The FTSE 100 got off to a slow start on Thursday, falling 0.7% to 6,022 over concerns about a new spike in coronavirus cases.

The World Health Organisation warned yesterday that the pandemic is far from over, as the largest daily rise in global cases was reported in the last 24 hours.

Asian stock markets were down, with China’s Shanghai Composite down 0.55%, the Hang Seng in Hong Kong falling 0.51% and Japan’s Nikkei 225 falling 0.21%.

In commodities, Brent crude oil futures were unchanged at $32.50 a barrel, while gold was up 0.85% to $1,750 per ounce.

WHITBREAD TUMBLES AS IT ASKS FOR £1BN

Premier Inn owner Whitbread (WTB) plunged 15.2% to £24.09 in early trade after warning of a 75% drop in revenue, suspending its dividend and asking shareholders for £1bn.

In full year results to 27 February, Whitbread reported a 1.1% rise in statutory revenue to £2.07bn, with statutory profit for the year up 23.2% to £218m.

However in the 11 weeks to 14 May, the hospitality firm warned its total accommodation and food and beverage revenues were down 75% year-on-year, while in the last seven weeks those revenues were down 99%.

The board therefore decided not to declare a final dividend for 2020 and to suspend future dividend payments ‘until the COVID-19 situation is clearer’ and when its existing lender covenant waiver period ends.

The firm also plans to raise £1bn by way of a rights issue, which it said was needed as it expects cash outflows of around £600m in the next six months, and among other things would also provide liquidity headroom in case there is a resurgence in coronavirus cases.

ASTRAZENECA TO START CORONAVIRUS VACCINE DELIVERIES IN SEPTEMBER

Pharma giant AstraZeneca (AZN) fell 1.4% to £87.57 as it said it would begin deliveries of the University of Oxford’s potential coronavirus vaccine this September after it received $1bn from a US government agency to develop the vaccine.

AztraZeneca received the funding from the US Biomedical Advanced Research and Development Authority (BARDA) for the development, production and delivery of the vaccine, starting in the fall. The development programme includes a phase III clinical trial with 30,000 participants and a paediatric trial.

The company said it had received commitments for at least 400 million doses and secured total manufacturing capacity for one billion doses so far.

AVIVA GAINS DESPITE MISSING EXPECTATIONS

Insurance company Aviva (AV.) gained 1.8% to 243p despite reporting a fall in its solvency ratio in the first quarter of the year, owing to the impact from the coronavirus pandemic, and warning that sales would likely remain below expectations.

The solvency ratio fell to 182% from 206% on-year, primarily reflecting capital markets impacts, in particular the widening of corporate credit spreads, reductions in risk-free yields and declines in equity markets, the company said.

General insurance net written premium gained 3% to £2.4bn in the quarter, with its business in Canada achieving ‘strong’ underwriting results while the UK was affected by February storms.

EASYJET TO START FLYING AGAIN

Budget airline EasyJet (EZJ) rose 4.9% to 577p as it said it planned to resume flights on 15 June on routes with sufficient demand to support profitable flying.

The initial schedule would comprise mainly domestic flying in the UK and France, with further routes to be announced over the coming weeks as customer demand increases and lockdown measures across Europe are relaxed, the company said.

EasyJet said it would implement a number of measures to enhance safety at each part of the journey, from disinfecting the aircraft to requiring passengers and crew to wear masks.

INTERTEK KEEPS DIVI AS IT SEES CORONAVIRUS OPPORTUNITY

Quality assurance firm Intertek (ITRK) jumped 5% to £51.10 as it said it would pay its final dividend of 71.6p per share for 2019 on 11 June.

The firm has been hit by the coronavirus pandemic, but not as badly as others with revenue in the four months to 30 April falling just 4.6% to £881.6m.

The product testing company said it was too early to quantify the effect of the coronavirus pandemic on its business, but chief executive André Lacroix believes it is likely to create opportunities.

‘These range from health, safety and wellbeing-oriented quality assurance in the workplace, public spaces and the home, to the growing demand in the healthcare sector for PPE, new medical devices and stronger infrastructure,’ said Lacroix.

‘Further, we are seeing the increasing need for risk management across supply chains and more robust protection against online piracy and other cyber threats in a connected world.’

FTSE 250 COMPANY NEWS

Pets at Home (PETS) sank 14.1% to 197p as it announced that total group revenue exceeded £1bn for the first time in its full-year results, but said it expects group pre-tax profit in the first half of its 2021 financial year to be ‘materially below’ the prior year due to coronavirus.

Food and beverage ingredients supplier Tate & Lyle (TATE) gained 2.6% to 650p as it announced double-digit profit growth in its food and beverage solutions business, up 10% to £162m, and maintained its full-year dividend.

Food packaging firm Hilton Food (HFG) increased 1.2% to £12.99 after it reported increased demand during the lockdown as meat purchases jumped in the UK and Ireland.

 

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Issue Date: 21 May 2020