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(Alliance News) - easyJet on Tuesday voiced confidence over international travel demand this summer, as the budget airline plans to ramp-up to 60% of pre-pandemic capacity in the fourth quarter ending September 30.
Slightly at odds with easyJet's assessment, pub chain Young's said it is looking forward to benefiting from a second "staycation summer" in the UK.
easyJet said it maintained a "disciplined approach" to capacity and cash management in the third quarter that ended June 30, with total cash burn reduced to GBP55 million. It managed to maintain net debt broadly flat at GBP2.0 billion and registered a headline pretax loss of GBP318 million, in line with expectations and slimmed from GBP346.8 million a year ago.
"During this quarter we have successfully managed through the continued challenges of the pandemic, using our operational responsiveness to capture demand while focusing on cost control and minimising cash burn," said Chief Executive Johan Lundgren.
The airline is now looking ahead to more relaxed travel rules.
It expects capacity in its fourth quarter to be up to 60% of 2019 levels, up from just 17% in the third quarter.
"We remain confident about demand for travel this summer and into autumn, due to the bookings surges experienced following selective easing of travel restrictions, such as the 400% increase in week-on-week flight bookings seen following the waiving of quarantine for fully vaccinated passengers returning from amber-list destinations," said easyJet, also noting high consumer savings rates and "high balances" of employees' annual leave.
easyJet shares were up 1.6% early Tuesday, while Young's shares were down 0.3%.
Here is what you need to know at the London market open:
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MARKETS
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FTSE 100: up 1.1% at 6,919.69
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Hang Seng: down 0.8% at 27,276.97
Nikkei 225: closed down 1.0% at 27,388.16
DJIA: closed down 725.81 points, 2.1%, at 33,962.04
S&P 500: closed down 1.6% at 4,258.49
Nasdaq Composite: closed down 1.1% at 14,274.98
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EUR: down at USD1.1777 (USD1.1798)
GBP: down at USD1.3635 (USD1.3677)
USD: firm at JPY109.55 (JPY109.51)
Gold: up at USD1,816.02 per ounce (USD1,807.03)
Oil (Brent): firm at USD69.33 a barrel (USD69.23)
(changes since previous London equities close)
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ECONOMICS AND GENERAL
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Tuesday's Key Economic Events still to come
1000 CEST EU euro area balance of payments
0830 EDT US housing starts and building permits
0855 EDT US Johnson Redbook retail sales index
1630 EDT US API weekly statistical bulletin
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UK Prime Minister Boris Johnson was facing a backlash over his plans to make coronavirus vaccination compulsory for nightclubs and other crowded venues in the autumn. Clubs, backbench Tories and opposition MPs criticised the Johnson's announcement on Monday – the day that clubs in England were allowed to open for the first time since March last year. He was also told to clarify the relaxation of isolation rules for some fully-vaccinated critical workers who are close contacts of Covid-19 cases after a government statement said it would not be a "blanket exemption for any sector or role". Speaking from self-isolation on so-called "freedom day", Johnson warned venues with large crowds that they must make full vaccination a requirement of entry from the end of September. Johnson declined to rule out extending vaccination passports to pubs as he attended the briefing virtually from his country residence of Chequers.
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Producer prices rose by 1.3% in Germany in June from the month before, according to data from the Federal Statistical Office. They rose by 8.5% annually, compared to a 7.2% inflation rate in May.
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BROKER RATING CHANGES
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STIFEL RAISES INTERCONTINENTAL HOTELS TO 'BUY' ('HOLD')
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HSBC RAISES ELEMENTIS TO 'HOLD' ('REDUCE') - TARGET 150 (100) PENCE
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COMPANIES - FTSE 100
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Anglo American reported a largely strong production performance for the first half of 2021, with rises in copper and diamonds. For the six months ended June 20, the miner posted a 5% rise in copper output to 330,000 tonnes from 314,000 tonnes a year before, driven by stronger results from the Los Bronces and El Soldado mines in Chile. For 2021 as a whole, Anglo American's copper guidance has been tightened to between 650,000 tonnes and 680,000 tonnes, from the prior range of 640,000 tonnes to 680,000 tonnes. Diamond production from the group's De Beers business grew 37% year-on-year to 15.4 million carats from 11.3 million carats, on output hikes from Botswana and South Africa, in order to meet stronger demand for rough diamonds. For the group's coal operations, metallurgical coal production fell 20% year-on-year to 6.2 million tonnes, while thermal coal output also declined to 9.3 million tonnes.
