MARKET REPORT: Cancelled exhibitions hammer turnover at media company Relx and sends its events arm plunging to a loss
Cancelled exhibitions hammered turnover at media company Relx and sent its events arm plunging to a loss.
Coronavirus travel and social distancing restrictions meant the FTSE100 group couldn’t hold any corporate shindigs between the middle of March and the end of May. It ran two in China last month and is starting to schedule more – but many events have had to be scrapped or pushed back until later in the year.
Relx warned it could be costly to keep rearranging.
In a typical year it usually hosts 500 events in almost 30 countries, which attract more than 7m people. And even though Reed Exhibitions is the company’s smallest unit, making up only 16 per cent of the company’s total revenues last year, it had a big effect. Revenues in the division slumped by 71 per cent in the first half of the year, helping to drag turnover at the entire group down by 10 per cent to £3.5billion.
The usually dependable earner swung to a £117m loss, compared with a profit of £231m in the first six months of last year. Formerly known as Reed Elsevier, Relx used to be a traditional media company but now focuses on specialist information and data.
It edits and releases 18 per cent of the world’s scientific articles – some of which it has made available free during the pandemic. The revenue dip sent shares in Relx, which is the world’s second-largest events organiser, down 3.7 per cent, or 64.5p, to 1700p. It also dragged rival Informa, number one in the field, down 5.3 per cent, or 22.6p, to 406.3p.
But investors will have been relieved that Relx is still promising to pay a 13.6p dividend per share, saying it was justified because its other three divisions did well. Speaking of dividends, elsewhere on the Footsie it was a different story. The blue-chip index was also held back in part by hefty falls in energy firm SSE and water company Pennon. The utility groups both went ex-dividend, meaning that anyone who bought their stock from yesterday would not be entitled to receive the next shareholder payout.
A company’s share price usually dips whenever this happens, to reflect the lost income. SSE closed down 2.5 per cent, or 34p, to 1337.5p, while Pennon shed 1 per cent, or 10.89p, to 1054p. Despite these falls, the FTSE 100 eked out a gain, rising 0.1 per cent, or 4.34 points, to 6211.44.
GKN-owner Melrose Industries rose as bargain hunters hoovered up its stock, following a 14 per cent fall on Wednesday when it revealed a slump in revenues. Shares finished higher by 5.4 per cent, or 5.6p, at 108.9p last night.
And traders cheered the UK’s largest technology company, Sage, which provides accountancy software to smaller businesses. Its stock jumped 6.6 per cent, or 46.6p, to 753.6p after the firm said it had been ditched by fewer customers than it was expecting during the Covid-19 disruption and that revenues were up by 4 per cent in the first nine months of its financial year.
The FTSE 250 climbed 0.1 per cent, or 23.72 points, to 17489.45.
Top of the mid-cap leaderboard was miner Petropavlovsk, which rocketed by 17.6 per cent, or 5.5p, to 36.8p after reporting its gold production had surged by 39 per cent during the first half.
The major boost came from a hi-tech processing plant it has spent years designing and building.
But it is trapped in the middle of a boardroom row after angry activist investors ousted most of the board last month. Yesterday a shareholder that is on the side of the former directors complained to the Takeover Panel.
Over on AIM, nickel miner Horizonte Minerals surged 9.7 per cent, up 0.35p, to 3.95p after Tesla boss Elon Musk sent out a plea for companies to develop nickel mines in anticipation of a supply shortfall for green technologies.