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ASX 200 recovered throughout today, but finished 0.3% lower

ASX 200
Credit: Cimexus

The S&P/ASX 200 Index (ASX: XJO) finished today lower by 0.3% to 6,174 points, however it was actually down around 1.2% earlier in the day.

Here are the highlights from the ASX today:

Westpac Banking Corp (ASX: WBC) and Zip Co Ltd (ASX: Z1P)

Westpac announced yesterday that it was going to sell its 10.7% stake in Zip through a fully underwritten bookbuild to institutional investors.

The offer price for the shares was $6.65, which equated to a discount of around 6% to the last closing price.

The major ASX bank said that this decision reflected Westpac’s approach to simplifying its business and ensuring the efficient use of capital. The sale will add around 8 basis points to Westpac’s CET1 capital ratio.

Westpac chief information officer Gary Thursby said: “Larry Diamond, Peter Gray and the management team of Zip have done a tremendous job growing the company, including expanding globally. We look forward to seeing them continue to grow a global customer franchise.

“We are continuing to explore opportunities with Zip, including working to integrate their buy now pay later functionality into our mobile banking apps across Westpac and our regional bank brands. This would expand our offering to customers and broaden the customers Zip can reach.

“We are also working with Zip on other opportunities for consumer, business and corporate customers that we believe could be mutually beneficial, while continuing to develop our banking relationship with Zip.”

Today, Westpac confirmed the sale went ahead, the Westpac share price dropped 1%. But the Zip share price fell 5% in reaction – it was one of the worst performers in the ASX 200.

Australian Pharmaceutical Industries Ltd (ASX: API)

API reported its FY20 result today to investors.

The pharmacy business reported that its total revenue rose by 0.2% to $4 billion. However, there was a shift away from higher margin products to value products which hurt profitability.

Underlying earnings before interest and tax (EBIT) fell 40.1% to $56.3 million and underlying net profit after tax (NPAT) dropped 42.6% to $32.5 million.

Reported EBIT was $4.4 million and it saw a net loss of $7.9 million after writing down the value of the Soul Pattinson Chemist brand name by $37.5 million (pre-tax) as well as including $12.3 million of post-tax tax relating to restructuring and reorganising.

API said that half of its revenue came from its retail businesses, so it was exposed to the impact of the mandatory lockdowns of non-pharmacy Priceline stores and Clear Skincare clinics. Pleasingly, Clear Skincare has performed very well in the states that have reopened and it continues to invest in new clinics.

As part of its cost reduction program, it closed two distribution centres which reduce its cost of doing business to 10.2%, a reduction of 70 basis points.

The API board decided to declare a dividend of 2 cents per share, representing a payout ratio of 33% of underlying net profit.

AMP Limited (ASX: AMP) suffers again

The AMP share price was one of the worst performers in the ASX 200 today after dropping around 5.5% in reaction to its third quarter update.

Australian wealth management (AWM) assets under management (AUM) increased by 0.3% to $121.4 billion, supported by improved investment markets.

However, AWM suffered net cash outflows of $1.95 billion (broadly flat compared to last year). The North platform achieved $818 million of net cash inflows.

AMP Capital AUM fell by 0.4% to $189.2 million after seeing net external cash outflows of $1.1 billion due to redemptions.

AMP Bank deposits rose by $52 million to $17 billion, though the total look book decreased by $303 million to $20.6 billion.

The AMP portfolio review continues alongside its transformation strategy to rejuvenate the business.

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Tristan Harrison has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. owns shares of ZIPCOLTD FPO. The Motley Fool Australia has no position in any of the stocks mentioned. 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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