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Edison is an investment research and advisory company, with offices in North America, Europe, the Middle East and AsiaPac. The heart of Edison is our world renowned equity research platform and deep multi-sector expertise. At Edison Investment Research, our research is widely read by international investors, advisors and stakeholders. Edison Advisors leverages our core research platform to provide differentiated services including investor relations and strategic consulting.  Visit www.edisoninvestmentresearch.com for more information.

Edison

April 9, 2020

UK Sparks: Diageo withdraws its full-year guidance

Due to the uncertain outlook of the COVID-19 pandemic, spirits group Diageo have withdrawn its full-year forecast for 2020 and suspended the next phase of its three-year capital return programme for the rest of the year. The company acknowledged the global lockdowns since March had ‘significantly’ impacted business. It has seen a ‘very slow’ return of on-trade consumption in mainland China and some pick-up in European and American retail stores, although whether this can be sustained remains unclear.

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Edison

April 8, 2020

UK Sparks: Tesco Operating Profits Soar 15.3%

Supermarkets group Tesco has announced a 15.3% increase in underlying operating profits to £3bn in the 12 months to the end of February. The figure, boosted by £46m from an extra week in the financial year, was calculated before £487m of exceptional charges and amortisation. Statutory pre-tax profits fell from £1.62bn to £1.32bn on sales 1.1% higher at £57.4bn, excluding fuel. The dividend rises from 5.77p to 9.15p per share.

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Edison

April 7, 2020

UK Sparks: Cineworld Scraps Dividend Amid Liquidity Talks

Cinema chain Cineworld Group has suspended payment of its fourth quarter dividend of 4.25c per share and revealed that it is in talks with its banks about its “ongoing liquidity requirements”. The company says it is reducing costs to mitigate the effects of the closure of all its 787 cinemas in ten countries due to the coronavirus and is “monitoring progress” of its acquisition of rival group Cineplex. All capital expenditure that is “currently unnecessary” is being cut and the group is in discussions with landlords, film studios and major suppliers as part of a “painful but necessary process”. Directors have voluntarily agreed to defer payment of their full salaries, fees and any bonuses until there is “greater clarity” on the situation.

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Edison

April 6, 2020

UK Sparks: Rolls-Royce Scraps Dividend And Cuts Costs By £750m

Aero-engine maker Rolls Royce Holdings has scrapped its final dividend for 2019 to save £137m and announced plans to cut its spending by another £750m. The company says the coronavirus impacted its liquidity by about £300m in the first quarter of this year. It has secured an additional £1.5bn credit facility and reduced executive and senior management pay by 20% for the rest of the year. Chief executive Warren East and chief financial officer Stephen Daintith will also defer their annual bonuses, while the group’s 52,000 global workforce will see salary cuts of at least 10%.

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Edison

April 3, 2020

UK Sparks: Banks Scrap Dividends After Pressure From PRA

Britain’s largest banks HSBC Holdings, Barclays, Lloyds Banking Group, Royal Bank of Scotland and Standard Chartered have scrapped dividend payments after pressure from the Bank of England’s Prudential Regulation Authority to preserve capital. The banks have agreed to cancel remaining payouts for 2019, not pay any other dividends this year and suspend any share buyback programmes. Barclays chairman Nigel Higgins says: “These are difficult decisions, not least in terms of the immediate impact they will have on shareholders. The bank has a strong capital base, but we think it is right and prudent, for the many businesses and people that we support, to take these steps now.”

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Edison

April 2, 2020

UK Sparks: Hays plans £200m equity raise

Recruitment group Hays has announced an equity placing, targeting gross proceeds of around £200m. It hopes this funding will provide additional liquidity buffer and allow the group to pursue organic growth opportunities with new and existing blue-chip clients once the markets stabilise. At end-March 2020, its net cash position was £35m versus £13.2m at end-December 2019. The company has committed borrowing facilities of £210m, of which around £165m is currently undrawn.

