11th Feb 2020 07:59
(Alliance News) - Anglo-German holiday operator TUI Group early Tuesday reported a sharply widened first quarter adjusted loss and tweaked its guidance range for underlying annual earnings due to the grounding of the Boeing 737 Max aircraft.
For the three months to December 31, the company's underlying loss before interest and tax widened 77% to EUR146.9 million from EUR83.1 million the year prior. This was despite revenue rising 7.7% to EUR3.85 billion from EUR3.57 billion the year before.
The widened underlying loss was attributed to a weak performance in the company's Holiday Experiences unit, higher fuel costs in Cruise business, a EUR45 million replacement cost relating to grounding of Boeing 737 Max aircraft and EUR29 million headwind from the non-repeat of a hedging gain.
The aircraft grounded by aviation regulators last year following two fatal crashes.
First quarter underlying earnings before interest, tax, depreciation and amortisation multiplied to to EUR111.5 million from EUR27.2 million the year prior. Net loss narrowed by 5.9% year-on-year to EUR105.5 million.
TUI is predicting to record a high single digit percentage growth in financial 2020 revenue, versus previous mid-to-high single digit percentage growth guidance, due to currently strong trading trends in its Markets & Airlines business.
Annual EBIT is now expected to be between EUR850 million to EUR1.05 billion versus previous EUR950 million to EUR1.05 billion guidance range. The tweak in annual EBIT estimate was attributed by TUI to Boeing's intention to return 737 MAX to service by mid-2020 as compared with previous April return to service estimate.
Here is what you need to know at the London market open:
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MARKETS
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FTSE 100: called up 0.6% at 7,491.30
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Hang Seng: up 1.3% at 27,589.59
Nikkei 225: Tokyo market closed for holiday.
DJIA: closed up 174.31 points, 0.6%, at 29,276.82
S&P 500: closed up 0.7% at 3,352.09
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GBP: down at USD1.2907 (USD1.2922)
EUR: down at USD1.0911 (USD1.0920)
Gold: down at USD1,569.50 per ounce (USD1,574.80)
Oil (Brent): firm at USD53.76 a barrel (USD53.58)
(changes since previous London equities close)
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ECONOMICS AND GENERAL
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Tuesday's Key Economic Events still to come
Japan National Foundation Day. Financial markets closed.
0930 GMT UK trade
0930 GMT UK monthly GDP estimates
1230 GMT UK NIESR monthly GDP tracker
1000 EST US job openings & labor turnover survey
1000 EST US Fed Chair Powell testifies to House committee
1630 EST US API weekly statistical bulletin
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The death toll from a new coronavirus outbreak surged past 1,000 on Tuesday as the World Health Organization warned infected people who have not travelled to China could be the spark for a "bigger fire". The rise came after President Xi Jinping made a rare visit to a hospital in Beijing, wearing protective gear as he chatted with medical workers and patients. An advance team for a WHO-led international expert mission arrived in China as the country struggles to contain a viral epidemic that has now infected more than 42,000 and reached some 25 countries. Another 108 deaths were reported on Tuesday – the first triple-digit rise since the virus emerged.
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UK Prime Minister Boris Johnson is expected to confirm HS2 will go ahead on Tuesday, despite concerns over its budget and the environmental impact of construction. The controversial high-speed railway scheme is likely to be discussed at a Cabinet meeting in the morning, before Johnson makes a statement on the project. It has been reported that Johnson will give the green light for Phase 1 between London and Birmingham, but say more analysis is needed on the cost of the route extending further north to Manchester and Leeds. Johnson also is set to announce a GBP5 billion cash injection to overhaul bus and cycle links in English regions outside London. The prime minister will say the five-year funding package will provide more frequent services and simpler, more affordable fares.
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The UK retail market was afforded a reprieve from further deterioration in January, figures showed, but sales rose at a slower pace than last year. According to the BRC-KPMG retail sales monitor, total sales were 0.4% higher year-on-year in the five weeks to February 1, but were flat on a like-for-like basis. Last January, total sales rose 2.2% annually, and like-for-like sales climbed 1.8%. The January numbers were an improvement from the three-month and 12-month averages of sales falls of 0.4% and 0.2%, respectively, BRC-KPMG noted.
