What to watch: Unilever beats estimates, IAG slumps and Shaftesbury to raise £300m

Kumutha Ramanathan
·Contributor
·4-min read
British-Dutch multinational consumer goods company sign is seen on October 7, 2020 in Warsaw, Poland. (Photo by Aleksander Kalka/NurPhoto via Getty Images)
British-Dutch multinational consumer goods company sign in Warsaw, Poland. (Credit: Aleksander Kalka/NurPhoto via Getty Images)

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

Unilever beats estimates

Unilever (ULVR.L), the Anglo-Dutch maker of Dove soap, Hellman’s mayonnaise and Tresemme shampoo, reported a stronger-than-expected return to sales growth in the third quarter on Thursday, led by a 5.4% increase in sales in emerging markets, where it gets the bulk of its revenue.

Analysts were expecting an increase of 1.3%, according to a company statement.

Similar to its peer Nestle (NESN.SW), Unilever has been focused on buying assets in fast-growing categories, such as vegan foods and premium beauty, and transitioning out of its traditional staple groups, such as margarine and tea.

“The environment we are operating in will remain unpredictable in the near term, so we will continue to maintain the speed and agility of our response,” said Chief Executive Alan Jope, adding he was “perplexed by talk of a quick recovery.”

IAG slumps on lower traffic

The parent company of British Airways and Iberia slumped to a €1.3bn (£1.17bn, $1.54bn) loss in the third quarter of 2020, as the COVID-19 pandemic continues to severely depress aviation.

IAG (IAG.L) on Thursday said it had made an operating loss of €1.3bn in the third quarter, compared to a profit of €1.4bn in the same period of 2019. Revenue in the three month period dropped 83% to €1.2bn. Passenger traffic fell by 88%.

IAG slashed capacity at the start of September in response to new quarantine measures introduced across Europe but the company said demand had been even weaker than expected since then. IAG now expects to fly only around 30% of its total capacity in the fourth quarter. It had hoped to carry between 46% and 60% of last year’s passenger numbers.

The airline blamed the spread of local lockdowns across Europe and the slow adoption of rapid testing at airports, which, if adopted, could subvert the need for passengers to quarantine.

The worse outlook means IAG no longer expects to break even on a cashflow basis in the fourth quarter.

IAG said it had “strong” liquidity, with €6.6bn of cash and lending facilities to draw on.

Read more: British Airways-owner IAG loses €1.3bn in three months

Shaftesbury asks shareholders for around £300m

Shaftesbury (SHB.L), the property company that owns vast swathes of London’s West End and Chinatown, is going cap in hand to investors.

The company on Thursday announced plans to raise £297m ($390m) through a heavily discounted open offer of new shares. Total fundraising could hit £307m if investor demand is big enough.

Shaftesbury said the funds would help to bolster its balance sheet, allowing it to weather the ongoing crisis in central London.

“The capital raising announced today will ensure the group maintains the financial flexibility and resources to navigate the unprecedented near-term operational challenges caused by the COVID-19 pandemic,” chief executive Brian Bickell said in a statement.

He said the funds would ensure Shaftesbury was “well-placed to benefit from the gradual return to more-normal patterns of life and activity that have always made London's West End an unrivalled global destination.”

Shares will be offered at 400p a piece in the new issue. It represents a 20% discount to Wednesday’s closing price of 501p.

Read more: West End landlord Shaftesbury asks shareholders for £300m

Stalled US stimulus and rising COVID-19 cases knock markets

Asian markets took a stumble and Europe’s also opened lower on Thursday as hopes of a US stimulus deal diminish and COVID-19 cases continue rising.

The pound rose as possibility of Brexit talks emerged on Wednesday evening after Michel Barnier, the EU’s chief negotiator said that the bloc would have to make compromises, alongside the UK. The talks are expected to resume on Thursday.

European markets opened lower.

London’s FTSE 100 (^FTSE) was down by 0.8% in London. The pan-European STOXX 600 (^STOXX) was down 1%. Germany’s DAX (^GDAXI) slumped by 1.3% and France’s CAC 40 (^FCHI) went lower by 1%.

The news on Brexit talks is well received as the UK and the rest of Europe continues to struggle with coronavirus cases, with restrictions being extended and lockdowns being placed on wider areas, placing further pressure on economies. In the UK, a record number of new cases totaling 26,687 were confirmed on Wednesday, with hospitalisations in England rising above 6,000 for the first time since late May. Italy and the Netherlands also reached record highs, and Spain became the first nation in Western Europe to record 1 million coronavirus cases in total.

US futures were negative. The S&P 500 (ES=F) was down by 0.6%, the Dow Jones (YM=F) was down by 0.5%, and the Nasdaq (NQ=F) was also slightly lower by 0.5%.

WATCH: FTSE hits 5-month low