(Alliance News) - UK housebuilder Persimmon on Wednesday said it will cancel its interim dividend and postpone the payment of its final distribution in preparation for completions delays, cancellations and a slowdown in new sales due to the virus outbreak.
Persimmon said it will be closing all of its sales offices from Thursday until further notice.
The move follows UK Prime Minister Boris Johnson's decision to place the UK on lockdown to tackle the coronavirus. Johnson also faces calls to stop non-essential construction workers heading to building sites.
Persimmon said its construction sites are commencing an orderly shutdown with only essential work taking place. This will be focused on making partly built homes safe and secure and where failure to complete the build could put customers in a vulnerable position.
The York-based company said it entered this "period of uncertainty" with a robust operational performance in the year to date and a strong forward order book.
It has decided to cancel the proposed 125 pence per share interim dividend payment, which was expected to be paid on Thursday next week. In addition, Persimmon said it will postpone the proposed final dividend payment of 110p per share, which was expected to be paid on July 6.
Here is what you need to know at the London market open:
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MARKETS
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FTSE 100: called up 119.89 points 2.2% at 5,565.90
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Hang Seng: up 4.0% at 23,561.19
Nikkei 225: closed up 8.0% at 19,546.63
DJIA: closed up 2,112.98 points, 11%, at 20,704.91
S&P 500: closed up 9.4% at 2,447.33
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GBP: up at USD1.1828 (USD1.1743)
EUR: up at USD1.0815 (USD1.0792)
Gold: down at USD1,602.47 per ounce (USD1,623.30)
Oil (Brent): firm at USD27.83 a barrel (USD27.55)
(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
1000 CET Germany Ifo business climate index
0700 EDT US MBA weekly mortgage applications survey
0830 EDT US advance report on durable goods
0900 EDT US monthly house price index
1030 EDT US EIA weekly petroleum status report
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UK Prime Minister Johnson is under growing pressure to stop non-essential construction workers heading to building sites as the country attempts to tackle the spread of coronavirus. Johnson has faced calls from across the political spectrum for more stringent rules so workers are not placed at risk, and public transport is not overwhelmed. Johnson, who will appear before MPs on Wednesday for Prime Minister's Questions in the Commons, has so far resisted the pressure. On Tuesday, the number of coronavirus dead in the UK reached 422 – up from 335 the day before and the largest day-on-day increase in the number of deaths since the outbreak began. In measures announced on Monday, the PM told people to only go to work if "absolutely necessary". But on Tuesday, Health Secretary Matt Hancock said those who cannot work from home, including key workers in the NHS and social care, should go to work "to keep the country running".
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UK inflation softened slightly in February, data from the Office for National Statistics showed. The data was released early, at 0700 GMT on Wednesday instead of the usual 0930 GMT. "The developing Covid-19 pandemic make the continuation of secure briefings no longer possible. The ONS plans to move to publication of market sensitive releases at 0700 without briefing accredited newswires ahead of publication, with the first release affected being price statistics," the ONS explained. Consumer prices were up 1.7% year-on-year in February, following a 1.8% rise in January. This did matched consensus expectations, according to FXStreet. Month-on-month, consumer prices in the UK rose 0.4% after a 0.3% decrease in January. Meanwhile, producer price growth weakened in February. Output producer price inflation was 0.4% year-on-year in February, a sharp deceleration from 1.0% in January. Input prices fell 0.5%, swinging from January's 1.6% rise.
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UK Chancellor Rishi Sunak has decided against creating a specific support package for the aviation industry, which is suffering from a collapse in demand due to coronavirus. In a letter to airports and airlines Tuesday, he said the government is prepared to enter into negotiations with individual companies once they have "exhausted other options" such as raising cash from existing investors. This comes seven days after he made a speech in which he acknowledged that "some sectors are facing particularly acute challenges" and promised to "discuss a potential support package for specifically airlines and airports".
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BROKER RATING CHANGES
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JPMORGAN RAISES BODYCOTE TO 'NEUTRAL' ('UNDERWEIGHT') - TARGET 615 (775) PENCE
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RBC RAISES BOOHOO TO 'SECTOR PERFORM' ('UNDERPERFORM') - TARGET 200 (250) PENCE
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COMPANIES - FTSE 100
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United Utilities said trading has been in line with expectations for the financial year ending next week. Revenue is expected to be higher than last year, while underlying operating profit also is expected to rise. The water works said it does not expect UK storms to result in any material incremental costs, but they did cause some service disruptions, which will reduce its anticipated Outcome Delivery Incentives to around GBP40 million from GBP50 million. In addition, United Utilities said it has enacted "robust contingency plans" in response to Covid-19.
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COMPANIES - FTSE 250
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SSP plans an equity raise in order to ensure sufficient liquidity amid Covid-19 disruption. Since its February update, the travel concessions operator said it has seen "an unprecedented and rapidly escalating impact of the Covid-19 virus on the travel operating environment, particularly in airports". SSP operates a number of food and drink brands at travel destinations such as train stations and airports, such as Upper Crust and Cafe Ritazza. Like-for-like sales are running around 80% to 85% lower in the UK and continental Europe year-on-year. In North America, sales are around 80% lower. For the month of March, SSP expects revenue to be down around 40% to 45% year-on-year, which will reduce group revenue by GBP125 million to GBP135 million and hit profit by GBP50 million to GBP60 million. SSP said it will defer the payment date of its final dividend, and it does not intend to pay an interim dividend for 2020. It has also suspended its share buyback. To "to preserve cash and ensure sufficient liquidity", SSP has agreed a new 18-month committed bank facility up to GBP112.5 million, and intends to launch a share placing and subscription. This will not exceed 19.99% of the company's existing share capital.
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COMPANIES - INTERNATIONAL
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Qantas Airways is to operate the first non-stop flight from Darwin to Heathrow as travellers struggle to return to the UK amid the coronavirus crisis. Its flagship Sydney to London service usually flies via Singapore but, due to travel restrictions on international journeys, the airline has been forced to find an alternative route. Australian carrier Qantas will temporarily operate its Sydney to London flight via the capital of Australia's Northern Territory, where the Airbus A380 aircraft will stop off to refuel. The flight to the UK's largest airport from Darwin will take 16 hours and 45 minutes – believed to be the first non-stop flight between the two destinations. The temporary route will only operate this week, before Qantas suspends all international flights until May 31 at the earliest.
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Wednesday's Shareholder Meetings
McCarthy & Stone
easyHotel
Beazley
Micro Focus International
BlackRock Throgmorton Trust
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By Tom Waite; thomaslwaite@alliancenews.com
Copyright 2020 Alliance News Limited. All Rights Reserved.
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