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Fianna Fail has been confirmed as the largest party in Ireland's next parliament by the narrowest margin over a surging Sinn Fein. Micheal Martin's party finished with 38 seats to Sinn Fein's 37 at the end of two days of counting. But given the Fianna Fail speaker was re-elected without contest, both parties essentially 'won' the same number of seats. Taoiseach Leo Varadkar's Fine Gael was the big loser, recording one of the worst results in its history, winning only 35 seats having entered the campaign as the largest party on 47.
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BROKER RATING CHANGES
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RBC CUTS RIO TINTO TO 'UNDERPERFORM' (SECTOR PERFORM) - PRICE TARGET 3300 (3800) PENCE
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JEFFERIES RAISES UNITED UTILITIES TO 'BUY' (UNDERPERFORM) - PRICE TARGET 1100 (660) PENCE
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SOCGEN INITIATES RIGHTMOVE WITH 'BUY' - TARGET 845 PENCE
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COMPANIES - FTSE 100
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Ocado Group said financial 2019 was a year of "strong progress and excellent momentum" but earnings were hurt by the devastating fire that destroyed its flagship warehouse in Andover. For the financial year ended December 1, revenue at group level rose 9.9% to GBP1.76 billion from GBP1.59 billion in financial 2018. The figure was slightly lower than the company compiled consensus estimate of GBP1.78 billion. Retail revenue increased 10% to GBP1.62 billion from GBP1.47 billion in financial 2018. Pretax loss widened to GBP214.5 million from GBP44.4 million. Consensus expected Ocado to report a loss of just GBP110 million. Ocado reported exceptional charges of GBP94.1 million, of which GBP88 million associated with the Andover facility. These combined with investments in the company's technology platform, including the operating costs of Ocado's new facility in Erith, outside London, resulted in the widened loss. Ocado added that its joint venture with high street stalwart Marks & Spencer is "progressing well".
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GKSD Investment Holding confirmed it is in the preliminary stages of considering an offer for embattled private healthcare operator NMC Health. GKSD said there was no certainty that an offer will made, nor as to the terms on which any offer will be made. NMC on Monday said it also had received an approach from US private equity firm Kohlberg Kravis Roberts & Co.
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COMPANIES - FTSE 250
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Marks & Spencer said its has appointed Eoin Tonge as its new chief financial officer. Tonge joins the retailer from sandwich maker Greencore Group and will assume the role in May after Greencore's interim results.
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William Hill announced a strategic partnership with New York-based CBS Sports, to provide official sports book and wagering data across all CBS Sports platforms and CBS television programming. The bookmaker said the partnership will begin with initial integrations in March on the CBS Sports digital platforms, with a full rollout planned for the fantasy football season. William Hill said it will receive exclusive rights to promote its brand across CBS Sports digital properties, including through CBS Sports Fantasy. Financial terms of the deal were not disclosed.
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COMPANIES - INTERNATIONAL
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French industrial gas firm Air Liquide said net profit for 2019 rose on a strong revenue performance, driven by the robust development of its Gas & Services and Global Markets & Technologies segments. For the year, net profit increased by 6.1% to EUR2.42 billion from EUR2.11 billion the year before, on revenue that grew by 4.3% to EUR21.92 billion from EUR21.01 billion. Chiefly responsible for the solid revenue rise was Air Liquide's core Gas & Services unit, where revenue grew by 4.6% on stronger sales and favourable currency movements.
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Australian investment bank Macquarie Group said trading conditions were satisfactory in the third quarter of its financial year but it still expects a weaker annual performance. Macquarie said the net profit contribution from Macquarie Asset Management and Banking & Financial Services for the three months to the end of December was up compared to the same period the year before. The contribution was also higher on a nine-month basis due to higher fees and continued volume growth, Macquarie said.
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Tuesday's Shareholder Meetings
TUI
Ormonde Mining (re disposal of 30% stake in Barruecopardo tungsten mine)
Cineworld Group (re proposed acquisition of Cineplex)
BMO Capital & Income Investment Trust
Keystone Investment Trust
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By Tom Waite; [email protected]
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