UK WINNERS & LOSERS SUMMARY: Beazley's Virus Claims Estimate Doubles

(Alliance News) - The following stocks are the leading risers and fallers within the main London ...

Alliance News 22 September, 2020 | 10:37AM
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(Alliance News) - The following stocks are the leading risers and fallers within the main London indices on Tuesday.

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FTSE 100 - WINNERS

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Kingfisher, up 7.3%. The DIY retailer posted a significant increase in profit for the first half of financial 2021, crediting the improvement to a strong sales recovery in the second quarter and a decrease in expenses. For the six months ended July 31, the B&Q and Screwfix stores operator 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 to GBP1.33 billion from GBP1.51 billion. Administrative costs also were reduced to GBP380 million from GBP396 million. Adjusted pretax profit was up 23% at GBP415 million. Looking ahead, Kingfisher said it has seen an "encouraging" start to the second half of the financial year, 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, it said.

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British American Tobacco, up 2.3%. RBC raised the tobacco firm to Outperform from Sector Perform. The bank also boosted peer Imperial Brands to Outperform, with the stock up 2.2%.

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FTSE 100 - LOSERS

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Hikma Pharmaceuticals, down 5.8%. The drugmaker has been given a "minor" complete response letter by the US Food & Drug Administration, relating to its new drug application for a generic version of the Advair Diskus inhaler. The US regulator sends a complete response letter if it decides to not approve the application in its present form. Advair Diskus, a GlaxoSmithKline product, treats asthma and chronic obstructive pulmonary disease. Hikma said it is working to address the questions raised in the letter, and once answered expects to receive a response within 90 days. The group now expects to gain approval for its generic version in early 2021.

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Whitbread, down 3.6%. The Premier Inn owner said it is looking to shed up to 6,000 jobs after reporting a slump in half-year sales due to the closure of its hotels and restaurants because of the Covid-19 pandemic. 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, the FTSE 100-listed company explained. First half UK like-for-like sales were down 78%, with total sales down 77%. The majority of hotels and restaurants were reopened by the first week of August, the company said, 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. August UK total sales - including both accommodation and food & beverage - were down 39% year-on-year.

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FTSE 250 - WINNERS

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AG Barr, up 13%. The Irn-Bru maker said significant changes in consumer purchasing and consumption patterns due to the Covid-19 pandemic resulted in a 62% slump in first half profit. The soft drinks maker added that revenue for the year ending January 2021 will be 12% to 15% below the prior-year level, with a modest reduction in operating profit margin due to adverse sales mix and operational de-leverage, mitigated by ongoing cost savings. For the six months to July 25, AG Barr recorded pretax profit of GBP5.1 million, down 62% from GBP13.5 million a year ago. Revenue fell 7.6% to GBP113.2 million from GBP122.5 million. The sharp drop in profit resulted from a GBP11.5 million in exceptional charges that stemmed from Covid-19. The exceptional charges relate to the company's restructuring programme and a GBP10 million impairment on the Strathmore bottled water brand, which has been significantly hurt by a slump in hospitality sector demand. Stripping out exceptional costs, first half pretax profit rose 19% to GBP16.6 million.

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FTSE 250 - LOSERS

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Beazley, down 12%. The insurer 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 cost of Covid-19 claims stems from further event cancellation losses, the company 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".

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OTHER MAIN MARKET AND AIM - LOSERS

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Ncondezi Energy, down 23%. The power development company with project in Mozambique noted General Electric's announcement on Monday regarding its intention to exit the new build coal power market, and confirmed it has not received any formal notification from GE regarding its future role in the Ncondezi 300MW coal-fired power project. "Should the project need to replace GE in its role as the technology partner the company is confident that in conjunction with CMEC it can source a new technology partner and it is not envisaged that such a process would have a material impact on the project. Further updates will be made in due course," said Ncondezi.

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By Lucy Heming; lucyheming@alliancenews.com

Copyright 2020 Alliance News Limited. All Rights Reserved.

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Securities Mentioned in Article

Security Name Price Change (%) Morningstar
Rating
Ncondezi Energy Ltd 3.65 GBX 0.00 -
Barr (A G) PLC 485.50 GBX 2.86 -
Whitbread PLC 2,313.00 GBX -0.04 -
British American Tobacco PLC 2,583.50 GBX -1.28
Kingfisher PLC 324.40 GBX 1.34
Imperial Brands PLC 1,281.50 GBX -1.54
Hikma Pharmaceuticals PLC 2,598.00 GBX -1.25
Beazley PLC 326.20 GBX -1.75 -

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