Lockdowns continued in Australia and overseas but light seemed to appear at the end of the tunnel. Trump announced guidelines to allow for the gradual easing of restrictions. In China, industrial production data showed a 32.13% increase in March by comparison to February.
The IMF has predicted a V-shaped rebound for the economy. While Australia appears to be entering its first recession in 30 years, growth of 6.1% is predicted for next year following the coronavirus contraction. Share markets appear to be looking on the bright side based on recent rises.
We take a look at the 5 ASX shares that fell the furtherest last week.
Webjet Limited (ASX: WEB)
Webjet shares fell 11.6% last week to finish the week at $2.60. Webjet has been in the firing line as a result of the coronavirus pandemic, which has wreaked havoc on its business.
Webjet was suspended from quotation in late March as the crisis began to bite, having withdrawn its earnings guidance earlier in the month. The travel company remained suspended for 2 weeks before it announced an emergency capital raise.
Webjet undertook the $275 million equity raising at the start of April, consisting of an institutional placement and entitlement offer for retail shareholders. Shares under the entitlement issue are issued on a 1:1 basis at an offer price of $1.70 per share.
Proceeds from the issue are being used to strengthen the balance sheet. Funds should be sufficient to provide for operating costs and capital expenditure through to the end of 2020, even if travel restrictions continue.
Whitehaven Coal Ltd (ASX: WHC)
Whitehaven Coal shares ended the week down 10.7% at $1.795. Shares took a tumble last week after the miner downgraded its coal sales target for the second time and ruled out investing in mine expansion due to volatile financial markets.
Coal sales were down in the March quarter. Equity coal sales declined 19% on the prior corresponding period. Managed coal sales were down 22%. Saleable coal production also fell during the quarter, down 15%
Whitehaven has three major development projects under consideration which aim to expand production over the next decade. Financial market conditions mean Whitehaven is being cautious in allocating capital to expansion. The company announced it does not expect to make a final investment decision on the projects this year.
Flight Centre Travel Group Ltd (ASX: FLT)
Shares in Flight Centre Travel Group finished the week down 9% at $10.52. Shares in the travel group have lost 70% of their value since February. Flight Centre conducted its own emergency capital raise last week.
Flight Centre raised some $700 million by way of a placement and entitlement offer. The institutional placement raised $282 million. The 1 for 1.74 entitlement offer raised approximately $419 million. Proceeds of the offer will be used to strengthen Flight Centre’s balance sheet and liquidity position, allowing it to withstand the current dislocation in the travel sector.
The capital raising saw the shareholdings of Flight Centre’s founders diluted significantly. The aggregate voting power of the founders dropped from over 42% pre raise to just 25.7%. Credit Suisse and UBS also became substantial Flight Centre shareholders as a result of the raise, with the former holding 8.25% of voting power and the latter 5.51%.
The capital raise comes as Flight Centre’s business has suffered significant disruption due to coronavirus. The company has stood down around 6,000 staff and closed half of its shopfronts globally. Savings from these measures are estimated to be $1.9 billion annually.
Coca-Cola Amatil Limited (ASX: CCL)
Shares in Coca-Cola fell 8.3% last week, ending the week at $8.63. Coronavirus restrictions are impacting sales with volume reductions of ~30% in the first 2 weeks of 2Q2020.
The beverage operator provided a trading update last week, revealing volumes increased in March due to consumer stockpiling, however weaker sales were recorded in the lead up to Easter. Volumes have been volatile across markets and channels.
A drop in earnings was recorded in the March quarter. While low single digit volume growth was reported, earnings before interest and tax (EBIT) saw a mid teen percentage decline. In the near term the company is focused on managing the short term impacts of coronavirus.
Coca Cola has a resilient business model that has been able to withstand immediate challenges presented by the pandemic. In the medium term the company has $500 million of undrawn bank facilities available and $920 million in cash, providing it with flexibility to deal with an uncertain environment.
Unibail-Rodamco-Westfield (ASX: URW)
Unibail-Rodamco-Westfield shares dropped 8% last week to finish the week at $4.81. The shopping centre operator was sold off as lockdowns continued in Europe, impacting on its properties in the region.
France and the United Kingdom have extended their lockdowns for at least 3 weeks. France accounts for 35% of Unibail-Rodamco-Westfield’s portfolio, while the UK and Italy account for another 9%. The company operates shopping centres, offices, and convention and exhibition centres.
Lengthened lockdowns mean conventions and exhibitions will remain on hold, and foot traffic at shopping centres will be down. Many retailers are seeking rent reductions from landlords as coronavirus seeing them facing plummeting revenues. Unibail-Rodamco-Westfield may see lower rental revenue from its properties as the crisis continues.
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Motley Fool contributor Kate O'Brien has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of and has recommended Webjet Ltd. The Motley Fool Australia has recommended Flight Centre Travel Group Limited. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.
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