Three things you need to know in the financial markets this morning from investment writer, Tony Cross.
Tesco
Supermarkets have been thrust into the spotlight in the wake of the COVID-19 pandemic, so Tesco’s LON:TSCO preliminary results, out this morning, are unsurprisingly the subject of some interest. For the year to end of February, revenues were up 1.3% whilst operating profits after one-off exceptional items fell by almost 5%. A dividend increase of close on 60% is being proposed. More significantly however, looking at what’s happening right now the note lists a series of initiatives undertaken by the business with 45,000 new jobs over the last two and a half weeks, a £15m boost for its work with food banks and 1 million free meals for NHS front line workers being just a few of the highlights. The company provides little in the way of guidance, other than noting how the impact on retail cost lines for the year ahead will be between £650m and £925m. The proposal of this dividend increase does however suggest there’s little concern that revenues won’t respond to match.
AG Barr
Full year results from AG Barr LON:BAG, the producers of Irn Bru, are out today. The headline numbers aren’t great with sales down 8.4% and pre-tax profits down 17.3%. The company notes that this is against a tough set of comparatives but looking forward, the COVID-19 pandemic is also rattling the situation. So-called “impulse sales” – those taking place in bars and restaurants and accounting for 40% of turnover – have been decimated by the lockdown. Supermarket sales are also looking more sporadic and this lack of clarity has lead the company to hold off from declaring a full year dividend payment.
MJ Gleeson
MJ Gleeson LON:GLE, the low-cost house builder, makes a second appearance in the column this week with news that it is tapping investors for £16.4m in a bid to leave the company well positioned when the COVID-19 crisis subsides. This will put total cash on hand at £82.9m, whilst the company has reduced its monthly burn rate from £4.9m to £3.1m. At first inspection, this does appear to be a rather cautious stance to be taking, but as has previously been noted, on the assumption many more businesses will be looking for cash injections, there’s benefit to be had in not waiting too long.
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