SBG, reflecting the firm and unwavering confidence we have in our business," the firm's chairman Masayoshi Son said in a statement.
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Boeing on Friday said it has suspended its dividend and extended its pause on share buybacks "until further notice" due to the Covid-19 crisis. The maker of the troubled 737 MAX plane already suspended buybacks in April 2019 but has now extended the pause indefinitely. Early Monday, rival Airbus also withdrew its 2019 dividend proposal over the crisis, as well as its 2020 financial guidance. However, Airbus said it has "significant liquidity available to cope with additional cash requirements related to the coronavirus", including a new EUR15 billion bank facility. Boeing said it has suspended its dividend until further notice as it "navigates through the Covid-19 pandemic". Furthermore, Chief Executive Dave Calhoun and Chair Larry Kellner have opted to forego all pay until the end of 2020.
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Monday's Shareholder Meetings
i-nexus
BB Healthcare Trust
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By Tom Waite; thomaslwaite@alliancenews.com
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