UK WINNERS & LOSERS SUMMARY: Iofina Falls After Warning On Production

Mon, 04th May 2020 10:53

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

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FTSE 100 - WINNERS

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Rentokil Initial, up 3.9%. Morgan Stanley started coverage on the pest control firm with an Overweight rating.

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FTSE 100 - LOSERS

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easyJet, down 7.1%. The budget airline's founder Stelios Haji-Ioannou on Sunday warned the airline will become insolvent by December should it proceed with a GBP4.5 billion order from aircraft manufacturer Airbus, who he labelled as "masters of bribery". Haji-Ioannou, who owns roughly a 34% stake in the budget carrier, has frequently took aim at easyJet's senior leadership, and has called on four board members - including Chair John Barton, Chief Executive Officer Johan Lundgren, and Chief Financial Officer Andrew Findlay - to be ousted. "Paying GBP4.5 billion to Airbus for 107 unnecessary planes will make easyJet insolvent in December 2020," he asserted. The travel industry has been battered by the Covid-19 pandemic and Haji-Ioannou warned it will take three years for demand to return to pre-crisis levels. He explained that it took four years for US airlines to climb back to regular traffic levels after the 9/11 terrorist attacks, which grounded planes for four days. Shares in British Airways parent International Consolidated Airlines were down 3.8%, while cruise line operator Carnival was the worst performer, down 8.5%.

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Rolls-Royce Holdings, down 6.8%. The jet engine maker is considering cutting up to 8,000 jobs as part of a restructuring plan to reduce its 52,000-person workforce by 15% in response to Covid-19 crisis, the Financial Times reported late Friday. The newspaper cited "several people inside the company" saying senior executives of the jet engine maker have begun work on the restructuring plan. The move is in response to production cutbacks by major customers Airbus and Boeing Co, themselves struggling with empty skies as a result of government travel bans to contain the spread of the new coronavirus. Fellow aftermarket services providers Melrose Industries and Meggitt were down 6.5% and 2.0%, respectively.

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FTSE 250 - WINNERS

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AG Barr, up 3.5%. The soft drinks maker was raised to Buy from Hold by Liberum.

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FTSE 250 - LOSERS

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Tate & Lyle, down 3.8%. The ingredients supplier said lockdowns across core US and European markets have resulted in significant changes in demand. Primary Products volume in April was significantly hurt by the first full month of lockdown in the US. Bulk sweetener volume was 26% lower, while industrial starch volume was 9% lower. Commodities also were affected as ethanol prices decreased sharply. Tate & Lyle said it was able to partially mitigate the financial impact of lower demand by cash conservation and cost reduction, including freezing salary increases and recruitment, stopping non-essential discretionary spend and reprioritising capital commitments.

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OTHER MAIN MARKET AND AIM - WINNERS

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Hotel Chocolat Group, up 1.2%. The chocolate retailer said online sales have failed to fully offset a total sales loss as a result of store closures in the key three-week Easter period. The company said however it is encouraged by the "agility and resilience" of the business model and continues to explore further avenues for online growth. Hotel Chocolat also said that it has secured an increase to its banking facilities, in the form of a new GBP35 million revolving credit facility with Lloyds Bank, with the partially UK government-backed facility replacing an existing GBP10 million overdraft. The company back in March had raised GBP22 million in an equity placing to fund growth and to provide operational headroom.

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OTHER MAIN MARKET AND AIM - LOSERS

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Iofina, down 29%. The iodine producer warned it is "unlikely" to meet its iodine production goals for the first half of 2020 as a result of brine supply issues at one of its plants. This is because of the oil price crash and the resulting curtailment of production by oil and gas operators. Brine, which is found adjacent to oil and gas fields, is a key raw material for the manufacture of iodine. For the three months to the end of March, Iofina reported crystalline iodine production of 129.7 metric tonnes. In the first half of 2019, iodine production had totalled 286.7 metric tonnes, so production has more than halved. Iofina on Monday said that the supply of brine to its No 8 iodine plant located in western Oklahoma in the US is expected to significantly decline in the coming days due to shut-ins of wells or plans to shut-in wells by energy companies due to reduced operating margins at current oil prices.

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By Arvind Bhunjun; arvindbhunjun@alliancenews.com