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UK TOP NEWS SUMMARY: Tesco Hails Record Christmas Trading Performance

Thu, 14th Jan 2021 11:22

(Alliance News) - The following is a summary of top news stories Thursday.



COMPANIES



Tesco became the latest UK grocer to boast a "record Christmas", with the supermarket chain's sales getting a boost from its premium 'Finest' range as well as plant-based products. The FTSE 100 constituent left its annual profit guidance unchanged, but did raise its Covid-19-related costs forecast to GBP810 million from GBP725 million. Tesco's group retail sales rose 7.3% at constant currency over the six weeks to January 9, which includes the bumper festive trading period. On a like-for-like basis, sales growth was 5.4%. Tesco said a strong UK sales performance was sustained in the third quarter as shoppers splurged on the grocer's 'Finest' food products range over the Christmas holiday period. Looking ahead, Tesco said guidance for the 2021 financial year is unchanged, adding it remains confident that retail operating profit is likely to be at least at the same level as in 2020, excluding the repayment of business rates relief. In financial 2020, Tesco posted retail operating profit of GBP2.81 billion. However, Tesco increased the estimate of its incremental costs of dealing with the Covid-19 pandemic in financial 2021, such as increased staff absence, to GBP810 million from GBP725 million.



Associated British Foods posted a drop in revenue for the 16 weeks ended January 2, as it warned on further huge losses should its Primark stores remain closed until the end of February. The food processor and clothing retailer said that for the 16 weeks ended January 2, revenue was 13% lower than the same period last year, at constant currency. AB Foods said its Retail performance - comprising the Primark clothing store chain - was materially hurt by the increased restrictions on the movement of people and trading activity put in place again by UK and European governments, mainly during November and late December, to limit the spread of Covid-19. AB Foods said uncertainty about store closure periods in the short term has increased. Making the assumption that all of the stores currently closed remain closed until the financial half year point, on February 27, the loss of sales caused by temporary store closures would reach around GBP1.05 billion. This is up from the previous estimate of GBP650 million, it said.



Whitbread said third-quarter performance reflected the damage inflicted by the ongoing Covid-19 government restrictions in the UK and Germany, where it operates its hotels and restaurants. The Dunstable, England-based hospitality firm said during the third quarter to November 26, total like-for-like sales growth were down 56% and year-to-date sales were down 70%. Premier Inn UK total sales were down 55% in the third quarter. This reflects the ongoing UK government restrictions on the operation of hotels and restaurants, which have forced closures of non-essential businesses, Whitbread said. As a result, total UK accommodation sales were down 55%, with occupancy at 49%.



Taylor Wimpey expects to report a performance for 2020 in line with market expectations, and to return to paying dividends, despite a decline in home completions for the year. For the year, total UK home completions including joint ventures fell by 39% to 9,609 from 15,719 the year before, which was due to the UK's national lockdown in the second quarter, which disrupted the housebuilder's production capacity. Taylor Wimpey said its net private reservation rate for 2020 was 0.76 homes per outlet per week, compared to 0.96 homes the prior year, while cancellation rates for the year reached 20%. This is above normal levels which are usually around 15%. Looking ahead, Taylor Wimpey expects to recommence ordinary dividend payout in 2021, starting with the 2020 final dividend. The group will review the special dividend in 2021 for payment in 2022.



A long-running dispute at a Rolls-Royce Holdings factory has been resolved after workers accepted a deal. Members of the Unite union at the Rolls-Royce plant in Barnoldswick, Lancashire, started taking industrial action last November in protest at plans to cut jobs and move work making aeroplane fan blades to Singapore. Unite said the deal, which has been supported overwhelmingly by the workforce, will give the historic site a new lease of life as a core manufacturing facility and make it host to a new centre of excellence.



Miner Rio Tinto said it struck a deal to allow an aluminium smelter in New Zealand to continue operating for roughly another four years. Rio said it reached an agreement with Meridian Energy, an electricity generator, to allow the New Zealand's Aluminium Smelter joint venture to continue operating the Tiwai Point aluminium smelter until December 31, 2024. The NZAS joint venture, of which Rio Tinto owns just over 79%, operates the Tiwai Point site in Southland region of New Zealand. Japan's Sumitomo Chemical holds the remaining stake in NZAS.



MARKETS



London shares were mostly higher on hopes for further US fiscal stimulus. Whitbread was the best blue-chip performer, up 4.1%, while Tesco was down 0.8%. Oil was retreating from 11-months highs. US stock index futures were pointed to a higher open.



