UK WINNERS & LOSERS SUMMARY: Reckitt Rises After Bumper First Quarter

Thu, 30th Apr 2020 11:04

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

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FTSE 100 - WINNERS

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Flutter Entertainment, up 5.5%. The gambling firm said it will complete its Stars Group acquisition next week after obtaining shareholder approval. Paddy Power and Betfair owner Flutter will complete its all-share merger with Sky Bet owner Stars Group on Tuesday next week. This follows approval from shareholders in both companies as well as all necessary regulatory clearances. This combined business will have five reporting segments and will report earnings on the basis of these segments. These are to be: Stars Group International, excluding current US operations; Paddy Power Betfair; Sky Betting & Gaming; Australia, including Sportsbet and BetEasy; and the US, including FanDuel Group and all Stars Group US operations.

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Hikma Pharmaceuticals, up 4.6%. The drugmaker said its year started well despite tough market conditions and reiterated its annual guidance. Hikma still expects to report low-to-mid single-digit revenue growth from its Injectables business in 2020 as a result of demand across all of its markets as well as the launch of new products. In 2019, Injectables revenue grew 8% to USD894 million. On top of this, Hikma's Injectables core operating margin is forecast to be between 35% and 37% in 2020, down from 38% in 2019. The company's Injectables business is performing well globally, with higher demand in Europe and the US - partly driven by Covid-19.

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Reckitt Benckiser, up 4.0%. The household goods maker posted a double-digit first-quarter revenue rise fuelled by higher sales of hygiene and health products as a result of the coronavirus pandemic. Reckitt said its "2020 performance is now expected to be better than original expectations" but conceded the "outlook for the balance of 2020 remains uncertain". Total Reckitt sales climbed 12% to GBP3.54 billion in the quarter to March 31. On a like-for-like basis, sales were 13% higher. The largest sales rise came from over-the-counter health products. These jumped by about a third to GBP618 million. It helped the company to a 13% sales hike in the Health unit to GBP2.19 billion. In Hygiene, sales jumped 11% to GBP1.36 billion. "Given a vaccine is at least a year away, and hygiene is showing to be a serious Covid defender, it's not implausible to think that sales will remain higher, but for how long and how high, is unclear," said Hargreaves Lansdown analyst Emilie Stevens.

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FTSE 100 - LOSERS

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Royal Dutch Shell 'B', down 5.1%, Shell 'A', down 4.9%. The oil major announced its first dividend cut since the second world war as it grapples with lower oil prices. Shell's first-quarter current cost of supplies earnings attributable to shareholders, excluding items, were USD2.9 billion, down 46% on a year ago due to a drop in oil, gas and liquefied natural gas prices as well as lower sales volumes. For the first quarter, Shell's global liquids realised price was USD46.53 per barrel, down from USD57.42 a year ago. Among divisions, Upstream earnings slumped to USD291 million from USD1.65 billion due to the lower oil and gas prices as well as a 5% decrease in production. Integrated Gas earnings fell to USD2.14 billion from USD2.57 billion, also reflecting lower prices. Shell produced 3.7 million barrels of oil equivalent per day, down 1% on a year before. "A toxic combination of demand destruction, with aircraft standing idle, vastly reduced travel generally and manufacturing shutdowns, alongside the issue of oversupply, to the extent that even storage of physical oil is becoming more difficult as storage space is increasingly taken, have put the oil majors on red alert," said Interactive Investor's Richard Hunter.

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St James's Place, down 4.5%. The wealth manager reported a drop in funds under management over the first quarter as its investment performance took a beating from Covid-19 sell-offs. At March 31, St James's Place recorded GBP101.67 billion in funds under management, down 1.8% from GBP103.52 billion at the same point a year before. From the end of 2019, managed funds are down 13% from GBP116.99 billion. During the first quarter, St James's Place recorded a net investment return of negative GBP17.69 billion - with all three asset classes suffering. Investment funds saw GBP4.23 billion wiped off from its market performance, while Pension funds lost GBP8.11 billion and UT/ISA & DFM losing GBP5.35 billion. St James's Place is withholding one-third, or 11.22p, from its 2019 final dividend. In order to enact this, the wealth manager has declared a second interim divided for 2019 of 20.0p - equivalent to around two-thirds of the previously proposed final dividend, and is withdrawing its recommendation to pay a final dividend. Going forward, the wealth manager said it will only pay one dividend for 2020, and the decision will be made in February 2021.

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Next, down 3.8%. Societe Generale downgraded the clothing retailer to Sell from Hold.

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Lloyds Banking Group, down 3.7%. The lender reported a sharp fall in profit in the first quarter, which was blamed on a significant rise in credit loss impairments. In the three months to March 31, Lloyds recorded pretax profit of just GBP74 million, which is down 95% on the GBP1.60 billion seen the same period the year before. Lloyds took a GBP1.43 billion impairment charge in the quarter, up from GBP275 million a year before, but the lender stressed its loan book remains "robust and well positioned". Statutory net interest income for the first quarter amounted to GBP5.19 billion, more than double the GBP2.11 billion recorded the year before. This was offset, however, by a GBP2.27 billion loss in Lloyds's insurance business compared to a GBP878 million gain a year before. Lloyds has also withdrawn its 2020 financial guidance. Previously, the bank had guided for a return on tangible equity between 12% and 13%. In the first quarter, RoTE was 5.0%.

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J Sainsbury, down 3.5%. The supermarket chain cut its dividend and reported the Covid-19 crisis could hurt profit by GBP500 million. In the financial year ended March 7, sales including VAT nudged 0.1% lower to GBP32.39 billion from GBP32.41 million. On a like-for-like basis, sales were down 0.6%. Pretax profit rose however to GBP255 million from GBP202 million. The FTSE 100 firm joined many other listed firms and opted not to make a final payout. It means the company's total dividend for the year has been slashed by 70% to 3.3 pence from 11.0p. "There's still work to be done on Sainsbury's proposition. It's been investing in prices, that's to say it's been cutting them, but we'd argue there's still work to be done if it wants to resonate with customers on the same scale as some peers," said Hargreaves Lansdown analyst Sophie Lund-Yates.

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By Arvind Bhunjun; arvindbhunjun@alliancenews.com