(Alliance News) - The economic winners and losers of the Covid-19 pandemic were set out clearly in company updates early Tuesday, as were those business that have been spared the worst impact of the health crisis.
Online grocer Ocado reported a 33% jump in annual revenue, as lockdowns shut restaurants and fear of catching the virus kept many people out of physical food shops.
Cruise ship and hotel operator Tui, by contrast, was weathering the worst of the storm, reporting a widened quarterly loss as revenue plunged by 88%.
In the middle was housebuilder Bellway, continuing to build and sell homes as the sector was allowed to continue trading through the second and third lockdowns in England.
"These are not just results, these are remarkable results," Third Bridge analyst Ross Hindle said of Ocado's numbers.
"Ocado couldn't have asked for better trading conditions, as customers clamoured to secure online shopping slots like never before. The question now is how much of that growth will stick, and how much will slip away as lockdowns ease. Experts believe Ocado's upper-end niche market placement is likely to shield them from this pullback effect more than its big four competitors."
Ocado shares were up 3.9% early Tuesday, Tui's down 0.1%, and Bellway's up 2.5%.
Here is what you need to know at the London market open:
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MARKETS
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FTSE 100: down 0.2% at 6,513.97
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Hang Seng: up 0.6% at 29,485.16
Nikkei 225: closed up 0.4% at 29,505.93
DJIA: closed up 237.52 points, or 0.8%, at 31,385.76
S&P 500: closed up 28.76 points, or 0.7%, at 3,915.59
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GBP: up at USD1.3783 (USD1.3740)
EUR: up at USD1.2085 (USD1.2050)
Gold: up at USD1,843.00 per ounce (USD1,836.80)
Oil (Brent): up at USD61.14 a barrel (USD60.32)
(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
1630 EST US API weekly statistical bulletin
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All travellers arriving in the UK will have to take two coronavirus tests in a fresh attempt to prevent mutant strains entering the country under new rules to be announced this week. The Department for Health & Social Care said the move was designed to provide a "further level of protection" enabling the authorities to track new cases more effectively. It is expected that people isolating at home will be told they must get a test two and eight days into their 10-day quarantine period. It comes after it was confirmed last week that UK nationals returning from 33 "red list" countries would be required to quarantine in closely monitored government-designated hotels, where they would have to take two tests.
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Rental houses in the UK are being snapped up by tenants six days faster on average than they were a year earlier, analysis has found. In the last three months of 2020, houses were taking 13 days to be rented out typically, compared with an average of 19 days in the fourth quarter of 2019, Zoopla found. By contrast, the average time to rent for flats has remained relatively unchanged, at around 16 days.
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German trade data for December was a mixed bag, according to numbers on Tuesday, with official figures showing the country's exports rose but its trade surplus disappointed market expectations. Numbers from Destatis showed Germany's trade surplus rose to EUR16.1 billion in December from EUR15.9 billion in November. According to consensus cited by FXStreet, Germany's trade surplus was forecast to rise to EUR16.3 billion in December, so the December figure fell short of expectations. Exports were 0.1% higher monthly and 2.7% higher annually at EUR100.7 billion. This figure topped market expectations of a 1% monthly decline. For the whole of 2020, exports fell 9.3% to EUR1.20 billion. Imports fell 0.1% monthly but climbed 3.5% annually to EUR85.9 billion. Imports for the whole of 2020 were 7.1% lower at EUR1.03 billion.
