6th Apr 2020 07:46
(Alliance News) - Stock prices in London are seen opening higher on Monday after several countries reported fewer coronavirus deaths over the weekend.
In UK company news, jet engine maker Rolls-Royce Holdings confirmed it is scrapping its financial guidance and final dividend, due to the coronavirus outbreak. Accounting software provider Sage Group cancelled its share buyback, and oil services firm Petrofac also suspended its dividend.
IG futures indicate the FTSE 100 index is to open 142.50 points higher at 5,558.00. The blue-chip index closed down 64.72 points, or 1.2%, at 5,415.50 on Friday.
Rolls-Royce Holdings said that due to limited visibility of the duration coronavirus pandemic, it was withdrawing previously announced financial guidance for 2020.
In February, the jet engine maker had retained its guidance for fixing Trent 1000 engines and had said that it remained on track to reduce aircraft on the ground for repairs to single digits by the end of the second quarter of 2020.
Rolls-Royce said it exited 2019 in a robust liquidity and financial position. In response to the change in outlook resulting from the global spread of Covid-19 and to ensure cash headroom in the event of a prolonged reduction in trading activity, Rolls-Royce took the precautionary decision in March to draw fully on its GBP2.5 billion revolving credit facility, it said. Including this cash, which has been placed on short-term deposit, the company said its current gross cash balance is GBP5.2 billion.
Rolls-Royce also secured an additional GBP1.5 billion revolving credit facility commitment with a consortium of banks, which will increase overall liquidity to GBP6.7 billion, it added.
However, in light of the coronavirus outbreak, Rolls-Royce decided that it was no longer recommending a final shareholder payment of 7.1 pence per share with respect to 2019.
Sage Group said that due to the ongoing health crisis it has decided to cancel its GBP250 million share buy-back programme. This had been suspended in March after GBP6 million of shares had been purchased.
The accounting software provider said the downturn in global economic activity caused by the spread of Covid-19 is expected to hurt the business, as customers defer making purchase decisions, leading to a slowdown in new customer acquisitions and licence sales.
Sage said it was "too early" to quantify with the damage the pandemic will cause to annual financial performance. However, the company now believes it is likely that organic recurring revenue growth will be below the previously guided range of 8% to 9%, and that the decline in revenue in some of its units will "accelerate significantly" in the second half.
The company added that it has a strong balance sheet, with around GBP1.3 billion of cash and available liquidity as at March 31. This includes around GBP900 million of cash and cash equivalents, and more than GBP400 million of undrawn facilities under its revolving credit racility - which expires in February 2025.
FTSE 250-listed Petrofac said it is suspending its 2019 final dividend and seeking to conserve cash and liquidity by reducing capital expenditure by 40%.
Petrofac said it was reducing overhead and project support costs by at least USD100 million in 2020 and by up to USD200 million in 2021.
The company said order intake of USD2.0 billion in the first quarter has increased its backlog to USD8.2 billion. Petrofac believes its cost-reduction measures, together with a capital-light business model and a strong competitive position in the Middle East, will protect it against near term pressures.
However, Petrofac said it is "too early to ascertain and quantify" the effects of both COVID-19 and low oil prices on financial performance or new order intake. As a result, the company suspended previous revenue and margin guidance.
The Japanese Nikkei 225 index is up 3.1%. Hang Seng index in Hong Kong is up 1.2%. The Shanghai market was closed for the Tomb Sweeping Day holiday.
"The slowing death rate over the weekend has offered up a ray of hope for markets more generally, helping Asia markets to start the week on the front foot, while markets here in Europe also look set to open higher," said CMC Markets analyst Michael Hewson.
Italy reported its lowest daily toll in two weeks, while Spanish officials said deaths fell for the third straight day and France reported its lowest daily toll in a week.
Meanwhile, South Korea saw its fewest new cases in six weeks, while President Donald Trump said the US was showing signs of stabilising, despite the number of cases there passing 335,000 - the highest in the world.
The pound was quoted at USD1.2232 early Monday, up from USD1.2221 at the London equities close Friday.
UK Prime Minister Boris Johnson has spent the night in hospital after he was admitted for tests as his coronavirus symptoms persist.
He will stay for "as long as needed" in the London NHS hospital where he was taken as a "precautionary step" on the advice of his doctor - rather than as an emergency.
The news came just an hour after the Queen delivered a message of hope to the nation amid the Covid-19 pandemic, saying "we will overcome it" although we "may have more still to endure".
A total of 4,934 patients - including frontline healthcare workers - have died in hospital after testing positive for coronavirus in the UK according to the latest figures issued by the Department of Health, up by 621.
Consumer confidence in the UK fell off a cliff in the last two weeks of March, tumbling at the fastest rate since records started more than 40 years ago, according to an index. People were asked about changes to their personal finances, the general economy and whether they feel now is the right time to make major purchases, during interviews between March 16 and 27.
The results produced an overall negative score in the "consumer confidence barometer" from GfK of minus 34, indicating a sharp decline in confidence of 25 points from a score of minus nine in mid-March. The 25-point tumble was the biggest fall in confidence since records started in January 1974.
The euro was quoted at USD1.0828, up from USD1.0791 late Friday.
Against the yen, the dollar was quoted at JPY108.94, up from JPY108.55.
Brent oil was quoted at USD33.42 a barrel Monday morning, up from USD33.05 late Friday. OPEC and Russia have postponed a virtual emergency meeting planned for Monday until Thursday, the government of Azerbaijan said over the weekend.
Gold was quoted at USD1,616.47 an ounce, up from USD1,618.25 late Friday.
The economic events calendar on Monday has UK construction PMI data at 0930 BST.
By Arvind Bhunjun; [email protected]
Copyright 2020 Alliance News Limited. All Rights Reserved.
Related Shares:
PetrofacSage GroupRolls-Royce