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Edison

April 1, 2020

UK Sparks: Banks Scrap Dividends After Pressure From PRA

Britain’s largest banks HSBC Holdings, Barclays, Lloyds Banking Group, Royal Bank of Scotland and Standard Chartered have scrapped dividend payments after pressure from the Bank of England’s Prudential Regulation Authority to preserve capital. The banks have agreed to cancel remaining payouts for 2019, not pay any other dividends this year and suspend any share buyback programmes. Barclays chairman Nigel Higgins says: “These are difficult decisions, not least in terms of the immediate impact they will have on shareholders. The bank has a strong capital base, but we think it is right and prudent, for the many businesses and people that we support, to take these steps now.”

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Edison

March 31, 2020

UK Sparks: Oil Price Slump To Cost Shell Up To $800m

Oil major Royal Dutch Shell has warned of after-tax impairment charges of between $400-800m in the first quarter of this year, due to changes in the oil price. The company says each $10 movement in the price of a barrel of Brent crude hurts it by about $6bn a year. It says the coronavirus is causing “significant uncertainty” with regards to prices and demand for oil, gas and related products. In addition, “recent global developments and uncertainty in oil supply” have caused “further volatility” in commodity markets.

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Edison

March 30, 2020

UK Sparks: EasyJet Grounds Entire Fleet

Low-coat airline easyJet has grounded its entire fleet of aircraft, due to the “unprecedented travel restrictions” and national lockdowns imposed in response to the coronavirus crisis. Cabin crews will be furloughed for two months from April 1 on 80% of their average pay under the Government’s job retention scheme. The group will continue to work with the Government to rescue Britons stranded abroad, having already returned home 45,000 customers on more than 650 rescue flights. It says there is no certainty as to when scheduled flights will resume.

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Edison

March 27, 2020

UK Sparks: Royal Mail Hit By Coronavirus

Royal Mail says its UK parcels, international and letters business is likely to be “materially loss-making” in 2020-21, while profitability will be “significantly reduced” at its GLS logistics operations. It says advertising mail has been “significantly impacted” by the coronavirus crisis over the last two weeks as marketing campaigns have been delayed or cancelled. It also anticipates that restrictions on individuals and businesses will have a “negative impact” on unsorted and stamped mail. The company says it will now take longer than expected to achieve the targets laid out in its “Journey 2024” business transformation plan. It is reviewing the plan, will not pay a final dividend for 2019-20 and is suspending guidance for 2020-21 and beyond.

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Edison

March 26, 2020

UK Sparks: British Land suspends dividend due to coronavirus crisis

Property company British Land has suspended dividend payments with immediate effect, but it will revisit its dividend policy when there is more clarity on outlook. The company says that around 12% of its retail units remain open after the Government has announced new measures to fight coronavirus on 23 March 2020. It has taken steps to mitigate their impact on its clients, which includes releasing its smaller tenants from lease obligations for three months. The company states this will have a negative £3m impact on its financials. It is also prepared to defer March rents in the amount of up to £40m.

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Edison

March 25, 2020

UK Sparks: SSP To Raise Up To £200m After 80% Sales Slump

Airports and rail stations caterer SSP Group is bolstering its finances to deal with the impact of the coronavirus through a share placing to raise up to £200m.The placing will increase the company’s issued share capital by up to 20%. It has also agreed new bank borrowings of up to £112m. SSP says weekly like-for-like revenues are currently 80%-85% down on last year.

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Edison

March 24, 2020

UK Sparks: Prudential Eyeing “Other Options” For Jackson

Insurance group Prudential says it is actively evaluating “other options” for its Jackson operation in the US, amid “continued turmoil” on world stock markets. The company said earlier this month that the flotation of a minority stake in the US business was its preferred method of providing it with third-party capital.

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Edison

March 23, 2020

UK Sparks: Shell Cuts Costs, Capital Spending And Buyback To Save More Than $9bn

Oil group Royal Dutch Shell is scrapping a share buyback, trimming operating costs and axeing $5bn of capital expenditure to help deal with the coronavirus crisis and slump in oil prices. The company says it will discontinue the next stage of its buyback programme after completing a $1bn tranche announced in January. Operating costs will be reduced by between $3bn-$4bn, while capital expenditure will be cut from a planned $25bn to $20bn or below.

