27th Aug 2020 08:07
(Alliance News) - Rolls-Royce Holdings is haemorrhaging cash, the jet engine maker revealed Thursday, as the coronavirus crisis badly damages the civil aviation sector with planes stuck on the tarmac around the world.
For the half-year ended June 30, revenue fell 26% to GBP5.82 billion from GBP7.88 billion last year, and the company's pretax loss widened to GBP5.37 billion from GBP3.24 billion on an underlying basis.
The company reported free cash outflow of GBP2.8 billion, "deteriorated" from a GBP429 million outflow last year, "reflecting the reduction in engine flying hour receipts and a substantial working capital related outflow that included a cessation of invoice discounting".
It expects another GBP1 billion in cash outflow in the second half, meaning GBP4 billion for the year as a whole. Beyond 2020, it is targeting a return to positive free cash generation during the second half of 2021 and annual 2021 free cash outflow is expected at significantly reduced levels compared to 2020.
Rolls-Royce said underlying revenue in 2020 is expected to be 25% to 30% lower than the prior year.
"Uncertainty remains high as a result of Covid-19, particularly around the easing of travel restrictions and the pace of economic recovery. Our recovery assumptions are based on a gradual recovery in civil aviation activity commencing towards the end of H2 2020. Most Power Systems end markets are currently expected to recover by the end of 2021 and revenues are expected to be back to 2019 levels in 2022. Defence performance is expected to remain resilient throughout the period," the company said.
In addition, Rolls-Royce said Chief Financial Officer Stephen Daintith has decided to leave the company "to take up another opportunity". The search for his replacement is underway.
Rolls-Royce shares were down 5.5% in early trade Thursday. The stock is down 65% so far in 2020.
Here is what you need to know at the London market open:
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MARKETS
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FTSE 100: down 0.2% at 6,035.24
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Hang Seng: down 0.9% at 25,267.91
Nikkei 225: closed down 0.4% at 23,208.86
DJIA: closed up 83.48 points, or 0.3%, at 28,331.92
S&P 500: closed up 35.11 points, or 1.0%, at 3,478.73
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GBP: up at USD1.3204 (USD1.3186)
EUR: up at USD1.1831 (USD1.1819)
Gold: down at USD1,941.20 per ounce (USD1,944.17)
Oil (Brent): firm at USD45.72 a barrel (USD45.58)
(changes since previous London equities close)
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ECONOMICS AND GENERAL
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Thursday's Key Economic Events still to come
US Fed Chair Powell speaks at open of 2-day Jackson Hole virtual symposium
0830 EDT US 2nd estimate gross domestic product
0830 EDT US preliminary corporate profits
0830 EDT US initial jobless claims
1000 EDT US pending home sales index
1030 EDT US EIA weekly natural gas storage report
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House prices in the UK are set to stay firm for the rest of the year as they remain "unseasonably strong" in the face of the recession, according to new research. Zoopla's latest monthly House Price Index has revealed that annual house price growth has sustained at 2.5% as demand continues to overtake supply despite the coronavirus pandemic. It revealed that house sales have sped up dramatically since the outbreak struck, with the time for a sale averaging 27 days in the period since lockdown, compared to 39 days over the same period last year. The report highlighted particularly strong price growth in Manchester and Nottingham, where annual price growth is more than 4%. The post-lockdown housing market rebound is showing "little sign of slowing", with buyer demand since the start of 2020 up 34% against the same period last year, Zoopla said.
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Hurricane Laura was barrelling towards the coast of the southern US states of Louisiana and Texas on Wednesday as a monster Category 4 storm, prompting warnings of "unsurvivable" storm surge and evacuation orders for hundreds of thousands of Gulf Coast residents. The Miami-based National Hurricane Center said Laura was expected to make landfall along the Gulf Coast late Wednesday or early Thursday. Packing winds of 150 miles per hour, Laura had strengthened almost to Category 5, the highest on the Saffir-Simpson wind scale and defined as sustained winds of 157 miles per hour or higher. If the storm remains this strong at landfall, it would be one of the 13 strongest storms ever to hit the US, although the NHC said that "rapid weakening is expected" after Laura moves inland.
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BROKER RATING CHANGES
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BERENBERG RAISES POLYMETAL PRICE TARGET TO 2200 (1840) PENCE - 'BUY'
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GOLDMAN SACHS RAISES POLYMETAL PRICE TARGET TO 2800 (2700) PENCE - 'BUY'
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JPMORGAN RAISES POLYMETAL PRICE TARGET TO 2000 (1900) PENCE - 'OVERWEIGHT'
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COMPANIES - FTSE 100
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Flutter Entertainment said its first-half financial performance exceeded expectations amid challenges posed by the coronavirus pandemic, which caused sporting events to be cancelled. For the half-year to June 30, revenue came in at GBP1.52 billion, up 49% from GBP1.02 billion last year, but pretax profit fell 70% to GBP24 million from GBP81 million. Flutter said that, due to the current disruption caused by Covid-19, the board considers it prudent to suspend the dividend for 2020. Looking ahead, Flutter said its outlook remains highly uncertain, due to potential further Covid-19 related disruption and possible regulatory change across various markets. However, it said trading in the second half so far has been encouraging, "benefiting from condensed football fixtures, favourable sports results and ongoing resilience of gaming".
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COMPANIES - MAIN MARKET AND AIM
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Hut Group said it intends to float on the Main Market of the London Stock Exchange, with a fixed offer price equating to GBP4.5 billion pre-money equity value. Hut Group said the offer would be comprised of new shares to be issued by the company raising gross proceeds of GBP920 million. No date for the initial public offering was given, but Sky News reported Wednesday that the beauty and nutrition company has eyed September 16 as its first day of trading. Hut Group was founded in 2004. Its own brands include Myprotein and Lookfantastic, while its e-commerce platform is used by over 1,000 third-party labels, it said.
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COMPANIES - GLOBAL
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Kevin Mayer, the chief executive of the popular social media app TikTok, has resigned amid pressure from the Trump administration and accusations that the video platform is a threat to US national security. The app has become a key point in brewing tensions between the US and China, with the Trump administration pushing for the US wing of the business to be sold to a local company. Microsoft is in talks to buy the app's US branch. TikTok is owned by ByteDance, a firm based in China. "We appreciate that the political dynamics of the last few months have significantly changed what the scope of Kevin's role would be going forward, and fully respect his decision. We thank him for his time at the company and wish him well," a spokesperson said.
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Australia & New Zealand Banking Group said Paul O'Sullivan will succeed David Gonski as the chair after the finalisation of full-year results on October 28. The promotion of O'Sullivan, who has been an independent non-executive director of ANZ since November of last year, follows Gonski's decision to retire from the board after serving as chair for the last six and a half years. O'Sullivan is currently chair of Western Sydney Airport Corp and Optus. He also serves as a director of Coca Cola Amatil. He has previously held senior executive roles with Singapore Telecommunications and was chief executive of Optus between 2004 and 2012.
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Thursday's Shareholder Meetings
UK Commercial Property REIT
Angle
i3 Energy - GM re Gain acquisition, placing
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By Tom Waite; [email protected]
Copyright 2020 Alliance News Limited. All Rights Reserved.
Related Shares:
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