Novel Coronavirus has not only impacted the businesses in the United Kingdom, but has also led to a large number of lay-offs, taking jobs of many people. To date, 11 April 2020, the coronavirus has taken 8,958 lives with more than 73.7K people infected from this deadly virus in the United Kingdom (Source: Worldometer)
The United Kingdom has been the strong hub for the companies after the United States of America, but is now struggling with the historical business crunch. Most of the companies belong to fashion retailers, support services, energy and beverages sectors etc. Recently, many of these businesses have scrapped dividends to safeguard their cash and to maintain their financial health so that they can survive till the novel coronavirus crisis is over. Many others are also working on cost-cutting by reducing staffs, reducing all discretionary spending and deferring investments etc. However, the panic buying effects are helping retail supermarket, but it might also get impacted if the epidemic continues to disrupt businesses and normal lives in the long term.
Here we are going to discuss the latest earnings of two diversified sector companies, i.e. Barr (A.G.) Plc and Robert Walters Plc, which belongs to Beverages Sector and Industrial Support Services Sector, respectively. We are going to discuss their latest earnings, the impact of COVID-19 and share price performances.
Barr (A.G.) PLC (LON: BAG)
- Overview of the Company
Barr (A.G.) Plc (LON: BAG) is into branded soft drink business, based out of the United Kingdom. The company builds a differentiated portfolio of the great-tasting brand in still drinks, carbonates and water product segments. The company operates through ten locations in the United Kingdom and has approximately 1,000 employees. It was incorporated 140 years before in Scotland and trades under the FTSE 250 index.
- Financial Highlights
On 08 April 2020, the company announced its final results for the 52 weeks ended 25th January 2020.
Company’s Financial Highlights for FY2020 (Source: company website)
- During the year FY2020, the company’s reported net sales decreased by 8.4 percent to £255.7 million due to brand challenges primarily in Rubicon and Rock star soft drinks, the adverse effect of pricing re-alignment broadly on IRN-BRU brand and the backdrop of the strong prior year results due to extreme summer weather in 2018.
- Statutory profit before tax for FY2020 decreased by 16.0 percent to £37.4 million, reflecting the negative effect of declined revenue along with a continuing commitment to maintaining investment in brands and business for future.
- During FY2020, EBITDA reduced by £3.5 million to £51.1 million due to weaker trading performance. In contrast, an EBITDA margin increased to 20.0 percent, which is marginally higher than the prior-year’s margin of 19.6 percent.
- The group confirmed its financially robust position with highly cash generative potential during the year. However, net cash from operating activities decreased to £40.1 million (2019: £44.6 million), and net cash balance decreased to £10.9 million, which is almost half of the prior year.
- During FY2020, the company completed the £30 million share buyback programme accepted by shareholders in May 2017.
- Basic EPS decreased by 15.9 percent to 26.50 pence (2019: 31.51 pence), driven by the challenging trading environment on reported profit.
- Return on the capital employed ratio ("ROCE") decreased to 16.1 percent in FY2020 as compared to 21.0 percent in FY2019 as the company’s operating profit declined while it also maintained modestly larger asset base.
- For FY2020, the company decided not to provide the final dividend to its shareholders with the view to save cash for the fight against the pandemic coronavirus.
- Impact of Novel Coronavirus
As per the company’s information, it is following government’s guidance since the outbreak of novel coronavirus in the United Kingdom. The company further acknowledged the possible impact the virus could have on its function ranging from supply chain to the ability of its customers to service consumers, which would broadly result in a volume loss having a negative impact on group’s profitability.
- Stock price performance
On 9 April 2020, BAG stock last traded at a price of GBX 500.0 on the London Stock Exchange, down by GBX 12.00 or 2.34 percent from its previous close of GBX 512.0. The beta of the stock stood at 0.40 while its market capitalisation was reported at GBP 560.14 million.
The stock recoded its 52-week high on 11 June 2019 at GBX 980.0 per share while, its 52-week low was marked recently on 19 March 2020 at a price of GBX 401.00 per share. The company’s annual dividend yield stands at 3.35 percent as at 11 April 2020.
Robert Walters Plc (LON: RWA)
- Overview of the company
Based in the United Kingdom, Robert Walters Plc (LON: RWA) is a professional recruitment consultancy. The company delivers staffing, recruitment process outsourcing, recruitment consultancy and managed services across its four geographical segments that include United Kingdom, Asia Pacific, Europe and Other International. It comprises of three specialist brands- Robert Walters, Walters People, and Resource Solutions- and operates in 31 countries with over 3,900 employees.
Brands of the Company (Source: company website)
- Financial Highlights- RWA
On 08 April 2020, the company announced its trading update for the first quarter ended 31 March 2020.
(Source: company website)
- The company reported an impact of ongoing coronavirus outbreak on its net fee income during the first quarter of 2020. Group’s net fee income declined 11 percent to £87.4 million in Q1 2020 from £98.6 million in Q1 2019.
- Its Asia Pacific net fee income decreased by 5 percent to £34.5 million during the first quarter of the year 2020 compared to the previous corresponding period.
- Europe net fee income decreased by 3 percent to £25.4 million in Q1 2020 compared to £26.2 million in Q1 2019.
- UK net fee income decreased by 29 percent to £19.7 million in Q1 2020. As per the company information, the candidate and client confidence declined throughout the United Kingdom during March due to government’s order towards lockdown. This lockdown impacted both recruitment process and specialist recruitment outsourcing. In contrast, technology, logistics and supply chain sectors have reportedly shown stronger performance during the quarter.
- The Americas, Middle East and South Africa’s net fee income declined by 6 percent to £7.8 million in Q1 2020.
- During the quarter, the company has implemented practical cost reduction measures throughout the group. As of 01 April 2020, group’s cost base reduced by 15 percent which consist of a decrease in all discretionary spend, 20 percent salary reduction and voluntary schemes for staffs to work for less working hours. As per the company information, these measures have given tremendous success throughout the globe.
- Group headcount fell by 2 percent to 3,935 as compared to 4,027 as of 31 December 2019.
- As of 31 March 2020, the company attained a robust balance sheet with net cash of £109.8 million.
- Impact of Novel Coronavirus
Chief Executive Officer Robert Walters stated that COVID-19 pandemic has negatively impacted the company’s trading activity for the first quarter. Due to highly uncertain environment, Walters stated that it would be imprudent to attempt to give accurate forward guidance on expected full year trading at this stage, but the company expects to see second quarter to be more challenging due to lockdown.
- Stock Price Performance- RWA
On 9 April 2020, Robert Walters Plc’s stock last traded at a price of GBX 459.0 per share, up by GBX 66.00 or 16.79 percent from its previous closing of GBX 393.0. The beta of the stock stood at 1.52 while its market capitalisation was reported at GBP 349.11 million.
The stock recoded its 52-week high on 26 June 2019 at GBX 676.0 per share while its 52-week low was marked on 23 March 2020 at a price of GBX 214.00 per share. The company’s annual dividend yield stands at 3.21 percent as at 11 April 2020.
The website has been prepared for informational purposes only and is not intended to be used as a complete source of information on any particular company. The above article is NOT a solicitation or recommendation to buy, sell or hold the stock of the company (or companies) under discussion. Kalkine does not in any way endorse or recommend individuals, products or services that may be discussed on this site.