What to watch: British Gas profits dive, Corona-owner's year of COVID, and Standard Chartered profits fall

Oscar Williams-Grut
·Senior City Correspondent, Yahoo Finance UK
·6 min read
British Gas engineers are to stage a series of fresh strikes in a dispute over pay and conditions. Photo: PA
British Gas engineers are to stage a series of fresh strikes in a dispute over pay and conditions. Photo: PA

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

British Gas profits dive

British Gas-owner Centrica (CNA.L) has reported a 31% fall in underlying earnings to £447m ($632m) for 2020 as results came under pressure from the pandemic and warmer weather.

Topline earnings dropped by 23% to £1.6bn and the group incurred exceptional costs of £1.5bn, largely linked to an ongoing turnaround plan. The business announced plans to axe 5,000 staff last year and has been seeking to renegotiate contracts with other staff.

"We started a major transformation of the company during 2020," chief executive Chris O'Shea said. "Against the continuing uncertain backdrop caused by the COVID-19 crisis, I am truly grateful for the efforts of all my colleagues, as we kept our customers warm, safe and supplied with energy and services and protected the business."

O'Shea said the company had made a "good start" but stressed the turnaround plan was in its early stages.

"It won't be easy, but I am confident we have the people, the brands and the market positions to deliver a successful turnaround in the coming years," he said.

Shares fell 4.7%.

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Corona-owner's year of COVID

Brewing giant AB InBev (ABI.BR) managed to grow sales at the end of last year after a tough 12 months.

AB InBev, which owns brands including Corona lager, said sales fell by 3.7% across 2020 to $46.8bn. Profit dropped by 80% to $2.2bn.

However, the brewing giant managed to grow sales by 4.5% in the final quarter of the year, pointing to a nascent turnaround.

"We finished the year with momentum in our key markets," said chief executive Carlos Brito.

"We are now more closely connected than ever to the 6 million+ customers and 2 billion+ consumers we serve worldwide through our clear commercial strategy, revamped innovation process, digital platforms and ongoing operational excellence.”

Shares were down 4.3% in Brussels.

Standard Chartered profits dive

Shares in emerging markets-focused bank Standard Chartered (STAN.L) slumped after it reported a sharp drop in profits.

Income fell 3% to $14.7bn but profits fell 40% to $2.5bn. Chief executive Bill Winters said returns were hit by "higher provisions, reduced economic activity and low interest rates, in each case the result of COVID-19."

Standard Chartered set aside $2.3bn to cover an expected spike in bad loans as a result of the pandemic. Provisions were 150% higher than in 2019.

"I am proud of the way our colleagues around the world have responded to the challenges of the pandemic by supporting each other, our communities and our clients," Winters said. "Looking ahead, our unique exposure to the most dynamic markets in the world puts us in a great position to benefit from the clear signs of recovery there.”

Shares fell 4.5%.

Lockdown costs Primark £1.1bn in lost sales

Primark has once again increase the estimate of how much lockdown will cost it in lost sales.

Associated British Foods (ABF.L), which owns Primark, said on Thursday that lockdown was likely to cost the clothing chain £1.1bn ($1.56bn) in lost sales and profits would likely to be lower. Last month ABF had said a £1bn hit was likely.

Primark sales over the last six months are on track to hit £2.2bn, ABF said, which was down from £3.7bn in the same period last year. Closures mean the chain will have to store £260m of autumn and winter clothing in warehouses until they become seasonal again.

Primark has been hit particularly badly by lockdowns given the fact it has no online sales. There is a light at the end of the tunnel, though, and ABF said 83% of Primark stores will reopen by 26 April.

Europe opens higher after rally on Wall Street and in Asia

European markets opened higher on Thursday, following rallies on Wall Street and in Asia overnight.

The FTSE 100 (^FTSE), the DAX (^GDAXI), and the CAC 40 (^FCHI) all opened half a percent higher on Thursday.

Stocks were buoyed by dovish comments from US Federal Reserve chair Jerome Powell on Wednesday, signalling the central bank would continue to support the economy through the recovery phase of the COVID-19 crisis.

"Risk appetite showed signs of returning to global markets over the last 24 hours as Fed Chair Powell stuck to his reassuring tone and continued to signal that the central bank would keep policy accommodative for some time to come," said Jim Reid and his team of strategists at Deutsche Bank.

"The remarks led to a sharp turnaround across a number of different asset classes, with the S&P 500 moving from an intraday low of -0.56% shortly after the open to end the session +1.14% higher, which was the strongest daily performance for the index in over 3 weeks."

There was little remaining momentum on Wall Street. S&P 500 futures (ES=F) were flat, Dow Jones futures (YM=F) were up 0.2%, and Nasdaq futures (NQ=F) were down 0.1%.

After a sell-off on Wednesday, Asian stocks rebounded overnight. Japan's Nikkei (^N225) rose 1.7%, the Hong Kong Hang Seng (^HSI) rose 1.4%, South Korea's KOSPI (^KS11) jumped by 3.5%, and the Shanghai Composite (000001.SS) rallied 0.6%.

Aston Martin losses soar to £466m

Luxury carmaker Aston Martin (AML.L) saw its losses almost quadruple to £466m ($659m) last year as sales sunk.

Aston Martin on Thursday reported a pre-tax loss of £466m for 2020, down from a loss of £119.6.m in 2019. It came as retail sales of its high-end cars fell by 32% and wholesale revenues slumped 42%.

Analysts said the decline was due to the company's actions to reduce the stock of cars held by dealers in showrooms, which slowed sales.

Shares in Aston Martin jumped 10% on the update.

Ikea's UK sales fall 10% but online surges

Swedish company Ikea, known for its budget, flat-packed furniture, said total sales in the UK fell by 10.2% to £1.9bn ($2.7bn) for the financial year ending 31 August 2020 as a result of the pandemic, but online sales were a bright spot.

It said that while sales were down because its many of its stores were closed for up to three months of the financial year, online sales surged 31% year-on-year. They now represent 27% of its total UK sales, compared to 10% in the previous year.

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