FTSE 100: up 0.6% at 6,787.80

FTSE 250: up 0.8% at 20,786.22

AIM ALL-SHARE: down 0.4% at 1,180.44

GBP: up at USD1.3654 (USD1.3629)

EUR: up at USD1.2165 (USD1.2158)

GOLD: down at USD1,839.15 per ounce (USD1,857.59)

OIL (Brent): down at USD56.12 a barrel (USD56.21)

(changes since previous London equities close)



ECONOMICS AND GENERAL



No new social distancing restrictions to combat the spread of coronavirus will be introduced "today or tomorrow", UK Home Secretary Priti Patel said, amid suggestions that tougher measures could be imposed next week. Patel said the government was continuing to focus on the enforcement of current lockdown measures in England, but did not rule out further restrictions being introduced in the future. With the NHS under extraordinary pressures, there are concerns that the current restrictions may not be enough to bring the infection rate under control, particularly with the highly-transmissible new variant. UK government ministers are reportedly considering tougher measures such as requiring masks to be worn outdoors and only allowing exercise with those within one's household bubble, but are not planning on introducing these measures until next week at the earliest. Patel stressed the stay at home message currently in place as ministers focus for now on trying to ensure maximum compliance with the existing regulations.



US President-elect Joe Biden on Thursday will unveil his plan to revive the American economy, as evidence mounts that its recovery from the coronavirus pandemic is flagging despite significant government spending already. With his fellow Democrats narrowly controlling both houses of Congress, Biden appears to have a good shot at passing a third massive rescue package that could include everything from another round of stimulus payments to tax hikes on the rich to an increase in the minimum wage. "We need more direct relief flowing to families [and] small businesses, including finishing the job of getting people the USD2,000 in relief," Biden said last week, referring to the last package that provided payments of USD600 in direct payments. The funds could help revitalize a recovery that appears to be buckling under the weight of the nationwide surge in Covid-19 cases.



Donald Trump became the first US president in history to be impeached twice when the House of Representatives voted Wednesday to charge him with inciting last week's mob attack on Congress. The Senate will not hold a trial before January 20, when Democrat Biden assumes the presidency, meaning the real estate tycoon will escape the risk of being forced to leave early. He will, however, depart in disgrace – and likely due to face a Senate trial later. The only question in the House had been how many Republicans would join the Democratic majority. In the end, 10 Republicans broke ranks, including the party's number three in the House, Representative Liz Cheney. Holed up in the White House, Trump had no immediate reaction but he earlier issued a brief statement insisting that he opposed violence among his supporters. "In light of reports of more demonstrations, I urge that there must be no violence, no lawbreaking and no vandalism of any kind. That is not what I stand for," he said. Powerful Republican Senate leader Mitch McConnell has made clear there is no time before Trump's January 20 exit to hold an impeachment trial, given that the Senate is in recess until January 19. However, he said Wednesday that he was open to the possibility of voting to convict Trump in a trial, which could still be held after Biden takes over.



A team of experts from the World Health Organization arrived in Wuhan Thursday to probe the origins of the coronavirus more than a year after it emerged, although two members were barred from boarding a flight in Singapore after testing positive for virus antibodies. The international team of 13 scientists landed for their much-delayed mission, met by Chinese officials in hazmat suits and given throat swabs on arrival, and were whisked to a hotel where they must complete a two-week quarantine before starting their work. The virus was first detected in the central Chinese city of Wuhan in late 2019 and has since billowed out across the world killing nearly two million people so far, infecting tens of millions and eviscerating the global economy.



China posted strong foreign trade figures again in December in a sign of a sustained economic recovery. Exports in December increased by 18% year-on-year, Beijing customs authorities announced on Thursday, while imports were up by 6.5%. This followed a rise in exports in November of 21% year-on-year while imports increased by 4.5%. Chinese factories are humming along as Beijing has managed to largely contain the novel coronavirus outbreak, which is still ravaging other parts of the world. While the rest of the world is experiencing a recession, analysts believe that China will be the only major economy to have seen growth again in 2020.



The German economy contracted by 5% last year, with the coronavirus crisis bringing to an end 10 years of growth, the Federal Statistical Office said. The global pandemic resulted in Europe's biggest economy tumbling into "a deep recession," Destatis President Georg Thiel said. Analysts forecast Destatis would say German gross domestic product would shrink by 5.1% last year after growing by 0.6% in 2019, with vast tracts of economic and public life having been shut down for extended periods in 2020. However, the contraction in 2020 was less dramatic than the 5.7% slump posted in 2009 at the height of the global financial crisis. In addition, Germany posted its first budget deficit since 2011 in 2020 as a result of the economic crisis unleashed by the spread of the coronavirus. Europe's biggest economy recorded a deficit last year of 4.8%, its second highest since German unification in 1990.



Copyright 2021 Alliance News Limited. All Rights Reserved.

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