Friday, July 12: The FTSE 100 closed out the week in the red, dragged lower foremostly by insurer Hiscox but also a raft of consumer stocks and utility companies. Hiscox(-5.32%) shocked the market after announcing it would take a hit from claims related to catastrophe events in 2018. However, a boost to business is expected in H2.
Thomas Cook(-59.47%) kicked off the day by announcing rescue talks to the tune of £750m with banks and its largest shareholder, Fosun, which holds 18% of stock. The tour operator declared that its Summer 2019 is 75% sold, slightly ahead of the year before, but underlying earnings in H2 will be behind the year before due to the “uncertain consumer environment” the UK faces. The recapitalisation will finance a reorganisation of the company’s Tour Operator and Airline business, leading to Fosun to taking a significant position as a minority interest in the Airline business. The plan comprises a debt for equity swap for external bank & bond debt following discussions with financial creditors. Existing shareholders face significant dilution of their ownership. The group stalled on the strategic review of its airline for the time being.
Lookers(-8.31%) saw its share price tumble as the car dealership guided that full year profits would be below expectations due to weak consumer confidence and pressure on used car margins. The company cited “challenging conditions” in the sector, as a tough Q2 trading period followed solid trading in Q1. In the second quarter car registrations were down 4.6% from a year earlier.
European equities were mixed at the close, with the FTSE 100 -0.05%, the CAC 40 +0.38% and the DAX 30 -0.07%.