November 28, 2021

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Vodafone maintains dividend, Saudi Aramco blow, stocks rise

Here are the top business, market, and economic stories you should be watching today in the UK, Europe, and abroad:

Vodafone climbs on profit jump and dividend

Vodafone (VOD.L) shares climbed on Tuesday after the company reported better-than-expected profits and said it would maintain its shareholder dividend.

The London-based multinational telecommunications firm is defying the wider trends, which has seen hundreds of firms slash their dividends in the wake of the coronavirus crisis.

Vodafone boss Nick Read said that pre-tax profits rose to €795m (£697m) in the 12 months to the end of March, up from a €2.6bn loss in 2019.

Revenue climbed 3% to €45bn, slightly lower than analysts had predicted.

“Vodafone has delivered a good financial performance — growing revenue, adjusted EBITDA and free cash flow — whilst building strong commercial momentum through the year and executing at pace on our strategic priorities,” Read said on Tuesday.

The company said that 4 million customers had signed up to its unlimited mobile data plans after it launched new speed-tiered offerings in six of its markets.

Shares in Vodafone were up by almost 6% on Tuesday morning.

Supermarket Morrisons (MRW.L) has pledged to “feed the nation” during the coronavirus pandemic, recruiting tens of thousands of extra staff and expanding online delivery as more people stay at home.

Morrisons said on Tuesday it had put in place a range of new measures to get help Brits shop during the crisis, including expanding an online delivery partnership with Amazon, launching a new quick delivery service with Deliveroo, and introducing food boxes of essentials for those self-isolating.

“We are facing into the unprecedented current challenges and are playing our full part to help feed the nation: working with determination, creativity and pace to serve customers as well as we possibly can,” chief executive Dave Potts said.

It came as Morrisons reported a 5.7% rise in first quarter sales, excluding fuel. Sales have surged by 10.8% in the weeks since the lockdown was introduced.

Morrisons has recruited 25,000 extra staff to deal with the surge and has also put in place extra measures to protect them while at work. 

Saudi state oil company Aramco (2222.SR) saw its first quarter profit fall by a quarter in the first three months of 2020, blaming collapsing oil prices caused by the coronavirus pandemic.

Saudi Aramco said on Tuesday it made a net profit of $16.7bn (£13.5bn) in the first three months of 2020, compared to $22.2bn a year earlier.

The decline mirrored a slump in oil prices since the start of the year. The price of Brent crude (BZ=F) has collapsed by 50% since the start of the year. Global lockdowns and travel bans have depressed demand for fuel and led to massive oversupply of oil.

“The COVID-19 crisis is unlike anything the world has experienced in recent history and we are adapting to a highly complex and rapidly changing business environment,” Aramco president and chief executive Amin H Nasser said.

“We have delivered solid earnings with robust free cash flow, despite weak energy demand and low oil prices.”

Ryanair (RYA.L) plans to start running 40% of its flight schedule from 1 July, as long as government restrictions on flights within the EU are removed and “effective public health measures” are put in place at airports.

The budget European airline hopes to start operating up to 1,000 flights per day, reintroducing 90% of its pre-coronavirus route network.

This is a huge increase on the 30 flights per day the airline has been running since mid-March between the UK, Ireland and the rest of Europe.

The airline said passengers will not be allowed to queue for the toilets onboard, but “toilet access will be made available to individual passengers upon request.”

Ryanair will also require crew and passengers to wear face masks or face coverings, and temperature checks will be in place at airports.

Coronavirus could create £105bn black hole for smaller UK firms

The coronavirus pandemic could saddle small and medium-sized firms (SMEs) in the UK with more than £100bn ($124bn) in “unsustainable” debt by March 2021, the Bank of England has been warned.

A preliminary assessment revealed that UK private, non-financial businesses could be forced to contend with an unruly debt pile of between £90bn and £105bn within a matter of months, financial services industry lobby group TheCityUK said.

In a letter to Bank of England governor Andrew Bailey, the group warned that businesses could require wide-ranging debt recapitalisation so that they can counteract the blow to employment resulting from the crisis.

Loans handed out under the government’s Coronavirus Business Interruption Loan Scheme, which provides financial support to smaller firms who have lost revenue during the crisis, could account for as much as £20bn of that debt pile, according to the analysis.

Shares in Europe opened modestly in the green on Tuesday even after fears of a new wave of COVID-19 infections saw broad declines across Asian markets.

The pan-European STOXX 600 index (^STOXX) was 0.3% in the green. London’s FTSE 100 (^FTSE) rose by around 0.5%.

Germany’s DAX (^GDAXI) climbed by around 0.1%, while France’s CAC 40 (^FCHI) was marginally in the red.

China’s SSE Composite Index (^SSEC) fell by almost more than 0.1% on Tuesday and the Hang Seng (^HSI) was down by more than 1.6% in Hong Kong at market close.

Japan’s Nikkei (^N225) closed 0.1% in the red, while the KOSPI Composite Index (^KOSPI) in South Korea fell by almost 0.7%. Australia’s ASX 200 (^AXJO) declined by more than 1%.

“In a sign that sentiment is extremely fragile, the rebound that we saw at the end of last week has given way to rising nervousness about a second wave of infections as a number of countries have started to report an increase in the number of cases,” said Michael Hewson, the chief market analyst at CMC Markets UK.

What to expect in the US

Futures were pointing to a lower open for US stocks on Tuesday.

S&P 500 futures (ES=F) fell by more than 0.3%, as did Dow Jones Industrial Average futures (YM=F). Nasdaq futures (NQ=F) were down by less than 0.1%.

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