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ASX 200 finishes higher, Woolworths gives update

ASX 200
Credit: Cimexus

The S&P/ASX 200 Index (ASX: XJO) rose by 0.2% today to 5,954 points.

Earlier in the day there were fears that a potential trade deal between the US and China was off the table. But President Trump soon confirmed on Twitter that wasn’t the case.

Woolworths Group Ltd (ASX: WOW) profit hasn’t grown like its sales

Woolworths announced a number of things today in an update to the market. The Woolworths share price declined around 0.75%.

The ASX 200 supermarket business said that for FY20 it expects to report earnings before interest and tax (EBIT) (post AASB 16 and before significant items) of between $3.2 billion to $3.25 billion. On a comparable basis, FY19’s EBIT was $3.29 billion.

A sizeable part of the disappointing EBIT was the fact that the hotels division is still losing money due to COVID-19 restrictions. FY20 Hotels EBIT is expected to be $160 million to $170 million, compared to $355 million in FY19.

The FY20 fourth quarter sales growth for the ASX 200 business was more impressive. In the 10 weeks to 14 June 2020, Australian food sales grew by 8.6%, New Zealand food sales grew by 15.1%, Big W sales grew by 27.8% and Endeavour Drinks sales grew by 21.4%.

Woolworths plans to transform its NSW grocery supply chain network by developing an automated regional distribution centre and a semi-automated national distribution centre at Moorebank Logistics Park in Sydney. Woolworths will invest $700 million to $780 million in the technology and fitout of the two distribution centres over the next four years and it has signed an initial lease term of 20 years with Qube Holdings Ltd (ASX: QUB). The Qube share price went up 7.8% today.

The decision to carry out this supply chain investment will result in a one-off pre-tax cost of $176 million. This will be counted as a significant item in FY20. The other significant items for FY20 include $230 million for Endeavour Group transformation costs and $185 million for salaried store team member remediation.

Western Areas Ltd (ASX: WSA) share price surges

The share price of ASX 200 resource business Western Areas jumped 16%.

Western Areas announced today it had some highly encouraging results from the first diamond drill hole at the Sahara prospect within the Western Gawler Project in South Australia. It has intersected over 200m of nickel and copper bearing sulphides.

There is an average of 2% to 5% of sulphide content across the entire intrusive body.

Western Areas managing director Dan Lougher said: “This is an excellent result from our first drill hole at the Sahara prospect, intercepting broad widths of nickel and copper bearing mineralisation. We keenly await the assay results, but it is already clear from what we have seen in the drill core, that we have a significant exploration result that merits immediate follow up work.”

Cromwell Property Group (ASX: CMW) share price rises 8%

The Cromwell share price rose 8% to $0.94 today as news came of a proportional takeover offer from large shareholder ARA Asset Management.

ARA has made an off-market offer to acquire 29% of all Cromwell shares not currently owned by ARA for $0.90 per stapled security.

The ASX 200 share’s leadership has advised shareholders to take no action, stating that the offer was unsolicited and opportunistic in nature.

The offer is a 3.4% premium to the last closing price of $0.87. It’s also a 9.8% premium to the 30-day volume weighted average price of $0.82.

AMP Limited (ASX: AMP) finally deliver some good news

Embattled ASX 200 financial services business AMO announced today that the sale of AMP Life to Resolution Life has received all regulatory approvals and confirmed it expects the transaction to complete after the market closes on 30 June 2020.

AMP said it will provide an update to the market on 1 July 2020.

The AMP share price rose by around 8% today.

Challenger Ltd (ASX: CGF) share price drops almost 10%

The ASX 200 annuity business came back to trade after completing the institutional part of its capital raising.

The 55 million new shares were raised at a price of $4.89 per share. This was an 8.1% discount to the last traded price. The placement was “significantly oversubscribed”.

Managing director and CEO Richard Howes said: “We are very pleased with the strong support shown by institutional shareholders for Challenger’s commitment to maintaining a strong capital position while at the same time providing flexibility to enhance earnings.

“This raise supports the business to remain strongly capitalised through this period of ongoing market uncertainty.”

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Motley Fool contributor Tristan Harrison has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of and has recommended Challenger Limited. The Motley Fool Australia owns shares of Woolworths 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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