Three things you need to know in the financial markets this morning from investment writer, Tony Cross.
Last night’s announcement by the Prime Minister was supposed to be well scripted, but left a glaring hole as far as the construction industry was concerned. Communities minister Robert Jenrick later said that building sites could remain open and that certainly seems to be what Redrow Homes [LON:RDW] is thinking in its update this morning. The company acknowledges that sales will slow, as will the pace of construction as the supply of manpower and resources will be disrupted in the coming months. In a bid to mitigate this, the interim dividend is being suspended and the company notes that it has £250m on the balance sheet. What’s more a slew of completions are expected in the coming months which will see debt reduced significantly. Given the underlying demand for housing remains strong, housebuilders who ride out the market turbulence could be well positioned later in the year.
Online gambling group 888 [LON:888] has published a COVID-19 trading update this morning, which lays out a couple of interesting facts. They’re losing out with the cancellation of sporting fixtures, but there’s evidence of increased customer activity in the casino and poker divisions. The company does note however that may not be sustained if the macroeconomic uncertainty extends for a protracted length of time, whilst disruption to the sporting calendar until September would hit EBITDA by a ‘high single digit millions of dollars’ figure.
A favourite of this column is Dunelm [LON:DNLM], who have published a trading update this morning as they approach the end of the third quarter. Whilst the underlying market continued to grow with like for like sales over the first 10 weeks of the period up 6.5%, activity has stalled over the last fortnight with total revenues down 8.8% on a like for like basis. However, strong growth in the company’s online channel could offer a degree of security here, so long as supply chain and distribution disruption doesn’t prove too damaging.
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