UK WINNERS & LOSERS SUMMARY: Carnival Down 12% Amid Threat To US Aid

Fri, 27th Mar 2020 10:58

(Alliance News) - The following stocks are the leading risers and fallers within the main London indices on Friday.

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FTSE 100 - LOSERS

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Carnival, down 12%. The cruise ship operator was down after US President Donald Trump said he told cruise lines to incorporate themselves domestically if they want to access loans from a massive US stimulus package. Carnival is listed in the UK as Carnival PLC and in the US as Carnival Corp. Its global headquarters is in Miami, but Carnival Corp is registered in Panama according to the articles of incorporation posted on its website. The US Senate on Wednesday approved a USD2.2 trillion spending bill that sets aside USD500 billion for large corporations, but stipulates that money can only be given to firms "created or organised in the US". In the New York pre-market, Carnival Corp shares were down 7.7%, having risen 14% on Thursday.

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Meggitt, down 8.9%. The aerospace and defence contractor said it will not be paying a final dividend for 2019 as part of cost-reduction measures taken in response to the Covid-19 pandemic. "This action, together with a series of significant measures to reduce costs and tightly manage cash flow, will further strengthen our financial position and liquidity," the company explained in its statement Friday.

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SSE, down 6.9%. The energy company still intends to recommend a dividend of 80 pence per share for its financial year ending March 31, as the growing spread of Covid-19 makes no material impact on the group's performance for the period. However, before any impact of Covid-19, SSE said it expects adjusted earnings per share to be at the lower end of its expected 83 pence to 88p range, but still representing a rise from 67.1p the year before. SSE said its adjusted operating profit for the year will show a high single-digit percentage year-on-year drop in SSEN Transmission, SSEN Distribution and investment in SGN, due to lower than expected Distribution Use of System electricity volumes and a greater number of network faults. However there would be a 25% increase in adjusted operating profit for SSE Renewables, driven by a full year of output from the Beatrice offshore wind farm.

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Next, down 5.4%. The retailer was lower after it was forced into a U-turn over its decision to keep warehouses open and ask workers to travel into stores for picking online orders. The company now has shut its online operations, from Thursday evening, and stop taking orders. Next had faced sustained pressure from politicians and staff, who felt like they were being pressured into stores. On Wednesday, it was revealed that the company had offered a 20% pay rise to any worker willing to continue picking jumpers, socks and other clothes for customers.

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Flutter Entertainment, down 5.6%. The gambling firm is no longer proposing to pay a pro-rated dividend immediately before its Stars Group merger and intends to pay out its final 2019 dividend in shares only. On top of this, Flutter said it is suspending its dividend for 2020 due to "the impact of the current disruption caused by Covid-19 and the ambition for the combined group to de-lever".

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FTSE 250 - WINNERS

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FDM Group, up 2.2%. The IT consultant and recruiter will not recommend the payment of a final dividend for 2019 of 18.5 pence per share, in order to maximise its financial strength amid the Covid-19 virus pandemic. In addition, London-based FDM has postponed its annual general meeting to no later than June 30, the original date being April 29. Looking ahead, FDM said its cash balance at the end of 2019 was GBP37 million, with no debt, giving the group a robust cash position. "At this early stage, our agile end-to-end business model appears to be relatively resilient to the challenges which are emerging in the marketplace. Although a small number of our Mounties have returned from client deployment, the vast majority of them continue to work on their client engagements, typically remotely," FDM stated.

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FTSE 250 - LOSERS

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Provident Financial, down 14%. The subprime lender withdrew forward guidance for 2020 and the final payout for 2019 due to uncertainty created by the Covid-19 outbreak. Provident saw no major impact from Covid-19 on trading in the first 11 weeks of 2020, but UK government restrictions together with the company's own actions are likely to hurt credit issued and collections. Provident has decided to withdraw the 16p per share final payout for 2019, which equates to GBP40 million. It plans to make future dividend decisions as and when conditions normalise. The Bradford-based company remains "heavily" focused on managing capital and liquidity through tightening underwriting across each business, particularly Moneybarn, and maintaining tight control on costs.

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Royal Mail, down 10%. The company still expects to report a financial 2020 adjusted operating profit but its UK Parcels, International & Letters business is likely to be "materially loss making" in financial 2021. For its financial year ending March 2020, Royal Mail said it still expects a between GBP300 million and GBP340 million adjusted operating profit before IFRS 16, as forecast in May 2019 when it published its financial 2019 result. However, while there is "significant uncertainty going forward", UKPIL is likely to post a loss for financial 2021 while profitability for Royal Mail's other main business, General Logistics Systems, will be "significantly reduced". At present, Royal Mail has more than GBP800 million in cash as well as a GBP925 million revolving credit facility. It is not recommending a final dividend for financial 2020.

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Redrow, down 7.2%. The company has taken the step to close all of its sites and offices, due to the housebuilder's supply chain taking significant hits in the last few days. Although Redrow said it has a strong balance sheet with total net assets of GBP1.6 billion, the group has started discussions with a syndicate of six banks for additional banking facilities over and above the current GBP250 million revolving credit facility. Looking ahead, Redrow said it will start to reopen sites and offices once its supply chain starts to show signs of normality. On Tuesday, Redrow said it was inevitable that its sales rate would be "seriously impaired" over the coming weeks, while build output is affected by labour and material shortages. UK government ministers have urged house buyers to put their imminent property moves on hold during the UK lockdown. Housing Secretary Robert Jenrick said those due to move house should rearrange to a new date and delay the process of changing property, even those planning to move on Friday.

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Essentra, down 6.5%. The plastic and fibre products maker has chosen to cancel its final dividend for 2019 of 14.4 pence per share, due to extreme macro-economic uncertainty caused by the Covid-19 pandemic. Essentra said for the first two months of 2019, there was a limited impact on trading caused by Covid-19, particularly in Essentra's China Filters & Components business. In more recent weeks, the Milton Keynes-based group reported that demand in China has returned to more normalised levels. However, in its Components division, Essentra said in the past week it has noted a high-single-digit slowdown in demand, particularly in Europe and the US as the epicentre for the outbreak shifts from the East to West. Looking ahead, Essentra said it has available liquidity of GBP225 million, comprising GBP125 million in cash and GBP100 million in committed bank facilities.

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By Paul McGowan; paulmcgowan@alliancenews.com