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Edison

March 20, 2020

UK Sparks: Hotels Chain Warns Of Historic Low

InterContinental Hotels Group says the impact of the coronavirus has reduced demand for hotels to the lowest levels it has ever seen. The company expects revenue per available room to fall by about 60% this month, while cancellations for April and May and current booking trends, indicate “continued challenging conditions”. The group is to save up to $150m by challenging “all discretionary costs” and reducing salaries and incentives, including “substantial decreases for executives”. It is also scrapping its final dividend for 2019 of $150m and reducing capital expenditure by about $100m.

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Edison

March 19, 2020

UK Sparks: Burberry retail store sales to drop 30% in the fourth quarter of FY 2019/20

Luxury fashion house Burberry says that its comparable retail store sales will be down around 30% year-on-year in the fourth quarter ended 28 March 2020, affected by the coronavirus outbreak. Globally, around 40% of its directly operated stores are currently closed and it expects additional closures over the coming days. Burberry is taking actions aimed at reducing the impact on the group, including renegotiating rents, restricting travel and reducing discretionary spending.

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Edison

March 18, 2020

UK Sparks: Morrisons Sales Surge 5% As Shoppers Stockpile For Coronavirus

Wm Morrison Supermarkets saw a 5% increase in like-for-like retail sales in February and March as shoppers stocked up on supplies to prepare for the impact of the coronavirus. The figure was included in the company’s financial results statement, which showed full-year like-for-like sales, excluding fuel, down 0.8%, compared to a 4.8% gain the previous year. Pre-tax profits before exceptional items rose by 3% from £396m to £408m.

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Edison

March 17, 2020

UK Sparks: Compass Group Warns Of Profits Hit From Coronavirus Shutdown

Contract caterer Compass Group has warned that half-year operating profits will be between £125m-£225m lower than expected, due to the coronavirus, which has closed most of its sports, leisure and education businesses in continental Europe and North America. The company says that volumes in its business and industry division are also being “severely impacted”. It expects overall revenues to be down by between 25%-30% over the six months.

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Edison

March 16, 2020

UK Sparks: easyJet, IAG and Wizz Air Announce New Wave of Flight Cancellations Due To Coronavirus Crisis

Budget airline easyJet has announced further “significant” cancellations due to the “unprecedented” level of travel restrictions imposed by governments in response to the coronavirus. It warns that the crisis could result in the grounding of “the majority” of its fleet. The company says European aviation faces a “precarious future” and there is “no guarantee” that it would survive a long-term travel freeze and the risks of a slow recovery. Chief executive Johan Lundgren says: “co-ordinated government backing” will be required to ensure that the airlines industry survives and is able to continue to operate when the crisis is over.

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Edison

March 13, 2020

UK Sparks: BT Chief Executive Contracts Coronavirus

BT Group has announced that its chief executive Philip Jansen has tested positive for the coronavirus. The telecoms group is now working with Public Health England to deep clean part of its headquarters and help employees who have had recent contact with Mr Jansen. The chief executive says his symptoms seem “relatively mild,” so he is continuing to lead BT while working remotely in self-isolation from his home. “There will be no disruption to the business,” he states.

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Edison

March 12, 2020

UK Sparks: WH Smith expects £30-40m full-year profit hit from coronavirus

Retailer WH Smith has warned that coronavirus outbreak can hit its full-year revenues by £100-130m and underlying profit before tax by £30-40m. This follows reduction of its sales expectations for the second half of the year in UK Travel, US and other international business. WH Smith says it will meet the market expectations for underlying profit before tax in the first half. In the period, the company has recorded a 7% year-on-year increase in total revenues, with like-for-like sales down 1%.

