Profits plunge at AB Foods, DS Smith sees second quarter recovery

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The FTSE 100 is expected to open 55 points higher on Tuesday, having closed down 1.39% on Monday, at 5,654.97.

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Full-year profits at Associated British Foods fell by 40% as store closures at its Primark clothing chain due to the coronavirus pandemic offset better performances at its sugar and food ingredients units. The conglomerate on Tuesday reported pre-tax profits of £810m compared with £1.2bn a year ago on a 12% fall in revenue of £13.9bn. No dividend was declared. “So far Covid-19 has cost the group some £2bn of sales, £650m in lost profit and a cash outflow of £800m,” ABF said.

DS Smith said on Tuesday that, while it was expecting its profit for the half year just ended to be lower year-on-year due to Covid-19, it had seen a “significant improvement” in the second quarter compared to the first on both sides of the Atlantic, reflecting the benefit of improving packaging volumes and reduced old corrugated containers (OCC) pricing, combined with the first quarter weighting of additional Covid-19 disruption costs. The FTSE 100 company diad that, given the improvement in performance, it still intended to declare a dividend for the half year ended 31 October.

Newspaper round-up

The number of furloughed workers in the UK is expected to more than double this month to as many as 5.5 million as the government places England into national lockdown and expands its emergency Covid-19 wage support schemes. Economists said businesses were set to claim for billions of pounds of additional state support from the furlough scheme over the coming weeks, amid the enforced closure of non-essential venues for the second time this year. - Guardian

Plans to build Crossrail 2 will be shelved as part of the £1.8bn bailout deal agreed by the government and Transport for London at the weekend. TfL will also have to further investigate driverless trains under the terms of the deal to provide emergency funds to the capital, which has lost billions in passenger revenue because of the Covid-19 pandemic. - Guardian

Car manufacturers and dealers are on a collision course with the Government, appealing to be allowed to keep selling vehicles through the new lockdown and avoid damaging job losses across the industry. Under the controls coming in from Thursday, dealerships will have to shut despite saying they can operate safely compared with most other retailers. - Telegraph

Thousands of businesses are braced for a "truly devastating" blow from Boris Johnson's second lockdown amid fears that the economy will collapse 12pc this month. Britain is teetering on the brink of a dreaded double-dip recession following the Prime Minister's ban on household mixing and non-essential travel coupled with mass pub and restaurant closures, experts at the National Institute of Economic and Social Research (Niesr) warned. - Telegraph

Some of the biggest employers in the City and beyond have told thousands of staff to work from home as banks, accounting firms and investment groups brace for the new lockdown. Deutsche Bank, Goldman Sachs and PwC are among the leading employers that are asking most staff members to avoid the office. - The Times

US close

Wall Street stocks closed higher on Monday despite rising cases of Covid-19 at home and increased lockdown measures abroad ahead of the US general election.

At the close, the Dow Jones Industrial Average was up 1.60% at 26,925.05 and the S&P 500 was 1.23% firmer at 3,310.24, while the Nasdaq Composite saw out the session 0.42% stronger at 10,957.61.

The Dow Jones closed 423.45 points higher on Monday, reclaiming some of the losses recorded in what was the worst week for the blue-chip index since March.

A continued rise in the number of new coronavirus infections was in focus on Monday, with the US reporting 99,321 new Covid-19 cases on Friday, according to Johns Hopkins University, eclipsing the previous record set only one day earlier.

Tuesday's general election also garnered a serious amount of investor attention, with Democratic candidate Joe Biden holding a considerable lead over the Donald Trump, with the former vice president garnering 52% of support from registered voters versus 42% for the incumbent president.