Markets Today: Tesla drives tech while ITV sinks amid Morgan row

We’re still not sure exactly what the Sussex’s interview with Oprah cost ITV (ITV: Hold, Aug 2020) financially, but it has cost the group a presenter. Piers Morgan has walked away from the broadcaster’s breakfast show, Good Morning Britain after the company’s chief executive Carolyn McCall made it clear she and the organisation did not agree with Morgan’s view on Meghan Markle. 

After storming off the set on Tuesday’s episode of Good Morning Britain, the presenter described his departure as amicable: "I had a good chat with ITV and we agreed to disagree."

Commenting on the fallout, Neil Wilson, chief market analyst at Markets.com said: “Investors may be a little worried about the loss of ratings for GMB – it wasn’t exactly doing that well before he joined and its primetime slot will have repercussions for ads. Love or loathe, Morgan boosted ratings. It could also be that investors are worried about an investigation over comments made by Morgan on air. Shares were hit yesterday after it revealed the way in which lockdowns have hit ad revenues, but indicated things are picking up and studios can drive new growth. DB today calls it a buy. You cannot be owning ITV and worry about one host, can you?”

Global institutions commit to ‘net zero’ alignment. 

The Institutional Investors Group on Climate Change (which includes UK groups Scottish Widows, Aberdeen Standard, Legal & General and Jupiter Asset Management) has launched the ‘Net Zero Investment Framework’ which is aimed at ensuring their investments are aligned with net zero emissions and helping to deliver the goals of the Paris Agreement on global warming. 

An undoubtedly worthy target, but painting the entire investment industry with the broad brush of ESG could prove problematic. Click here to read, Why pensions have an ESG problem. 

Wednesday companies news: Spirax-Sarco, L&G and Just Eat

Making good on plans set out at its November capital markets day, Legal & General (LGEN: Buy, Mar 2021) paused rather than cut its final dividend for 2020, leaving the pay-out at 17.57p per share. Shares in the life insurance giant slipped in early trading, despite full-year results beating consensus forecasts for operating profit. 

Meanwhile, Spirax-Sarco (SPX: Buy, Aug 2020) has boosted its own payout after cost-cutting helped limit the decline in adjusted operating profit to 4 per cent to £270m amid a pandemic-driven slowdown. On the back of £197m of free cash flow, Spirax has increased its final dividend by 8 per cent to 84.5p per share.

Simultaneous results announcements from Restaurant Group (RTN: Sell, Oct 2020) and Just Eat (JET: Hold, Aug 2020) reveal just how much our dining habits have changed during the pandemic. While Just Eat reported revenues rose 54 per cent to €2.4bn and adjusted EBITDA came in ahead of forecast at €256m, Restaurant’s revenues more than halved to £460m.

IT firm FDM’s (FDM: Buy, July 2020) pre-tax profits dropped more than a fifth to £41m in 2020, as the initial coronavirus disruption last year affected its ability to place its consultants, or ‘Mounties’. But as the pandemic forces companies rearrange their tech, FDM looks like it could be in an enviable position. 

As with fellow brick maker Forterra (FORT: Hold, Mar 2021), Ibstock (IBST) swung into the red in 2020, recording a £24m pre-tax loss, versus an £82m profit a year earlier. The group was weighed down by £36m of exceptional costs relating to Covid-19 and restructuring efforts.

In a year that was an extreme test of company balance sheet strength, Hill & Smith (HILS: Buy, Mar 2021) diverted cash to knock almost £70m from its net debt and brought back the final dividend. 

 TT Electronics gets Covid booster

Investors were excited last September by the news that TT Electronics (TTG) had been chosen as exclusive manufacturing partner for ‘Virolens’, a proposed rapid Covid-19 screening product, relying on artificial intelligence (AI) technology, conceived by a company called iAbra.

The evaluation process for Virolens is still ongoing, TT noted within its results on Wednesday, and there is no guarantee that the electrical engineering group will benefit financially from those trials. Still, chief executive Richard Tyson told Investors’ Chronicle that its work on Virolens “is not a bad example of what our strategy has enabled us to do”. “We’re able to bring together capabilities from across TT to help them design their screening device”.

More broadly, TT says it seeks to “solve electronics challenges for a sustainable world” and believes “many of the positive, structural trends in our markets will accelerate as a result of the longer-term impacts on society” brought about by the coronavirus pandemic. The group pointed to demand for improved healthcare and faster digital transformation as two cases in point.

Revenues dropped a tenth for the year ending December to £432m but the group has staged a recovery since a crisis-induced hit in the second quarter. It cited a record order book, with Tyson noting that TT is “80 per cent covered for the year ahead”. TT has resumed dividends with a proposed pay-out of 4.7p a share. HC

Foxtons flags early sales improvement 

Foxtons (FOXT: Sell, Nov 2020) revealed revenues for the first two months of the year were well ahead of the comparable time in 2020, following a recovery in demand during the second half of last year.

However, the rebound in demand following the introduction of the stamp duty holiday in July was not enough to offset the closure of the group’s offices during the first lockdown. Revenue over the year was down 13 per cent but a reduction in operating costs meant the group posted an adjusted operating profit of £1.9m, ahead of last year’s loss.

Questions are now being asked about how long the property market can retain its strength. Rishi Sunak extended the stamp duty holiday in the recent budget, but only until July. EP

Find out why many homebuyers will miss out on the full stamp duty holiday extension here.

Catch up on yesterday’s news

The short-term leases offered by flexible workspace providers such as IWG (IWG: Sell, Mar 2021) and Workspace (WKP: Hold, Nov 2020) may mean that the injuries dealt by the pandemic are more immediately visible than for permanent office landlords. Yet could they also be quicker to heal?

IWG, which signs longer-term leases with office owners and re-lets to occupiers for a smaller duration, has swiftly cut its footprint in response to reduced demand. The costs associated with closing underperforming centres, which included impairing assets, were worse than anticipated by analysts over 2020, which pushed pre-tax losses up higher than consensus forecasts. 

Meanwhile, London-based landlords including Shaftesbury (SHB: Buy, Dec 2020), Great Portland Estates (GPOR: Hold, Nov 2020) and Derwent London (DLN: Buy, Sep 2020) are trading at massive discounts to their NAV. Could now be a good time to pick up prime London real estate at bargain prices?

You can read our full overview of the top stories for UK investors here.