Three of Britain’s biggest firms reveal devastating toll coronavirus pandemic has had on business
- Profits at HSBC dive 36 per cent
- BP rocked by oil price collapse
- Whitbread racks up £725m loss
Three of Britain’s biggest firms have revealed the devastating toll the Covid-19 pandemic has had on business.
As fears of a second wave of infections again rocked stock markets worldwide, FTSE 100 giants HSBC and BP reported a dramatic fall in profits while Whitbread racked up a £725m loss.
The slump in fortunes across banking, oil and leisure underlined the widespread impact of the coronavirus outbreak on the economy.
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And it fuelled fears that thousands of smaller businesses – employing millions of workers – are also suffering as the virus and strict measures to curb its proliferation wreak havoc on corporate Britain.
David Buik, a veteran City commentator who works for challenger stock exchange Aquis, said: ‘These three firms are at the pinnacle of their sectors and they have all been completely hammered. The thing they have in common is Covid-19. It just shows the parlous state that the economy is in.’
HSBC reported profits of £2.4billion for the third quarter of the year – down 36 per cent on the same period 12 months ago.
The results were well ahead of City expectations, and showed the bank recovering slightly from earlier this year, and the muted profits prompted boss Noel Quinn to ramp up his cost-cutting drive.
Quinn said he was hoping to cut the bank’s 2022 annual cost base by more than the £24billion originally planned.
He did not disclose whether this would involve further job losses on top of the 35,000 planned. But he did reveal the lender would be further cutting back its wholesale and investment bank in Europe, as it focused on pushing further into Asia where it makes most of its money.
So far this year, £8.1billion of HSBC’s profit has come from its operations in Asia, while its businesses in Europe have contributed a £2.3billion loss.
HSBC said its bad loan provisions for the full year would likely be at the lower end of the £6bn to £10bn scale it predicted earlier this year, as the global economic outlook has settled and the recovery in countries such as China is making up for gloom in the UK.
Profits at BP – led by chief executive Bernard Looney – also tumbled in the third quarter, dropping 96 per cent from a year the price of oil due to weaker demand for fuel during the pandemic hit the business.
Hit hard: Profits at BP – led by Bernard Looney – also tumbled in the third quarter
The energy supermajor warned it was ‘difficult to predict’ when the demand for oil will begin to rise again and what the ‘ultimate impact’ of Covid-19 will be.
However, the results were better than feared, and followed a £13.5billion loss in the second quarter of the year.
The price of Brent crude oil has rebounded from $19 a barrel in April to around $40 now – but is still far off the roughly $70 it was trading at in January.
BP’s share price has more-than halved this year and has dropped significantly since it slashed its prized dividend in half in August from 7.9p to 4p. Shares fell 2.1 per cent. Premier Inn-owner Whitbread said the latest restrictions threaten to snuff out its recovery as it reported a huge half-year loss.
The company, which also owns Beefeater and Brewers Fayre pubs, said the number of guests had already dropped in October, and forecast things would get worse in November and December. In Wales it has closed almost 40 hotels, and half of its remaining 800 UK sites are subject to Tier Two or Three restrictions.
Chief executive Alison Brittain said: ‘As restrictions get intensified, I would expect to see further decline as we head into November and December.’
Whitbread swung to a £724.7m loss in the first six months of the year, compared to a £219.9m profit over the same period last year.
Revenues fell 76.9 per cent to £250.8m as the company’s hotels were closed between March 23 and July 4. Shares fell 2 per cent.