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ASX 200 (XJO) drops 0.6%, Telstra (ASX:TLS) suffers

The ASX 200 (ASX: XJO) is down right now as investors react to today’s released FY20 reports.

Victoria has reported big decrease in the number of new COVID-19 cases, however NSW’s latest 12 cases included three with no link to other clusters.

Telstra Corporation Ltd (ASX: TLS) suffers a selloff

The Telstra share price is down 7% after reducing its future return on invested capital (ROIC) expectations to be above 7% by FY23.

In the FY20 result Telstra announced that its total income decreased by 5.9% to $26.2 billion.

Reported EBITDA (click here to learn what EBITDA means) was $8.9 billion. After adjusting for lease accounting changes to make the comparison on an apples to apples basis, EBITDA decreased by 0.3% to $8.4 billion.

However, on a guidance basis, underlying EBITDA dropped 9.7% to $7.4 billion. Telstra said that its underlying EBITDA was hurt by COVID-19 by approximately $200 million.

Telstra’s net profit dropped by 14.4% to $1.8 billion.

Telstra’s board decided to declare a final dividend of 8 cents per share, bringing the total dividend for FY20 to 16 cents per share. That’s the same as last year.

In FY21 Telstra is expect total income to be between $23.2 billion to $25.1 billion. Underlying EBITDA is expected to be in the range of $6.5 billion to $7 billion. The NBN headwind for is expected to be around $700 million in FY21. FY21 guidance assumes COVID-19 impacts amounting to around $400 million. Therefore, Telstra is expecting underlying EBITDA to drop by 5.5% to 12.2%.

Premier Investments Limited (ASX: PMV) rises

The Premier Investments share price is up around 8%.

The company has given an update for the 26 weeks ending 25 July 2020, being its FY20 second half.

Premier Investments said that global sales were $484.2 million which was down $106.5 million or 18% on the second half of FY19.

However, despite the headline drop in sales and related decline in gross profit. Premier’s online sales and EBIT growth (click here to learn what EBIT means) continued to accelerate and deliver record earnings according to the company.

The company saw online sales of $123.3 million in the second half, up 70% compared to the prior corresponding period. Online sales made up around a quarter of Premier Retail’s total sales. The online sales deliver a “significantly” higher EBIT margin than the EBIT margin of the retail store network.

Premier Retail is now expecting FY20 second half EBIT to be between $58.7 million to $59.7 million. This would be growth of 9.7% to 11.7%.

Therefore, FY20 EBIT is now expected to be between $184.8 million and $185.8 million – up 10.5% and 11%.

Flight Centre Travel Group Ltd (ASX: FLT) share price rises

The Flight Centre share price is up 3.6% this morning after giving an update.

Flight Centre said that it’s expecting an underlying loss of between $475 million to $525 million. The statutory loss is expected to be between $825 million to $875 million after including write downs and ‘one-offs’.

It had made around $150 million of underlying profit before tax up to the end of February 2020. COVID-19 has clearly had a massive effect.

Pleasingly, the company said that its short term net operating cash outflow target was beaten. In July it saw a $53 million net outflow, which was below its monthly target of $65 million and included $17 million in revenue. The outflow was $43 million with the net benefit of the jobkeeper subsidy included.

Flight Centre said its corporate business was profitable (on an underlying basis) during FY20 and it won a record amount of new accounts.

The company said there are signs of a corporate recovery in most countries but a slower leisure recovery is likely because most customers are still unable to travel.

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