Centrica cancels dividend, Segro to proceed with final distribution
By Josh White
Date: Thursday 02 Apr 2020
(Sharecast News) - London open
The FTSE 100 is expected to open 22 points higher on Thursday, having closed down 3.83% at 5,454.57 on Wednesday.
Stocks to watch
British Gas owner Centrica cancelled its dividend and cut capex by ?200m as to mitigate the impact of the coronavirus pandemic. The company on Thursday reported a significant reduction in demand from business customers who had shut their shops after the government ordered lockdown. "We also expect to see an increase in working capital outflows and customer bad debt, as certain customer segments defer payments due to the reduction of household incomes and business revenues," Centrica said.
Segro said on Thursday that it is "very well capitalised" with a 26% loan-to-value ratio as at 31 March, alongside high liquidity and significant headroom to its financial covenants, as it faced the impact of the Covid-19 coronavirus pandemic. The FTSE 100 property investment and development company reported cash and undrawn facilities of ?1.2bn at the end of March, with ?280m of capital commitments. It said rental income would need to fall by 80%, or asset values by 64% before any debt covenants were breached, and confirmed it would go ahead with payment of the final dividend of 14.4p per share on 1 May.
Land Securities has cancelled its dividend to conserve cash and set up an ?80m rent relief fund for customers struggling during the coronavirus crisis.
Newspaper round-up
Millions of people across Britain risk falling through gaps in the coronavirus wage subsidy plan and benefits system, according to two of the country's leading economics think tanks. After ministers hurriedly pulled together plans to increase the level of financial aid available from the state as the Covid-19 outbreak intensifies, the Institute for Fiscal Studies said many self-employed workers would still get no support, while others would be left financially better off as a result of the crisis. - Guardian
Business leaders have warned that British companies are running out of time to stay afloat amid the coronavirus outbreak, after a survey showed a majority of firms had just three months of cash or less in reserve. The British Chambers of Commerce (BCC) said companies across the country were suffering from a sharp and significant fall in domestic and overseas sales as lockdown measures brought many firms close to collapse, threatening widespread job losses. - Guardian
Governments should buy up businesses that collapse to stop workers losing jobs and enable a quick recovery once the coronavirus crisis is over, the International Monetary Fund has urged. The Depression-era policy should be used to save the economy's productive capacity if loans, job support and other help for companies turns out to be insufficient, it recommended. - Telegraph
The government needs to set out an exit strategy for the coronavirus crisis because a lockdown that lasts for months is unrealistic and will damage the economy, Lord King of Lothbury, the former Bank of England governor, warned yesterday. Lord King, who led the Bank during the 2008 financial crisis, said that an indefinite shutdown would hurt younger generations and would cause mental health problems. If it went on too long, "there will be a rebellion against it" among the young, he added. - The Times
The Treasury has raised ?3 billion in the first of a series of bond sales this month to fund spending needed to combat the coronavirus pandemic. The Debt Management Office, which deals with the government's debt cash requirements, said that the tender of the first tranche of a series of sales in April had been completed yesterday. The average price accepted in the tender was ?112, a yield of 0.2 per cent. - The Times
US close
US stocks finished sharply lower on Wednesday, continuing on from the losses recorded at the end of the Dow's worst first quarter in history.
The Dow Jones Industrial Average ended the session down 4.44% at 20,943.51, the S&P 500 lost 4.41% at 2,470.50, and the Nasdaq Composite was 4.41% weaker at 7,360.58.
At the open, the Dow had lost 585.69, following on from losses seen in the previous session as market participants shrugged off some strong manufacturing data out of China and wrapped up the volatile quarter, which saw the blue-chip index lose more than 23% of its value in the first three months of 2020.
Donald Trump said that the US should brace for a "very, very painful two weeks" as a result of the rampant coronavirus.
White House officials projected between 100,000 and 240,000 virus-related deaths in the country.
"This is going to be a rough two-week period," Trump said.
"When you look at night the kind of death that has been caused by this invisible enemy, it's incredible."
Trump also proposed another $2trn stimulus package, this time focused on infrastructure spending.
However, it remained unclear as to whether or not it would pass Congress.
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