22nd Sep 2020 08:06
(Alliance News) - Premier Inn-owner Whitbread on Tuesday reported a slump in half-year sales amid the closure of its hotels and restaurants, and said it is looking into cutting up to 6,000 jobs.
Total sales were "significantly" down year-on-year in the six months ended August 27, due to the closure of the vast majority of hotels and restaurants for a large chunk of that period.
UK like-for-like sales were down 78% in the first half, with total sales down 77%. UK & International sales were down 77%.
The majority of hotels and restaurants were reopened by the first week of August, and a total of 801 hotels, representing 98% of total UK capacity, were open by the end of August.
Since reopening, UK accommodation sales performance has been ahead of the market, Whitbread said. Occupancy levels have improved on a weekly basis across the entire UK estate, averaging 51% in August, while restaurants got a boost from the UK government's Eat Out to Help Out scheme.
August UK total sales - including both accommodation and food & beverage - were down 39% year-on-year.
Whitbread commented: "Trading in the first two weeks of September saw year-on-year total accommodation sales remain ahead of the market. Bookings in tourist destinations remain strong, and business bookings are growing, albeit from a low base. September and October are traditionally a period when business bookings pick-up after the quiet summer period, however at this point it is too early to assess the impact of Covid-19 on this traditionally busy booking period."
With market demand expected to remain at "lower levels" in the short to medium-term, Whitbread said it has decided to enter into consultation on proposals that could result in up to 6,000 redundancies across its hotel and restaurant staff - representing 18% of the total workforce.
Whitbread also said it is close to completing a 15% to 20% reduction in head office staff.
The company said the financial impact of the changes it is making already are reflected in the guidance it gave in May with its full-year results. Every percentage point of total revenue decline, net of cost savings, reduces profit by GBP18 million, it noted. One-off costs for the job cuts is expected to be about GBP12 million to GBP15 million.
The hotelier added grimly: "We also note recent UK government announcements regarding increased local and regional lockdowns, and we will continue to closely monitor the situation."
More positively, Chief Executive Officer Alison Brittain said: "We continue to work hard to ensure that we emerge from the crisis with a more flexible operating model and a stronger, more resilient business."
Whitbread shares were down 2.7% early Tuesday. The stock has more than halved 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: up 0.6% at 5,840.34
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Hang Seng: down 0.9% at 23,735.19
Nikkei 225: Tokyo market closed for holiday.
DJIA: closed down 509.72 points, 1.8%, at 27,147.70
S&P 500: closed down 1.2% at 3,281.06
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GBP: soft at USD1.2785 (USD1.2795)
EUR: flat at USD1.1743 (USD1.1745)
Gold: flat at USD1,904.10 per ounce (USD1,904.24)
Oil (Brent): soft at USD41.28 a barrel (USD41.50)
(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 Autumn Equinox Day. Financial markets closed.
1100 BST UK CBI industrial trends survey
1100 BST Ireland wholesale price index
1600 CEST EU flash consumer confidence indicator
1000 CEST Germany Ifo economic forecast autumn report
1000 EDT US existing home sales
1630 EDT US API weekly statistical bulletin
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Pubs, bars and restaurants in England will be ordered to close by 10pm each night from Thursday under tough restrictions set to be announced by UK Prime Minister Boris Johnson in a bid to curb the rapid rise in coronavirus cases. Johnson will use an address to the nation on Tuesday evening to outline new measures to stop the spread of Covid-19, which will also restrict the hospitality sector to table service only. Johnson will emphasise the need for people to follow social-distancing guidance, wear face coverings and wash their hands regularly, and – according to reports – urge people to work from home where it does not hurt businesses. According to The Daily Telegraph, other potential measures being considered include a further delay to trials of spectators returning to professional sport events and the closure of indoor concert venues. On Tuesday morning, Cabinet Office minister Michael Gove said there was going to be a "shift in emphasis" on the hovernment's advice about working from home, telling Sky News: "If it is possible for people to work from home then we would encourage them to do so." It comes after the government's chief scientific and medical advisers painted a grim picture of how 200 or more people in the UK could die each day by mid-November if the current rate of infection is not halted.
