ASX 200 (XJO) up another 0.9%, Sydney Airport (ASX:SYD) to raise $2 billion

The ASX 200 (ASX: XJO) is up another 0.9% this morning with reports coming thick and fast during reporting season.

Whilst new Victorian COVID-19 cases are coming down – 331 cases announced today – there has been the highest number of cases in NSW for months, with 22 new cases.

Sydney Airport Holdings Pty Ltd (ASX: SYD) HY20 result and capital raising

Sydney Airport said that 9.4 million passengers went through the airport in the half year period, a 56.6% decline on the prior corresponding period. The total passengers in the first quarter of 2020 was 9 million. COVID-19 has caused a significant impact on passenger numbers.

There was a 57.3% drop in international passengers and a 56.1% fall in domestic passengers.

Total revenue dropped 35.9% to $511 million.

Sydney Airport’s EBITDA (click here to learn what EBITDA means) fell 35.4% to $300.4 million. While operating costs dropped 20.5%, net operating receipts fell 79% to $90.4 million.

The airport operator recorded a loss after income tax of $53.6 million.

Sydney Airport recognised a $40.9 million doubtful debt provision, including the full impairment of pre-admin Virgin Group debts. It also recognised a $22.2 million impairment charge relating to capital projects that are being impacted or delayed.

Sydney Airport also announced that it’s going to raise $2 billion for four key reasons: Substantially reduce net debt, to enhance financial resilience, to maintain its investment grade credit rating and increase liquidity.

The offer will be a fully underwritten pro rata accelerated renounceable entitlement offer. People can buy one Sydney Airport share for every 5.15 they currently own at a share price of $4.56 per share.

That price is a 15.4% discount to the last traded price yesterday.

A2 Milk Company Ltd (ASX: A2M)

a2 Milk announced this morning that David Bortolussi would soon to be stepping into the role managing director and CEO. David will succeed interim CEO Geoffrey Babidge, who temporarily took back the reins when Jayne Hrdlicka “agreed to step down” in December 2019.

David will be based in Sydney and given the six month notice period required by his current employer, is expected to commence in early 2021.

David’s experience primarily lies in the consumer and retail sector. After joining the formerly ASX-listed Pacific Brands as Chief Financial Officer & Operating Officer in 2009, David was appointed CEO in 2014 until it was acquired by US-listed retailer HanesBrands. David is currently the group president for international innerwear at HanesBrands.

a2 Milk said David has many strengths that make him well suited to the company at this stage of its growth. This includes extensive international leadership experience in the consumer and retail sector, particularly in corporate strategy and business transformation with a focus on brand development and innovation, multi-channel management and supply chain operations.

The A2 Milk share price is down 0.8%.

Challenger Ltd (ASX: CGF) result

Challenger announced that it saw group assets under management rise by 4% to $85.2 billion over the year. The Challenger share price is down 3.7%.

There was net inflows of $2.5 billion into its funds management, which was better than the broader market.

Life sales grew by 13%, reflecting the growth of its institutional sales and an above target contribution from the partnership with MS Primary in Japan. Challenger also said that Life’s wholesale longevity business completed three transactions in the UK pension market during the year. These transactions resulted in a significant increase in the value of future profits which will support future earnings growth.

However, total annuity sales fell by 12% to $3.1 billion. Management said this decline was due to structural changes in the wealth management market as well as new age pension rules and the COVID-19 disruption.

Its normalised profit before tax dropped 8% to $807 million and the normalised net profit after tax fell 13% to $344 million. The ‘normalised’ result removes the effects of investment value changes.

The statutory net result, which does include investment movements, showed a net loss of $416 million due to significant investment declines because of the market sell-off.

There will be no final FY20 dividend due to the uncertain conditions, market volatility and the aim of maintaining a strong capital position.

Challenger is expecting normalised net profit before tax to be in the range of $390 million to $440 million. That would mean a drop of 13% to 23%.

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At the time of publishing, the author of this article does not have a financial or commercial interest in any of the companies mentioned.

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