Three things you need to know in the financial markets this morning from investment writer, Tony Cross.
Associated British Foods
Associated British Foods [LON:ABF] has issued a trading update this morning, noting that for each month its Primark stores have been closed has resulted in a loss of revenues of around £650m. Management has however fared well during the COVID crisis with the aim of reducing overheads by 50% in April and May having been exceeded. The company is now in the process of reopening stores across its estate, with some 30% of venues now operational with that number set to grow to 74% in the next two weeks as English stores are set to come back online on June 15th. Re-openings are being done with limits on customer numbers but early indications are that basket sizes are larger. It is however difficult for the business to state whether this can be sustained. Separately the food business is faring well with grocery profits ahead of estimates, countering a poor performance at AB Sugar. Full year guidance isn’t being offered but the business has significant liquidity headroom.
Dart Group [LON:DTG], the owners of Jet2, are doubling down on the leisure industry with news this morning that they have completed the disposal of Fowler Welch, a leading food distributor. The deal is set to generate almost £100m, with the board noting that the capital will enable the company to focus on the long-term ambition of growing the travel business. That’s showing real commitment, especially given the uncertain situation we’re currently in.
There’s a trading update out from Balfour Beatty [LON:BBY] this morning, which includes a few notable take aways. 83% of sites were open in May, the company has over £800m worth of liquidity in hand and the order book is more than 20% ahead of where it was this time last year, thanks to winning more HS2 work. This is a company that will be worth watching in the coming weeks, following Chancellor Sunak’s pledge on Friday of a significant jobs creation program. The temptation for the government to push through new infrastructure projects to generate employment and inject cash back into the economy has to be on the table.
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