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Edison

March 11, 2020

UK Sparks: Prudential Eyes Flotation Of US Arm

Insurance group Prudential plans to float a minority stake in its American business Jackson in an initial public offering in the US. Chief executive Mike Wells says Jackson, headquartered in Lansing, Michigan, will need access to additional investment in order to “diversify at pace”. The plan was announced alongside a fall in full-year pre-tax profits from continuing operations from $3.45bn to $1.92bn. The group says it expects the coronavirus to result in lower levels of new sales activity in affected markets.

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Edison

March 10, 2020

UK Sparks: Informa Warns Of Coronavirus Impact

Exhibitions and events group Informa has warned that fears about the coronavirus are leading it to re-schedule about 45 large events with budgeted revenues of about £350m. About 70 smaller events with revenues of about £50m are also being rearranged, while 13 events with budgeted revenues of £25m have been cancelled. The company says the current market uncertainty means it is unable to give guidance about this year’s results. Last year, pre-tax profits increased by 13% to £319m on revenues 22% ahead at £2.89bn.

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Edison

March 9, 2020

UK Sparks: Tesco Nets $10.6bn in Thailand and Malaysia Exit

Tesco has sold its businesses in Thailand and Malaysia to CP Group, Thailand’s largest company, for $10.6bn. The operations have been under review since last year when the supermarkets group received approaches for them from interested buyers. Tesco plans to return £5bn of the proceeds to shareholders via a special dividend.

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Edison

March 6, 2020

UK Sparks: Aviva Exits Indonesian Market

Insurance group Aviva is pulling out of the Indonesian market, selling its entire shareholding in PT Astra Aviva Life to its joint venture partner, PT Astra International. The transaction is expected to complete in the fourth quarter of this year. It is subject to conditions, including regulatory approval in Indonesia and the completion of Bangkok Bank Public Company’s acquisition of PT Bank Permata, Aviva’s Indonesian bancassurance partner.

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Edison

March 5, 2020

UK Sparks: ITV’s ad demand suffers as travel firms delay marketing amid coronavirus outbreak

Integrated producer broadcaster ITV has released its full year results, which exceeded company expectations, supported by sales growth in the second half of the year in ITV Studios, advertising and online. In 2019, group external revenues increased 3% year-on-year to £3.3bn. Adjusted EBITA was £0.7bn while adjusted EPS stood at 13.9p, both figures down 10% year-on-year, affected by the decline in total advertising revenue and strategic investments.

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Edison

March 4, 2020

UK Sparks: Intu Ditches Fundraising Plan

Shopping centres group Intu Properties has abandoned plans for an equity fundraising of up to £1.5bn after concluding that it is “unable to proceed” at this point. The company says that, while some shareholders and potential new investors were supportive, the “current uncertainty” in the equity and retail property investment markets “precluded a number of potential investors from committing capital”. Intu is now exploring “alternative capital structures and asset disposals”.

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Edison

March 3, 2020

UK Sparks: Profits Rise 31% At Greggs

Retail bakeries chain Greggs has unveiled a 31% increase in full-year pre-tax profits from £82.6m to £108m on sales 13.5% higher at £1.17bn. Chief executive Roger Whiteside says this year has seen “very strong” sales in January but a “significant slowdown” in growth in February, due to the UK storms. He warns of “some uncertainty in the outlook, particularly given the potential impact of coronavirus”.

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Edison

March 2, 2020

UK Sparks: NMC Health Requests Standstill

NMC Health, the Abu Dhabi-based private hospitals group, says it has requested an “informal standstill” in relation to existing facilities from its lenders to achieve an “immediate stabilisation” of its financing. It says in a statement that the arrangement would involve its lenders not exercising any rights and remedies that may arise from any current or future defaults.

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Edison

February 28, 2020

UK Sparks: IAG Profits Plunge 35%

British Airways’ owner International Consolidated Airlines Group (IAG) saw pre-tax profits dive 35% from €3.49bn to €2.28bn in 2019 after exceptional charges of €672m from the settlement of a dispute over BA’s pension scheme. Operating profits fell by 5.7% to €3.29bn on revenues 5.1% higher at €25.5bn.

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