Banks update
HSBC dividend?
In its third-quarter results, HSBC (HSBA.) told shareholders that the board “will consider whether to pay a conservative dividend for 2020”, subject to the economic outlook in early 2021 and regulatory consultation. It had been forced by the Bank of England to stop its quarterly payout earlier this year because of the the pandemic. The third-quarter ‘CET1’ capital ratio – the proportion of equity capital against total risk-weighted assets – climbed by 60 basis points to 15.6 per cent. Expected credit losses were four-fifths below the level of provisions booked in the second quarter. Barclays’ (BARC) figures beat market profit forecasts, and its expected credit losses dipped by 63 per cent.
easyJet sells and leases back jets
Raises £306m
easyJet (EZJ) has sold and leased back nine Airbus 320 aircraft, raising proceeds of $399m (£306m). The airline will be left with 152 fully-owned aircraft, amounting to 44 per cent of its fleet, and expects to pay £15m annually in connection with the nine leases. The aircraft sales represent easyJet’s latest effort to shore up its balance sheet in response to the coronavirus pandemic, with the airline having raised £2.4bn in cash from the start of the pandemic until the conclusion of its financial year on 30 September. Passenger numbers for its most recent full-year were down by a half, at 48m travellers.
Merck lifts sales outlook
Robust demand
Merck’s (US:MRK) third-quarter sales edged up by 1 per cent to $12.6bn, while net income climbed by more than a half to $2.9bn. Revenues from the US pharma group’s blockbuster immuno-oncology drug ‘Keytruda’ rose by just over a fifth to $3.7bn. Merck has narrowed and raised its full-year revenue guidance range to between $47.6bn and $48.6bn, while simultaneously narrowing and lowering its EPS range to $4.55-$4.65. It expects that the pandemic will deal revenues a blow of roughly $2.35bn (excluding the impact of currency movements). But management noted that demand for the group’s products remains robust.
GSK sticks to guidance
Q3 numbers
Meanwhile, London-listed GlaxoSmithKline’s (GSK) third-quarter sales slipped by 8 per cent to £8.6bn, or by 3 per cent at constant currencies excluding the impact of divestments or brands under review. Vaccines turnover contracted by 12 per cent to £2bn, but GSK has seen a “recovery” in vaccination rates in Q3. It is still on track to deliver its full-year adjusted EPS guidance, albeit at the lower end of the -1 per cent to -4 per cent range at constant currencies. If approved, GSK and Sanofi (FR:SAN) plan to make 200m doses of their Covid-19 vaccine available to Covax, a global collaboration.
The Hut Group upgrades
Beauty revenues surge
The Hut Group (THG) lifted its full-year revenue guidance from £1.43bn to a range of £1.48bn to £1.52bn, after a bumper third-quarter during which total turnover increased by 39 per cent to £378m. THG’s beauty division revenues jumped by nearly a half to £158m, while the group’s ‘direct to consumer’ online channel experienced a 51 per cent turnover uplift in step with the burgeoning D2C trend that is taking place across retail. THG has entered its critical fourth quarter, which typically accounts for just under a third of annual revenues, with Black Friday being a key event in the period.
Semi-conductor deal
$35bn price tag
Semiconductor group Advanced Micro Devices (US:AMD) has agreed to buy Xilinx (US:XLNX) in an all-stock deal worth $35bn. It hopes the acquisition will create the industry’s leading high-performance computing company that will be immediately accretive for AMD’s margins, EPS and free-cash-flow generation. Together, the companies boast a team of 13,000 engineers and more than $2.7bn in annual research and development investment. The news comes hot on the heels of Nvidia’s agreement to buy Arm from SoftBank last month, for $40bn.
Next warns of lockdown impact
Upgrades guidance
Next has lifted its pre-tax profit guidance for the year to £365m, an increase of £65m from its September central forecast. Sales for its third quarter edged up by 2.8 per cent, as home and childrenswear continues to outperform, online sales remain strong and out-of-town retail parks fare better than high street stores. But Next warned that a step-up in lockdowns could knock its fourth-quarter sales by as much as 20 per cent.
UK house prices rose by 3 per cent year on year in September, according to the latest Zoopla House Price Index, the highest annual growth rate in almost two-and-a-half years.
That rate is up from an increase of 1.1 per cent during the same point last year and is expected to trend upwards to almost 4 per cent by the end of this year, according to the property portal.
Nottingham recorded the largest rise in average sales prices at 5.1 per cent, followed by Manchester at 4.6 per cent, with Oxford and Cambridge lagging at 1.5 per cent and 0.9 per cent, respectively.
