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UK WINNERS & LOSERS SUMMARY: Shell Sinks As It Warns On Oil Price Hit

Tue, 30th Jun 2020 10:59

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


Smiths Group, up 6.8%. The engineer launched a strategic restructuring programme that will cost around GBP65 million and said revenue was higher in the ten months to the end of May. The restructuring is group-wide and will have an operating cash cost of approximately GBP65 million spread across financial 2020 - which ends July 31 - and financial 2021. Savings are to "substantially offset costs" in financial 2021 and deliver a full approximately GBP70 million annualised benefit starting in financial 2022. Turning to trading, Smiths said in the ten months ended May 31, underlying revenue from continuing operations was up 2% and year-to-date revenue increased 6%. For the four months of its second half ended May 31, underlying revenue was up 1%.

Standard Life Aberdeen, up 4.0%. The fund manager said former senior executive of Citigroup Stephen Bird will succeed Keith Skeoch as chief executive as part of a "wide-ranging succession planning exercise". Bird will initially join the company's board as CEO-designate on Wednesday and was touted as a potential candidate for the top job at HSBC Holdings PLC - the role eventually went to Noel Quinn. Following a handover period and subject to regulatory approvals, Bird will assume CEO role at which point Skeoch will stand down after some five years as CEO and 14 years as a director. Skeoch will serve out the remainder of his contract as non-executive chair of the Aberdeen Standard Investments Research Institute, Standard Life said. The management transition is expected to take place by the end of the third quarter.


Royal Dutch Shell 'A', down 2.5%, Shell 'B', down 2.1%. The oil major warned it will take an impairment charge of up to USD22 billion in the second quarter of 2020 due to the significant disruption to energy markets caused by the Covid-19 pandemic. Shell said that a more sombre view on oil and gas prices and refining margins means it will take post-tax impairments of USD15 billion to USD22 billion in the second quarter of 2020. It said there will be no cash impact from these impairments. BP also had warned shareholders earlier this month that it would write down the value of its assets by between USD13.0 billion and USD17.5 billion. The impairments are expected to have a pretax impact of USD20 billion to USD27 billion. The impairment charges stem from Shell's revised view of mid-to-long-term commodity prices and refining margins. BP shares were down 1.8%.

RELX, down 2.0%. Exane BNP double downgraded the information and data analytics provider to Underperform from Outperform.


Cineworld Group, up 4.0%. The cinema chain said it will reopen its cinemas in the UK and US from July 31, as it announced a number of Hollywood movies scheduled to be screened. The company - which closed all its sites in March - added it will continue to reopen sites in other markets but noted that any upcoming re-openings remain subject to the relevant government guidelines. On Tuesday, it said it will implement health & safety measures which include contactless payments, sanitization procedures, new social distancing protocols, and seating capacity limits. Movies scheduled to be screened include Tenet, Mulan, A Quiet Place Part II, Greenland, and Antebellum as well as a special re-release of Christopher Nolan's Inception on IMAX.


Redrow, down 5.0%. The housebuilder said it expects to report a lower number of completed homes and revenue for its recently ended financial year, as it urged the UK government to extend the Help to Buy scheme to keep the recovery in housebuilding sustainable. For the financial year to the end of June, Redrow completed 4,032 homes, down 37% from 6,443 the year before, leading to expectations of revenue being GBP1.34 billion, a 36% drop from GBP2.11 billion. Profit for the year also is set to "substantially below" financial 2019, for which pretax profit was GBP406 million. In addition, Redrow will scale back its London operations to focus on the Colindale gardens developments and its higher returning regional businesses and Heritage product line. However, scaling back its London operations is expected to incur costs and significant impairments. "Help to Buy has been a major boost to housebuilders’ sales and there is a growing fear that many companies are too dependent on it. Take it away and housebuilders’ earnings could potentially suffer, despite there being an imbalance between supply and demand causing a housing shortage in the country," said AJ Bell's Russ Mould.

By Arvind Bhunjun; arvindbhunjun@alliancenews.com

Copyright 2020 Alliance News Limited. All Rights Reserved.

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