Business & Investing: Disappointment for AMP shareholders, but  the market to get a new listing in My Food Bag

AMP shareholders were on the receiving end of bad news yesterday after being told the Australian based wealth management company’s proposed acquisition by US-based Ares Management at A$1.85 per share would not proceed.

No reasons were given for why the much-anticipated deal had fallen over at the last minute.

Meanwhile, AMP New Zealand’s operations reported a 19 percent fall in operating earnings to $38 million for the year ended December. The company blamed the decline on the closure of two legacy schemes and softer investment returns in the first half of the year as a result of the Covid-19 market sell-off.

Assets under management rose 4 percent to $13.3 billion with investment market gains of $564 million partly wiped out by new cash outflows.

A recent survey of KiwiSaver funds by Morningstar found AMP’s 4.1 percent return was the lowest among the default schemes last year, with several other funds also underperforming during 2020.

AMP’s Australian parent reported a A$177 million net profit for the year compared with 2019’s A$2.5 billion loss. No dividend was declared.

Previous attempts to sell the local business had not materialised due to a lack of buyer interest.

AMP’s New Zealand listed shares closed down 10.3 percent at $1.48, while on the ASX its shares were down 11 percent at $A1.37.

In 2019, AMP launched a company-wide turnaround strategy to improve its financial performance. Since then its shares have declined a further 30 percent.

Telstra earnings fall but dividend maintained

Australia’s largest telco, Telstra, yesterday reported underlying pre-tax and depreciation earnings of A$3.3 billion for the half year to December, a 14.2 percent fall on the same period last year.

Additional payments to network operator NBN Co and an estimated A$170 million impact due to the coronavirus pandemic, which led to declines in international roaming revenues and additional expenses for customer support, all contributed to the fall in earnings.

In addition, Telstra said the pandemic had also triggered A$100 million in costs from the pause in previously planned job cuts. The redundancy programme, which will eliminate a further 2200 jobs by the end of the calendar year, was restarted last week. The company has increased its cost reduction target to A$2.7 billion for the next financial year.

Excluding payments to the NBN and the impact of the pandemic, underlying ebitda was flat.

Telstra has forecast its full-year underlying earnings to be in the range of $6.6 billion to $6.9 billion and has maintained its current dividend at 16c.

Its shares rose 2.5 percent to close at A$3.25 yesterday.

My Food Bag set to list in early March

My Food Bag has announced details of its listing on the NZX Main Board and ASX on March 5 after confirming it had lodged its product disclosure statement with both exchanges.

Its shares will be priced at $1.85, giving the meal-kit company a market capitalisation of $449 million.

The company is forecasting a full-year profit of $20.1 million in its first year as a listed company and expects to pay a maiden dividend in December.

Up to $342 million will be raised under the IPO, with 85 percent of the proceeds being used to repay existing bank debt and enabling current shareholders to realise the majority of their investment.

Major shareholder Waterman Capital will sell its 66 percent stake down to a minimum of 15 percent, realising $193.9 million in the process, while the original five co-founders will sell $93.4 million worth of shares, leaving an 8.7 percent stake.

The company said deliveries increased 22 percent during the 2021 financial year, compared to just half a percent increase in the prior year, lifting revenue to $189.5 million.

Hallenstein Glasson Holdings appoints new CEO

Clothing retailer Hallenstein Glassons has appointed Stuart Duncan as the company’s new group CEO from April 1. Duncan, who has been chief operating officer since 2015, will take over from current managing director Mary Devine who has been appointed a non-executive director.

Jason Barrow, current buying manager of Hallenstein Brothers has been promoted to CEO Hallenstein Brothers.

Hallenstein Glassons has been one of the standout performers in the retail sector with its shares up more than 400 percent since hitting a low of $1.82 at the peak of the market selloff in March last year.

Uber reports another mammoth loss

Uber has reported a full year loss of US$6.8 billion last year, though down 20 percent on its US$8.5 billion loss in 2019.

During the year, the company said it had sold off costly ventures, cut staff and focused on what it had previously called “profitable growth.”

Uber said it remained “well on track to achieving our profitability goals in 2021.”

Uber plans to achieve profitability on an adjusted basis before the end of this year. Like rival Lyft, which reported its fourth quarter results this week, Uber saw some improvement from the third quarter of last year, but still experienced revenue declines due to the ongoing impact of the coronavirus pandemic on its business. Uber’s revenue for the fourth quarter was down 16 percent from the same period a year earlier.

The company has continued to lean on Eats, its food delivery business, which saw revenue increase 224 percent to US$1.4 billion in the fourth quarter compared to the year prior. Rides revenue fell 52 percent from a year earlier.

In July, Uber acquired one of its smaller food delivery competitors in the US, Postmates, for US$2.65 billion in an all-stock deal. Last week, the company announced it is acquiring alcohol delivery start-up Drizly.

The acquisition spree comes as Uber has abandoned some of its loftier and more costly ambitions. The company sold off its autonomous vehicle research division and its flying taxi operations in December.

AstraZeneca reports strong sales growth

Anglo-Swedish pharmaceutical giant AstraZeneca has reported a 10 percent rise in product sales for 2020, a year in which the drugmaker shot to prominence for its work developing a coronavirus vaccine, alongside the University of Oxford.

The company reported product sales totalling US$25.8 billion for 2020, while fourth quarter sales rose 12 percent to just over $7 billion. Total revenue for the year was US$26.6 billion.

AstraZeneca has said it will provide access to its Covid-19 vaccine at no profit for the “duration of the pandemic,” although the timing on this is uncertain. It has also committed to provide the vaccine on a not-for-profit basis in perpetuity to low- and middle-income countries. As such, its current earnings did not include sales of the vaccine.

In the results report, AstraZeneca CEO Pascal Soriot said the performance last year “marked a significant step forward for AstraZeneca. Despite the significant impact from the pandemic, we delivered double-digit revenue growth.”

Pot stocks in the US now in Reddit traders sights

The Reddit crowd are at it again, this time targeting US cannabis stocks betting on federal legalisation of the recreational drug under the new Democrat administration.

However, this time around the price action has been seemingly less dramatic than was the case last month.

A number of ‘pot stocks’ were caught up in the latest buying frenzy, including companies such as Tilray which soared 50 percent bringing the stock’s year-to-date gain to more than 670 percent, Canopy Growth rose 6 percent adding to its 110 percent rally in 2021, while shares in Aphria popped 10 percent, giving it a 280 percent gain for the year.

The group of cannabis companies is garnering attention from the same WallStreetBets Reddit army that contributed to the epic short squeeze in GameStop last month. Several posts on the social media forum show users expressing optimism about the stocks’ upside potential.

“Weed about to make me a millionaire in 2021,” one post said with more than 107,000 likes.

Andrew Patterson is Newsroom's Markets Editor and has worked for decades as a financial journalist, radio presenter and editor with Australia's ABC, Radio Live and NBR.

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