Corporate round-up: companies count the costs of Covid-19
Barclays added a further £1.6bn to its reserves for bad loans in the second quarter, adding clarity to the scale of the damage coronavirus could wreak on Britain’s banks.
Credit impairment charges more than tripled from £408m in the same period last year, as strict global lockdowns to slow the spread of Covid-19 caused historic plunges in economic growth. The impact was worse than the £1.4bn analysts had forecast.
The charge helped depress net profit 91 per cent to £90m in the period, half the £180m expected by analysts. Profit before tax similarly fell 76 per cent to £359m, missing the £491m average forecast.
Heathrow Airport reported a £1.1bn pre-tax loss for the first half of the year, with passenger numbers down 96 per cent in the second quarter. Even on a prettified adjusted basis, the pre-tax loss was £471m, down from a £153m profit for the same time last year. The airport also said the opening of the much-disputed third runway would be delayed by at least two years because of the crisis and an appeals process.
Medical devices maker Smith & Nephew missed analysts’ earnings forecasts as its business continued to suffer as hospitals delayed elective surgeries to focus on the health crisis wrought by coronavirus.
The group, which makes devices for hip and knee replacements, reported a trading profit for the six months to June of $172m, compared with analysts’ expectations of $225m. Smith & Nephew’s sales also fell 19 per cent on an underlying basis.
Oil producer Tullow Oil said it would probably take impairment charges of up to $1.7bn in its forthcoming half-year results, as it lowered its outlook for fuel prices. The group, which has net debt worth almost six times its stock market capitalisation, has now followed larger rivals such as Royal Dutch Shell and BP in downgrading its expectations for oil prices.
Hungarian budget airline Wizz Air reported a €108m net loss for the three months to June 30, compared with a net profit of €72m the same time last year. The group, which restarted flights in May, said it was now flying at about 70 per cent of its capacity, compared with just 11.5 per cent in the first quarter of the year. Chief executive József Váradi argued, in a statement alongside the quarterly update, that Wizz Air’s young fleet and low costs made the business “best positioned to double down on the opportunities that present themselves,” and “emerge as a structural winner post-Covid-19.”
FTSE 100 housebuilder Taylor Wimpey’s revenues fell by half during the first six months of the year, dragging it to a £40m loss — a fall in profits of more than £300m from last year. Site closures and socially-distanced construction mean the builder expects to deliver around 40 per cent less completions this year, with a significant impact on revenues and margins and some knock-on impact next year.
Food producer Premier Foods reported a boost from lockdowns and increased supermarket shopping, however. The group said sales rose 22.5 per cent in its most recent quarter, compared with the same time last year. “As expected, we continued to see strong demand for our grocery brands,” chief executive Alex Whitehouse said, “with consumers eating the vast majority of their meals at home.”