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BROKER RATING CHANGES
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RBC RAISES IMPERIAL BRANDS TO 'OUTPERFORM' (SECTOR PERFORM) - PRICE TARGET 1900 (1800) PENCE
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RBC RAISES BAT TO 'OUTPERFORM' (SECTOR PERFORM) - PRICE TARGET 3200 (2700) PENCE
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RBC CUTS HURRICANE ENERGY TO 'UNDERPERFORM' ('OUTPERFORM') - TARGET 1 (25) PENCE
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COMPANIES - FTSE 100
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Kingfisher said its sales recovery has continued into the third quarter, as it reported a rise in interim profit. The B&Q owner said sales for the six months to July 31 fell 1.3% to GBP5.92 billion, representing a fall of 1.6% on a like-for-like basis. However, pretax profit surged 62% to GBP398 million amid a decrease in selling & distribution expenses. "We delivered a resilient financial performance in the first half of the year, with the adverse impact of Covid-19 in Q1 offset by a strong recovery in Q2. This recovery has continued into Q3 to date, with growth across all banners and categories," said Chief Executive Thierry Garnier. Kingfisher said like-for-like sales were up 20% in the second quarter. The DIY retailer said it has seen an "encouraging" start to the second half, with third quarter like-for-like sales up 17% up to September 19. However, continued uncertainty over Covid-19 limits visibility on the sales outlook for the remainder of the year.
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Hikma Pharmaceuticals said it has received a "minor" complete response letter from the US Food & Drug Administration in relation to its abbreviated new drug application for a generic version of GlaxoSmithKline's Advair Diskus. The US regulator sends a complete response letter if it decides to not approve the application in its present form. The drug maker said: "Hikma is working closely with the FDA to quickly address the small number of questions raised in the CRL. Once answered, Hikma can expect to receive a response from the FDA within 90 days. Hikma now expects to receive approval for its generic Advair Diskus in early 2021." As such, Generics revenue is expected to be within a range of USD710 million to USD730 million with a core operating margin around 18% to 19% for 2020.
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Unilever on Monday said its Dutch investors approved a plan to combine the Anglo-Dutch consumer goods company into one single London-based company. The company's unification proposal was approved by 99.42% of Dutch shareholders at an extraordinary general meeting, according to Unilever, marking the first step towards ending the company's dual-headed structure. UK shareholders of the Dove soap maker must now back the unification plan at a meeting on October 12 for the unification to go ahead. The High Court in London also must approve the plan, the company said. In June, the company announced its plan to combine its dual-headed structure into one single London-based entity. Unilever, however, said it would retain its stock listings in London and Amsterdam.
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COMPANIES - FTSE 250
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Insurer Beazley said its total estimate for first party Covid-19 claims has doubled to USD340 million from USD170 million anticipated previously. Almost all of this increase stems from further event cancellation losses, thecompany said. "This revised figure assumes a resumption to some form of normality in the second half of 2021. Were this not to be the case, we estimate that we would have another USD50 million of further claims net of reinsurance," said Beazley. Turning to business generally, Beazley said that it continues to see rate improvements, with an overall rate change of 13% at the end of August. The firm estimates that overall growth for 2020 will be in the "mid-teens". "Looking towards next year we expect these rate improvements to continue, and are again planning for double digit growth in 2021. We have contemplated this growth within our capital planning and, following the equity raise and LOC extension earlier this year, are able to take full advantage of the opportunity that lies ahead of us," said Beazley.
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COMPANIES - GLOBAL
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San Diego, US-based biotechnology firm Illumina said Monday it will acquire cancer early detection-focused healthcare firm Grail for USD8.0 billion in cash and shares. Grail was first founded by Illumina as a standalone company, to develop state-of-the-art data science and machine learning to create and atlas of cancer signals in the blood. Stockholders in Grail are expected to receive USD3.5 billion in cash and USD4.5 billion in Illumina shares, meaning that they will collectively hold a 7% stake in Illumina itself.
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Apple chief Tim Cook said he views the recent increase in fires, hurricanes and floods as strong proof that climate change is real. The disasters should sway those denying science that shows greenhouse gases are dangerously changing weather patterns, Cook said in a talk streamed during an online event by The Atlantic magazine. Cook reasoned that wildfires raging on the US West Coast, hurricanes slamming the South, and flooding in the Northeast and Mid-Atlantic regions make a compelling case for climate change.
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Tuesday's Shareholder Meetings
Utilico Emerging Markets Trust
Odyssean Investment Trust
Blue Planet Investment Trust
Morses Club
Liontrust Asset Management
Trifast
Ashmore Global Opportunities
Prime People
Ilika
Yourgene Health
Hastings Group Holdings - GM re takeover by Sampo, RMI
Cathay International Holdings
Empyrean Energy
Miton UK MicroCap Trust
Manolete Partners
Pantheon International
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By Tom Waite; [email protected]
Copyright 2020 Alliance News Limited. All Rights Reserved.
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