8th Apr 2020 11:15
(Alliance News) - The following is a summary of top news stories Wednesday.
----------
COMPANIES
----------
Tesco warned of costs as high as GBP925 million due to the Covid-19 outbreak, but the grocer upped its annual payout to shareholders and reported a boost in recent sales as UK consumers stockpiled over fears of shortages. In the financial year ended February 29, revenue excluding VAT climbed 1.3% to GBP64.76 billion from GBP63.91 billion. Pretax profit fell 19% however, to GBP1.32 billion from GBP1.62 billion. Sales costs climbed 1.6% to GBP60.2 billion and administrative expenses edged 0.7% higher to GBP2.1 billion. Costs could rise again, Tesco cautioned, due to the Covid-19 outbreak. The grocer said it has "considered a range of scenarios" and predicted that it in its year ending February 2021, it could incur costs between GBP650 million and GBP925 million associated with the deadly virus. The supermarket chain will pay a final ordinary dividend of 6.50 pence. This brings the full-year payout to 9.15p, up 59% on last year's 5.77p. Tesco received a sales boost at the start of the current financial year. UK consumer stockpiling - on fears of food shortages during the pandemic - lifted the company's sales by roughly 30% during the first few weeks of the crisis, Tesco said on Wednesday.
----------
Some of the UK's largest listed insurers - including RSA Insurance, Aviva, Direct Line and Hiscox - became the latest financial firms to withdraw dividends due to the Covid-19 outbreak. Last Thursday, the European Insurance & Occupational Pensions Authority called on insurers to "suspend all discretionary dividend distributions and share buybacks". The UK Prudential Regulation Authority also last week wrote a letter requesting that insurance companies be prudent in their approach to dividends. The PRA also had leaned on UK banks to withhold dividends in order to retain money for lending, with which all complied. Aviva said it "recognises the importance" of a cash dividend and will reconsider its payout arrangements in the fourth quarter of 2020. Meanwhile, RSA said it intends to resume making payouts "when prudent to do so". It previously had proposed a 15.6 pence final payout for 2019.
----------
Anglo-German tour operator TUI confirmed it has signed an agreement for a EUR1.8 billion loan from the German government to help keep it afloat as the coronavirus batters the travel industry. The bridging loan equivalent to USD1.99 billion will be issued through German public lender KfW and be used to bolster TUI's credit line. "KfW and TUI confirm the signing of the state aid bridging loan for EUR1.8 billion," the group said in a statement. TUI first had announced the loan commitment at the end of last month. It is one of the biggest examples yet of German companies making use of a huge government rescue package aimed at cushioning the impact of the pandemic on Europe's top economy. Global lockdowns to stem the spread of the virus have paralysed holiday travel, forcing TUI's hotels, flights and cruise ships to stay empty.
----------
easyJet's founder has threatened to personally sue executives at the firm if it spends "a penny" on a GBP4.5 billion order with plane manufacturer Airbus and fails to repay its GBP600 million government loan on time. Stelios Haji-Ioannou renewed his demands on Wednesday for the company to remove Chief Finance Officer Andrew Findlay to "stop him from signing any more billion-pound cheques to Airbus every year". Stelios - who holds the biggest stake in the carrier - issued a second call for a meeting of the company's shareholders to vote on removing Findlay and another director, Andreas Bierwirth.
----------
MARKETS
----------
London shares were lower with insurers weighing on the FTSE 100 after withdrawing dividends. The euro was lower after European finance ministers failed to reach an agreement on an EU virus response to the spread of the pandemic across Europe. US stock market futures were pointed higher.
----------
FTSE 100: down 1.7% at 5,608.71
FTSE 250: down 0.3% at 15,522.36
AIM ALL-SHARE: up 0.8% at 717.83
GBP: flat at USD1.2329 (USD1.2325)
EUR: soft at USD1.0867 (USD1.0890)
GOLD: soft at USD1,651.73 per ounce (USD1,655.70)
OIL (Brent): down at USD31.87 a barrel (USD33.02)
(changes since previous London equities close)
----------
ECONOMICS AND GENERAL
----------
Efforts by EU finance ministers to strike a deal on a package of coronavirus-related fiscal measures ended in disarray early on Wednesday, with talks due to resume later this week. After 16 hours of discussions that began on Tuesday afternoon, "we came close to a deal but we are not there yet", Mario Centeno, head of the Eurogroup of eurozone finance ministers, wrote on Twitter. The talks are to resume on Thursday, he added. The ministers were debating a trio of proposed measures with a joint firepower of around half a trillion euros. These consist of a precautionary credit line from the eurozone's bailout fund, the European Stability Mechanism; a guarantee fund from the European Investment Bank for business liquidity; and EU support for the salaries of workers who would otherwise be laid off. Existing tools will be enough to help the EU through the coronavirus crisis, German Finance Minister Olaf Scholz said, rejecting again the use of controversial "coronabonds" pooled debt instruments.
----------
Ministers have cautioned it is still too soon to begin lifting the coronavirus lockdown, after UK Prime Minister Boris Johnson spent a second night in intensive care undergoing treatment for the disease. The PM's condition remains "stable", according to the latest bulletin from Downing Street issued on Tuesday evening. Johnson was said to be in "good spirits" in St Thomas' Hospital in London where he is undergoing "close monitoring" after his condition worsened on Monday. Johnson had on Monday been due to oversee a three-week review of the lockdown rules - brought in last month to curb the spread of the disease. However, with the number of cases continuing to rise, health minister Edward Argar made clear now is not the time to start easing the restrictions. "We need to start seeing the numbers coming down and that's when you're in the negative," he told BBC Breakfast.
----------
The German economy is expected to shrink by nearly 10% in the second quarter as the coronavirus paralyses the country, six leading research institutes warned. "The corona pandemic will trigger a serious recession in Germany," the think tanks including Ifo, DIW and RWI said in their annual spring report. Gross domestic product likely contracted by 1.9% in the first three months of 2020, and is set to shrink by a whopping 9.8% in the second quarter as companies feel the pain from widespread shutdowns. The second-quarter plunge is twice as big as any seen during the 2008-2009 financial crisis and marks the steepest fall since the institutes' records began in 1970, the report noted. Over the full year, Germany's economy is predicted to contract by 4.2%.
----------
Copyright 2020 Alliance News Limited. All Rights Reserved.
Related Shares:
Tesco