(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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Royal Dutch Shell 'A', up 2.3, Shell 'B', up 1.1%. The oil major said it will cut costs and capital expenditure and has decided not to continue with the next tranche of the share buyback programme in light of the coronavirus outbreak. Shell said it will axe operating costs by USD3.0 billion to USD4.0 billion over the next 12 months. Shell said it will cut annual spending to a maximum of USD20 billion for 2020 from its previous expectations of USD25 billion. However, Shell left intact its dividend. This has not been cut since the Second World War. "Unlike many other companies, it is not yet cutting its dividend let alone suspending it despite the escalating impact of the coronavirus outbreak and the containment measures launched in its wake. With a yield well into double digits the market is clearly pricing in action on the dividend sooner rather than later. Perhaps there might even be a bit of relief if such a decision were to be made," said AJ Bell's Russ Mould.
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FTSE 100 - LOSERS
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Pearson, down 12%. The education publisher paused its share buyback as a result of the Covid-19 outbreak. To date, GBP167 million of Pearson's GBP350 million share buyback programme has been completed. Pearson noted uncertainty in group's businesses that rely on learners and staff accessing physical sites. These businesses include Pearson VUE, the Pearson Test of English, US Student Assessments and higher institutions in South Africa, which is expected to hurt group profit. This is particularly true in the US, where test cancellations in several states is expected to lower operating profit for 2020 by GBP15 million. Pearson said there is risk of other states cancelling tests, which could further hit profit. For 2019, Pearson's operating profit was GBP275 million.
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ITV, down 11%. The broadcaster withdrew its guidance for 2020 and its proposal of its 2019 final dividend, amid disruptions caused by the Covid-19 and resultant containment measures. ITV said recent restrictions on working practices have hurt ITV Studios' ability to film productions, leading to productions both in the UK and internationally being paused. ITV said it is unable to predict how the pause in productions would hurt revenue and profit of its studios. As a result of the uncertainty of Covid-19, ITV has withdrawn its financial guidance for 2020, as well as its intention to pay an 8 pence annual dividend for 2020. Further, the board has decided not to propose the final dividend of 5.4 pence per share for 2019 at the forthcoming annual general meeting on April 24. ITV said savings realised from these steps will ensure that more than GBP300 million of cash will be retained within the business.
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FTSE 250 - WINNERS
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Go-Ahead Group, up 12%. The transport operator said it will suspend the payment of its recently declared dividend as the new coronavirus is hurting its operations. The company said the Covid-19 situation is rapidly evolving, particularly in the UK where the majority of the company's activities take place, with developments directly hurting travel demand. However, Go-Ahead said 75% of its revenue is derived from contracted markets, where there is no direct revenue risk from changes in underlying travel demand. The company's financial exposure is therefore predominantly linked to the 25% of its revenue derived from demand-driven commercial services. The parts of Go-Ahead's business that fall within this category are regional bus, Norwegian rail and Southeastern, a UK rail franchise which is due to expire on Tuesday next week. Go-Ahead added it has decided to suspend the interim dividend of 30.17 pence per share declared back on March 12, until "there is greater clarity" on the impact of Covid-19.
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Kingfisher, up 7.1%. The DIY retailer aid it is seeing higher demand for its products following a sales slip in its most recently ended financial year. In addition, the B&Q owner said it has been required by the UK Financial Conduct Authority to delay the publication of its annual results, which were due to be reported on Tuesday, for at least two weeks. On Sunday, the FCA asked all companies due to produce preliminary financial statements in the next few days to delay publication due to disruptions caused by the coronavirus. Kingfisher said its sales in the twelve months to the end of January declined by 1.5% to GBP11.51 billion. On a constant currency basis, sales fell by 0.8%, the company noted. However, in the fourth quarter alone, sales improved by 1.7% on a like-for-like basis, reflecting operational improvements in France and the implementation of a new trading approach across the company.
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AG Barr, up 4.7%. The soft drinks maker delayed the publication of the results for the financial year that ended January 25, after the FCA requested companies to delay publishing their statements. Looking ahead, the IRU-BRU brand owner said its performance in its financial year was encouraging; however since then the Covid-19 pandemic has created an "unprecedented level of uncertainty" in the UK and beyond. AG Barr said it has taken steps to ensure that its raw material availability and stockholding remains as a robust as possible, and it has not yet experienced any difficulties with supply as a result. From a demand perspective however, AG Barr said the UK government's containment measures have created significant challenges for the hospitality sector, which accounts for around 10% of AG Barr's business.
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FTSE 250 - LOSERS
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IWG, down 14%. The office provider said it will not be paying a dividend declared at the time of its full-year results announcement amid uncertainty caused by Covid-19. IWG said it ended 2019 "strongly" and this provided a "positive" start into January and February. The company said that some centres that were closed in China at the beginning of March are now operating again. However, IWG said it expects there to be pressure on its global business as countrywide lockdowns are implemented in an increasing number of geographies.Therefore, it is taking action to reduce operational costs, limit both growth and maintenance capital expenditure and optimise cash flows. This includes the cancellation of the final dividend of 4.8 pence previously declared.In addition, IWG said it will temporarily suspend the GBP100 million share repurchase programme. To date GBP27.5 million in buybacks have been completed.
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By Arvind Bhunjun; arvindbhunjun@alliancenews.com
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IWG (IWG)
Pearson (PSON)
Kingfisher (KGF)
Barr (A.G.) (BAG)
ITV (ITV)