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BROKER RATING CHANGES
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RBC RAISES HSBC HOLDINGS TO 'SECTOR PERFORM' (UNDERPERFORM) - PRICE TARGET 420 (370) PENCE
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JPMORGAN RAISES ELECTROCOMPONENTS TO 'OVERWEIGHT' ('NEUTRAL') - TARGET 1,103 (799) PENCE
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COMPANIES - FTSE 100
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Ocado Group said annual revenue jumped by a third, helped by virus-boosted demand for online grocery purchases. Ocado posted GBP2.33 billion in revenue for the financial year that ended November 29, up 33% from GBP1.76 billion. This was slightly short of the GBP2.35 billion expected by the market, according to the company-compiled consensus. Ocado's statutory pretax loss narrowed to GBP44.0 million from GBP214.5 million, with the FTSE 100 company benefiting from a GBP104.6 million gain from exceptional items, swung from a GBP94.1 million hit in financial 2019. The boost from exceptional items this year came from insurance proceeds from a fire at its Andover, England customer fulfilment centre. Before exceptional items, Ocado's pretax loss widened to GBP148.6 million from GBP120.4 million. According to the company-compiled consensus, the figure was expected to be unchanged. In Retail alone, revenue jumped 35% as the online grocer got a boost from lockdown measures in the UK. "The rapid acceleration of many pre-existing trends in business and society has been a feature of the Covid-19 crisis and the dramatic channel shift in grocery is a clear example of this," Chief Executive Officer Tim Steiner said. Looking ahead, Ocado said annual revenue growth is "highly dependent on length of Covid-19 restrictions". It also has earmarked around GBP700 million in total capital expenditure.
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COMPANIES - FTSE 250
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Package holiday operator Tui posted a sharp first-quarter loss, succumbing to European travel restrictions, but hopes for an end to these curbs around Easter. The Anglo-German company reported an 88% revenue plunge in its first quarter ended December 31. Revenue came in at EUR468.1 million from EUR3.85 billion. Its underlying loss before interest and tax stretched to EUR698.6 million from EUR146.7 million. The dramatic revenue drop was "as a result of extended travel restrictions across our key European markets during November and December 2020", Tui explained. New variants of Covid-19 have meant governments in Europe have been forced to impose more international travel curbs. "Our assumption for Q2 FY 2021, is for working capital development to correlate with vaccine programme rollout and lifting of travel restrictions, with significant upside anticipated should travel restrictions be lifted ahead of Easter (early April 2020)," Tui said. Tui said it has enough financial liquidity to bridge to the expected summer 2021 travel recovery, with EUR2.1 billion in cash and available facilities after its recent third support package of EUR1.8 billion. It said 2.8 million customers have booked holidays for summer 2021.
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Mid-cap housebuilder Bellway reported record output in its financial first half, as the housing sector was spared from the two most recent UK Covid-19 lockdowns. Bellway said it completed 5,656 new homes in the six months to January 31. This was a 6.3% annual improvement and also "record first half volume output" for the housebuilder. Bellway said first-half revenue was up 12% year-on-year to GBP1.72 billion. "In the context of challenging circumstances, the group has delivered an excellent first half performance, achieving growth in volume to a record level, while maintaining high build standards and a focus on customer service," Chief Executive Jason Honeyman added. "Looking forward, we have a sizeable forward order book, which provides a solid platform for the second half of the financial year and beyond." Bellway said its order book stands at 5,889 homes worth GBP1.63 billion, up from 4,598 homes worth GBP1.16 billion a year ago.
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COMPANIES - GLOBAL
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Honda Motor said its performance in the nine months was below the prior year's level despite a profit surge in the third quarter of its current financial year. The Tokyo-based manufacturer of automobiles said sales rose by 0.6% year-on-year in the three months to the end of 2020 to JPY3.772 trillion, about USD35.97 billion. Operating profit, meanwhile, jumped by 67% to JPY277.7 billion, thanks to increased efficiency in research & development expenditures and to cost reduction efforts, Honda noted. For the nine months to December 31, the company said sales revenue totalled JPY9.547 trillion and operating profit was JPY447.0 billion, down 17% and 30%, respectively. In 2019, nine-months sales revenue was JPY11.473 trillion, while operating profit was JPY639.2 billion.
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Tuesday's Shareholder Meetings
Benchmark Holdings PLC - AGM
Numis Corp PLC - AGM
Tritax EuroBox PLC - AGM
CRH PLC - EGM re replacing Crest with Euroclear Bank
Pensana Rare Earths PLC - GM re name change to Pensana PLC
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By Tom Waite; thomaslwaite@alliancenews.com
Copyright 2021 Alliance News Limited. All Rights Reserved.
HSBC Holdings (HSBA)
Ocado (OCDO)
Bellway (BWY)
TUI AG (TUI)