The race for space boosts warehouse giant Segro
THE surge in online shopping and almost overnight shift to working from home during lockdown has been a boon for warehouse owner Segro.
The property firm has come into its own as parcel delivery groups and traditional retailers have been, as chief executive David Sleath put it, ‘scrambling for space’ as they adapt to the Covid-19 world.
Demand for data centres has unsurprisingly boomed because of the need for additional storage to support remote working in the wake of the mass exodus of white- collar workers from office blocks to their rarely used studies and spare bedrooms.
Video streaming has played a part too, as millions of people forced to stay home ploughed their way through Normal People.
Segro’s first-half profits rose 6.5pc to £140m between January and June, compared with the same period of last year. The value of its warehouses and other properties rose 0.7pc to £11.2bn, in stark contrast with retail and leisure sites, which have seen theirs plummet.
And, in comparison with retail and office landlords, it managed to collect 99pc of £92m it was owed in rent for the three months to June, though this excluded £10m it had written off or deferred.
Warehouses might not be cool or sexy, but during a pandemic they have proven to be dependable, necessary, and one of the few stores of value in the commercial real estate market.
As a result of its recent resilience, FTSE 100-listed Segro has bumped up its half-year dividend by around 10pc, from 6.3p per share to 6.9p.
Grateful investors, starved of dividends by dozens of other large companies, sent shares in the group 2.5pc higher, up 24.4p, to 987.6p by the close.
The wider stock market also made gains – with the Footsie rising by 1.1pc, or 68.72 points, to 6104.72.
The blue-chip index was given a boost by British Airways- owner
IAG, which soared 10.5pc, or 18.4p, to 193.8p, as a rally in travel companies and airlines continued for the second day.
Shares in Coca- Cola HBC, a group that focuses on bottling and distributing the world’s most famous fizzy drink, were also bubbling after it said tentatively it was seeing a recovery.
The reopening of restaurants and bars will be key to trading, and the group has said ‘the best available evidence suggests that the second quarter should have been the trough of performance caused by Covid-19’.
Investors clearly agreed, with the company ending the day 8.1pc higher, up 165p, to 2198p. The
FTSE 250 also inched higher – to 17,638.3, up 1.9pc, or 330.6 points by the close of play. Construction group Morgan Sindall was near the top of the midcap leaderboard, climbing 17.5pc, or 182p, to 1222p, after it gave shareholders some guidance for its full-year performance.
It expects profits to come in between £50m to £60m, though this will require a big rebound in business during the rest of the year, as first-half profits dived 62pc to £13.6m.
Elsewhere, there were some hefty director deals over at the software firm Kainos and law company Knights Group.
Kainos’s senior vice-president of business development, Paul Gannon, sold £4.4m of stock – getting on average 1098p for 400,000 shares. He now holds a 6.2pc stake in the group.
And at AIM- listed Knights, which rose 1.2p, or 5p, to 425p, the firm’s group director of client services, Mark Beech, disposed of 250,000 shares for 395p each – or £987,500.