Three things you need to know in the financial markets this morning from investment writer, Tony Cross.
Motor group Pendragon [LON:PDG] has published a Q1 trading update this morning, noting that the company made a strong start to the year before lock down measures took a toll on performance. Over the quarter alone, the COVID-19 pandemic is seen as having taken £10m off profits, leaving the business with an underlying loss of £2.3m for the period. The company has in the latter part of 2019 undertaken a series of initiatives to improve profitability, focusing on cost and reducing stock levels. The business has already reopened the majority of its service network albeit with reduced capacity and retail outlets will come on stream from June 1st. There’s no assessment as to how badly hit Q2 will be or how fast any recovery will emerge, but new online initiatives and a reasonable cash balance are noted.
Pets At Home
Pets At Home [LON:PETS] has published full year results for the period to Mach 26th. The year finished with a flourish after a strong Q4 and for the first time, total revenue exceeded £1billion, having risen by more than 10%. The looming COVID-19 pandemic saw sales spike at the end of the period as consumers stockpiled goods, but the expectation is H1 21 profits will be impacted as the additional demand was temporary. The company will benefit from a rates holiday but additional costs and lower sales will combine to have a material impact on the numbers. With the business unsure as to how consumers will react as the lockdown unwinds, there’s no full year guidance but an update is promised when Q1 figures are released at the end of July. A final dividend of 5p is however being paid, making for an unchanged 7.5p for the full year.
Whitbread [LON:WTB] has published full year results today – along with a request for a £1bn rights issue from shareholders. The figures were in line with expectations, but it’s what happens from here that is attracting the most interest. With the UK hospitality industry largely shut down, the company has taken a raft of actions to minimise its cash burn rate, including the suspension of dividends. Uncertainty over how quickly trade will return to normal does however leave the company unable to provide guidance as to what happens next, but to give a quick idea on numbers, the company is burning through around £80m a month, has refunded £100m in customer deposits and has £130m worth of capex in H1. That gives the £1bn cash call some real perspective.
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