By Steve Goldstein, MarketWatch
Two companies in defensive sectors struggled on Tuesday as the FTSE 100 gave up some of the previous session’s strong gains.
Compass Group /zigman2/quotes/200043088/delayed UK:CPG +1.82% shares fell as much as 11% in London as the catering group said it would raise 2 billion pounds in equity.
The company said organic revenue skidded 46% in April following a 20% downturn in March, though it has also cut its cost base by around £500 million a month.
In April, around 50% of its business was closed.
Compass says it wants a “strong investment grade rating” and said it would invest in capital expenditure and possibly spend on what it calls “bolt-on M&A [mergers and acquisitions] opportunities that improve our exposure or strengthen our capabilities.” It will resume the dividend it has suspended and additional returns to shareholders after it reaches its target leverage ratio, Compass said.
Compass Group slide presentation
Analysts at Citi said the “slow recovery” scenario laid out in slides released by the company explain the share-price reaction. In that scenario — which the company insists is not a forecast — revenue is still 20% below normal in the second half of fiscal 2021.
Cigarette maker Imperial Brands /zigman2/quotes/208789104/delayed UK:IMB -1.02% was another big decliner, losing 7% as it cut its dividend by a third.
Its fiscal first-half adjusted operating profit fell by 9% as tobacco volume slipped by 0.5%.
There was a mixed performance by the airlines, with International Consolidated Airlines Group /zigman2/quotes/208070069/delayed UK:IAG +1.40% rising 4% while easyJet /zigman2/quotes/202825892/delayed UK:EZJ +1.18% dropped 2.6%. EasyJet revealed a cyberattack resulted in 9 million email addresses and travel destinations were accessed, and 2,208 credit-card details.
The revelation of the cyberattack comes at a sensitive time, with Friday’s shareholder showdown as founder Stelios Haji-Ioannou attempts to remove the airline’s top executives. Haji-Ioannou holds one-third of the company.
The FTSE 100 /zigman2/quotes/210598409/delayed UK:UKX +0.65% fell 0.4% after the 4.3% rally on Monday.