MARKET REPORT: BT feeling the Covid pinch

Being able to go to the pub and watch a football or cricket match with friends seems like a distant memory for Britons these days. 

And BT is still feeling the pinch too – as it usually reaps a pretty penny from the nation’s beloved, beer-fuelled past-time. 

Revenues at the telecoms behemoth were down 8 per cent to £10.6billion in the first half of its financial year, as its sports division and income from business customers (for obvious reasons) took hits. 

Profits dived 20 per cent, to £1.1billion. 

Earlier this year, the company received a boost from households upgrading their broadband en masse to ease the overnight exodus to home-working during the coronavirus lockdown. 

But even though the ongoing effects of Covid restrictions are still being felt on BT’s books, boss Philip Jansen said it had managed to cut £352m of costs in the six-month period. 

And it struck an upbeat tone by lifting its profit guidance this year to between £7.3billion and £7.5billion – and predicting it will be back up to last year’s profit levels of £7.9billion by 2023. 

William Ryder, equity analyst at Hargreaves Lansdown, said: ‘All things considered these are some reasonable results from BT. 

‘There are still challenges ahead and 5G looks like it will cost a fortune, but the internet is now an essential service.’ 

Investors initially gave the update a warm welcome, with shares surging by almost 10 per cent in early trading. 

But the rally fizzled out throughout the course of the day, before closing lower by 2.5 per cent, or 2.53p, at 99.12p. The wider market was also in the red, but just by a whisker, following Wednesday’s sharp sell-off. The FTSE 100 finished down just 0.02 per cent, or 1.05 points, at 5581.75, while the FTSE 250 dropped 0.4 per cent, or 71.23 points, at 17,177.68. 

So-called ‘lockdown winners’ fared significantly better. 

Among them were online white goods seller AO World (up 9.1 per cent, or 30.5p, to 365p), delivery giant Ocado (up 1.6 per cent, or 37p, to 2350p) and Paddy Power-owner Flutter Entertainment (up 8 per cent, or 985p, to 13270p). 

European markets also managed to stabilise, with France’s Cac 40 finishing 0.03 per cent lower and Germany’s Dax rising 0.3 per cent after the leaders of both countries announced tighter nationwide restrictions to halt the further spread of Covid before it spins out of control. 

The European Central Bank, meanwhile, indicated it would hand out even more support to governments as new lockdown measures in a slew of countries make it more likely there will be a double-dip recession. The euro fell by around 1 per cent against the dollar after ECB president Christine Lagarde said the bank’s council had all agreed it was ‘necessary to take action’. 

The UK has so far avoided a second national lockdown but was urged to boost spending even further by the International Monetary Fund and not to worry about the growing debt pile. The IMF also cut its forecast for the UK economy, expecting GDP to fall by 10.4 per cent this year, compared with prior estimates of 9.8 per cent. 

Hip and knee replacement equipment specialist Smith & Nephew fell after it declined to give any future guidance in a trading update. 

Shares edged down 1.8 per cent, or 25.5p, to 1359.5p, despite saying its US division had returned to growth in the most recent quarter. 

It also revealed that total revenues had bounced back after plunging during lockdown, when many scheduled operations were delayed by Covid. 

Revenues slid 4 per cent to £930m – compared with a 29 per cent dive during the second quarter.

This post first appeared on Dailymail.co.uk