Three things you need to know in the financial markets this morning from investment writer, Tony Cross.
BP [LON:BP] has posted Q1 profits this morning, showing an ‘underlying cost replacement profit’ of $800 million down from the $2.4 billion posted a year earlier. That figure falls short of consensus expectations but despite both that and the tumbling price of oil, a quarterly dividend will still be paid. That’s going to cost in the region of $2 billion, although that’s a fraction of the $32 billion of liquidity the company has at its disposal. It is however doing little to reduce gearing into the targeted bracket, showing that investor hunger for dividends remains very much in focus.
Coca Cola European Partners
There’s a Q1 trading update from Coca Cola European Partners [LON:CCEP] out this morning, which shows the early impact of the COVID-19 crisis. The company works in two main markets – at home and away from home. Understandably it’s the former which has suffered more, but overall sales volumes in the five weeks to April 17th are down between 20% and 40%. Average revenues per unit sold are however slightly higher, but the company acknowledges the uncertainty that lies ahead and will be deferring any decision on a H1 dividend for the time being.
Marks and Spencer
Marks and Spencer [LON:MKS] has updated the market on its liquidity situation this morning, noting that it working on the basis that a return to normal trading will only be seen after a prolonged exit period. Its syndicate of bank lenders have agreed to relax covenant rules as far out as September 2021, whilst dividend payments have also been frozen in a bid to conserve cash. This plan leaves the business with ‘significant’ undrawn credit lines available even in 18 months time, but the sluggish expectation of recovery here is noteworthy.
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