▷ LONDON BRIEFING: Reckitt Benckiser Rides Covid-19 « Tailwinds » – Demo

(Alliance News) – Health and Hygiene are pretty good fields to be in during a virus pandemic, as Reckitt Benckiser’s two divisions showed on Tuesday.

The FTSE 100 firm raised its outlook after a strong first half, boosted by cleaning products such as Dettol and Lysol.

Reckitt Benckiser said its underlying performance has been ahead of expectations, the Dettol disinfectant maker getting a boost from Covid-19.

Revenue was up 11% to GBP6.91 billion in the first half of 2020, and pretax profit rose to GBP1.44 billion from GBP1.26 billion. Reckitt Benckiser reported Hygiene like-for-like sales growth of 16% and Health growth of 9.3%, resulting in overall like-for-like sales growth of 12%.

Its 2020 performance is now expected to be better than forecast back in April.

« Our underlying revenue performance (pre-Covid-19) has been ahead of our early expectations for the year and overall, including favourable tailwinds from Covid-19, we now expect high single digit growth for the year as a whole. Looking to the second half, net revenue growth is expected to reflect the benefit of Covid-19 tailwinds for Dettol and Lysol, improving trends in IFCN, offset by likely ongoing uncertainties of pantry-unloading, particularly for our OTC portfolio when combined with a likely weaker cough/cold and flu season and ongoing headwinds caused by social distancing, » said Reckitt.

2020 margins are expected to be in line with current consensus expectations, it added.

Reckitt declared an interim dividend of 73p, flat on a year ago.

Reckitt shares were down 1.2% early Tuesday.

Here is what you need to know at the London market open:

MARKETS

FTSE 100: up 0.2% at 6,118.80

Hang Seng: up 0.5% at 24,717.60

Nikkei 225: closed down 0.3% at 22,657.38

DJIA: closed up 114.88 points, or 0.4%, at 26,584.77

S&P 500: closed up 0.7% at 3,239.41

GBP: soft at USD1.2869 (USD1.2888)

EUR: down at USD1.1732 (USD1.1775)

Gold: up at USD1,939.49 per ounce (USD1,937.08)

Oil (Brent): up at USD43.44 a barrel (USD42.47)

(changes since previous London equities close)

ECONOMICS AND GENERAL

Tuesday’s Key Economic Events still to come

US Federal Reserve’s two-day meeting starts.

1100 BST UK CBI distributive trades survey

1100 BST Ireland retail sales index

1000 EDT US Richmond Fed business activity survey

1000 EDT US consumer confidence index

1630 EDT US API weekly statistical bulletin

UK government ministers were told to get a grip on summer holiday ‘confusion’ after the Balearic and Canary islands were added to the list of places where only essential travel should take place. Holiday firms and the opposition urged the government to bring more clarity to the situation as travel companies cancelled flights. The calls came as the Foreign & Commonwealth Office advised against all non-essential travel to the Balearic and Canary Islands following a Covid-19 upsurge in parts of mainland Spain. The move came after Downing Street warned « no travel is risk-free » after a 14 day coronavirus quarantine requirement for people arriving in the UK from Spain was reintroduced.

North Korea leader Kim Jong Un said his country’s hard-won nuclear weapons were a solid security guarantee and a « reliable, effective » deterrent that could prevent a second Korean War, state media has reported. Kim said in his speech on Monday his country has tried to become « a nuclear state » with « an absolute might » to prevent another war and that it has now built such a deterrent, according to the Korean Central News Agency. His speech followed recent remarks by both North Korean and US officials suggesting they were reluctant to engage in a new round of diplomacy on the North’s nuclear program anytime soon.

BROKER RATING CHANGES

BARCLAYS RAISES BT GROUP TO ‘EQUAL WEIGHT’ (UNDERWEIGHT) – PRICE TARGET 130 (115) PENCE

JPMORGAN CUTS BT GROUP PRICE TARGET TO 160 (182) PENCE – ‘OVERWEIGHT’

JEFFERIES RAISES CENTRICA TO ‘BUY’ (‘HOLD’) – TARGET 60 (29) PENCE

COMPANIES – FTSE 100

Wealth manager St James’s Place reported a dip in funds under management for the first half, but expects 2020 to be « another year of major net inflows ». For the six months to June 30, the FTSE 100 constituent reported funds under management of GBP115.7 billion versus GBP117.0 billion at the end of December. Gross inflows totalled GBP7.3 billion, down 2% on a year ago, but net inflows edged up to GBP4.5 billion from GBP4.4 billion, helped by retention of existing client investments. However, the wealth management firm’s investment return was negative GBP5.8 billion. « As the population at large recovers from more than four months of lockdown, we anticipate a period of recuperation for the UK. Nonetheless, from what we have experienced so far in July, we still expect new business flows for the third quarter to be similar or slightly lower in terms of value to the level of flows recorded for the second quarter, » the firm said. Overall, it added, 2020 is set to be « another year of major net inflows as our business model proves resilient in a really difficult period. »

Gold and silver miner Fresnillo reported sharp interim profit growth as commodity prices improved and costs were reduced. Revenue was up 5.2% to USD1.05 billion in the first half of 2020, mainly due to higher gold and silver prices. The average realised gold price jumped 27% in the half-year to USD1,676.8 per ounce, while silver prices rose 10%. This was partially offset by lower volumes of gold and silver sold, with gold production down 12% in the half and silver down 2.7%. Pretax profit surged to USD127.9 million from USD54.1 million a year ago, with cost of sales falling to USD733.0 million from USD796.5 million even as revenue rose, and exploration expenses falling to USD50.7 million from USD84.0 million. Fresnillo said it will pay out an interim dividend of 2.3 US cents per share, down 12% on a year ago.

COMPANIES – FTSE 250

Baker Greggs said sales slumped in the first half with shops closed for most of the second quarter. Total sales in the half were GBP300.6 million, down sharply on GBP546.3 million a year ago. Company-managed shop like-for-like sales slumped 49%. This saw the sausage roll maker swing to a pretax loss of GBP65.2 million from a GBP36.7 million profit a year prior. It did not declare an interim dividend. Greggs said it is « clear » sales will be constrained while the need for social distancing exists, with an « observed impact » on both its capacity to serve and on customer demand. « Company-managed shops have seen sales develop since reopening, and reached 72% of 2019 levels in the most recent week to 25 July 2020. Whilst these are early days, Greggs is already showing that the variety and geographical reach of our shop estate, combined with the broad appeal of the brand, which is not materially dependent on office-based workers, means we are less impacted by social distancing than many, » said Greggs.

COMPANIES – GLOBAL

Amazon.com is to make its Amazon Fresh service free to Prime subscribers, as it looks to rapidly expand the grocery delivery business across the UK, PA reports. The technology giant has also said it will speed up delivery times to make same-delivery available to UK grocery customers in some parts of the South East. Customers subscribing to Amazon Prime will be able to order groceries through Amazon Fresh, with free delivery on orders over GBP40, from Tuesday. Amazon said the move will start with abut 300 postcodes, focused around London and the South East, with the service expanding to millions more by the end of the year.

Tuesday’s Shareholder Meetings

TR Property Investment Trust

Wizz Air Holdings

ULS Technology

1Spatial

Codemasters Group Holdings

Inspired Energy – GM re placing and open offer

Vodafone Group

JPMorgan Japan Smaller Companies Trust

Mitie Group

By Tom Waite; thomaslwaite@alliancenews.com

Copyright 2020 Alliance News Limited. All Rights Reserved.

▷ LONDON BRIEFING: Reckitt Benckiser Rides Covid-19 « Tailwinds » – Demo
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