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Premarket London: EasyJet Profit in Line; Hammerson Fire Sale Continues

Stock MarketsNov 19, 2019 05:21AM ET
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Investing.com -- Here is a summary of regulatory news releases from the London Stock Exchange on Tuesday, 19th November. Please refresh for updates

  • Full-year profit before tax at EasyJet (LON:EZJ) will be between 420 and 430 million pounds ($554-$557 million), the airline said after what it called a "solid performance in the fourth quarter with robust customer demand", despite storms across Europe and operational issues at Gatwick Airport.
  • The effects of the economic slowdown, which has exposed the sector's excessive investment in growing capacity in recent years, were clearly visible in the airline's preliminary update. The airline's load factor fell 1.4 points from the 2018 fiscal year to 91.5, as an 8.6% rise in passengers to 96 million failed to keep pace with a 10.3% rise in available seat-kilometers.
  • The airline also reported a 12% rise in unit costs for the year due to higher fuel costs (1.42 billion pounds in total, including emissions trading system costs), as well as foreign exchange headwinds of 14 million pounds.
  • EasyJet is cutting capacity growth to only 2% in the first quarter of the new fiscal year. Bookings are in line with the same time last year, it added.
  • Struggling commercial landlord Hammerson (LON:HMSO) said it had sold a retail park in Gloucester to a local authority for 54 million pounds, the latest in a series of planned disposals aimed at raising cash and strengthening its balance sheet.
  • The company said it has now raised 577 million pounds in disposals this year, well ahead of its 2019 target of 500 million.
  • The sale price was some 8% below the asset’s book value and will give the buyer an initial net yield of 8.5%.
  • CEO David Atkins hinted in a statement that the company would use any spare cash to invest in its City Quarters project pipeline “which is core to the future direction and success of our business."
  • Drax (LON:DRX), the company transforming England's biggest coal-fired power plant into a biomass operation, upheld its profit guidance for the full year ahead of a capital markets day.

    The company confirmed EBITDA expectations for the full year. The latest analyst consensus is around 409 million pounds. Around one quarter of that will come from assets it bought last year from Spain's Iberdrola (MC:IBE). It noted a particularly strong performance from the acquired pumped storage business.

    However, it noted that coal operating conditions remain "challenging". U.K. coal plants are spending ever-longer periods in mothballs due to the growing share of renewables in the U.K. power mix.

    Much of Drax's expected profit is due to payments from the U.K.'s backup capacity market which had been frozen due to a EU antitrust investigation. Drax expects 75 million of payments for that to hit its books in January.

    The company said it's also made progress in lightening its debt burden after refinancing the credit facility it used for the Iberdrola (MC:IBE) deal, lengthening the group maturity profile to 2029. The new facility also becomes cheaper if Drax outperforms a benchmark tracking its carbon emissions.

    Melrose (LON:MRON), the corporate buyout specialist that acquired engineering group GKN (LON:GKN) last year, said trading had been as expected in the four month through October, with better-than-expected sales growth of 5% at its aerospace division offsetting a temporary slowdown in the automotive unit caused by the lengthy strike at General Motors (NYSE:GM).

    The powder metallurgy unit saw sales fall 13% on the year, due to the same strike, but were otherwise in line with expectations.

    Automotive profits and margins were still higher than a year ago, the company added.

    “The improvements in the businesses are being delivered at pace and the Melrose Board is confident this will unlock significant further shareholder value,” the company said in its statement.

    CORRECTION: The initial version of this story incorrectly reported Drax's expectations for full-year group EBITDA.

    Premarket London: EasyJet Profit in Line; Hammerson Fire Sale Continues
     

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