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BHP Group had a mixed performance in output for its recently ended financial year, with a drop in petroleum and copper, but growth in iron ore production. For the year ended June 30, copper production dropped by 4.7% to 1.64 million tonnes from 1.72 million tonnes, due to the Anglo-Australian miner's Chilean assets having to operate with a reduced workforce due to preventative measures linked to Covid-19. Total petroleum production also fell 5.5% year-on-year to 102.8 million barrels, with crude oil, condensate & natural gas liquids suffering from natural field decline across BHP's portfolio, while natural gas dropped due to planned shutdowns at Angostura in Trinidad & Tobago. Iron ore production for the year grew 2.1% to 253.5 million tonnes from 248.2 million tonnes the prior year, driven by record production from the Jimblebar mine in Australia, as well as a stronger operational performance across BHP's supply chain.
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COMPANIES - MAIN MARKET AND AIM
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Premium tonic water maker Fevertree Drinks reported strong sales in its first half, but margins were squeezed by global logistics cost pressures. Total sales in the half to June 30 amounted to GBP141.8 million, up 36% on a year ago. The UK segment delivered 4% growth, while US sales surged 32% and Europe sales doubled. However, gross margin in the half was "impacted by significantly elevated costs resulting from the disruption currently impacting global logistics". As a result, the company expects first-half gross margins for the Fevertree brand of around 45% and around 44% inclusive of revenue from GDP's portfolio brands. Fevertree bought German distributor Global Drinks Partnership a year ago. Due to the strong start to the year, Fevertree raised its annual revenue guidance to a range of GBP295 million to GBP304 million. "However, as is being seen in other sectors, growing challenges from COVID-related logistics disruption and associated costs is putting pressure on the group's margins. Consequently, we anticipate gross margins of about 44% for FY21, or 43% inclusive of revenue from GDP's portfolio brands, delivering an Ebitda margin of about 20%," the company said. For 2020, the Fevertree reported a gross margin of 46.2% and an adjusted earnings before interest, tax, depreciation and amortisation margin of 22.6%.
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Young & Co's Brewery said trading has continued to run ahead of internal expectations, as the pub chain looks ahead to "another busy staycation summer". For the 13-week period to July 12 from April 12, total sales were 95% of the same period in 2019, a pre-pandemic period when it was fully open throughout. On April 12, Young's opened 144 pubs for outdoor trading only, and then the remainder of its estate resumed business in May when indoor hospitality was allowed again. "Our trading has benefited from significant pent-up demand, as well as from the major capex programme undertaken in our pubs, hotels and outdoor areas and the delivery of some truly transformational projects," said Chair Stephen Goodyear ahead of Tuesday's annual general meeting. While the delay of England's 'freedom day' from the original June date was disappointing, he said, the firm is pleased to now be able to operate close to normal following Monday's lockdown lifting. "We remain optimistic about the balance of the financial year to March 2022 and believe our new and upgraded pubs and hotels and the large number of bookings we have for weddings, parties and other events put us in a strong position to capitalise on another busy staycation summer," Goodyear said.
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COMPANIES - GLOBAL
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UBS reported a sharply improved second quarter, as the Swiss bank saw growth from all of its businesses. In the three months to June 30, the Zurich-headquartered universal bank recorded net attributable profit of USD2.01 billion, up 63% from USD1.23 billion a year before. Operating pretax profit improved 64% to USD2.59 billion from USD1.58 billion. UBS booked a USD80 million credit release in the quarter compared to a USD272 million provision the year before. The bank's operating income increased 21% year on year to USD8.99 billion from USD7.40 billion. Net interest income rose 17% to USD1.63 billion from USD1.39 billion, while fee & commission income surged 28% to USD6.04 billion from USD4.73 billion.
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Tuesday's Shareholder Meetings
Aberdeen Japan Investment Trust PLC - AGM
Golden Rock Global PLC - AGM
HICL Infrastructure PLC - AGM
NMCN PLC - GM re assets falling to less than half of its called-up share capital
Sanderson Design Group PLC - AGM
Wynnstay Properties PLC - AGM
Young & Co's Brewery PLC - AGM
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By Tom Waite; thomaslwaite@alliancenews.com
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