Fertiliser ingredient producer Sirius Minerals (LSE:SXX) has had a very tough time of late. It’s developing a flagship fertilizer product named POLY4 out of the naturally occurring evaporite mineral polyhalite. This potash project is at the Woodsmith mine in Yorkshire where locals are heavily invested, both as employees and shareholders.
Unfortunately, financing has hit a few roadblocks, not helped by Brexit and the current political climate. The SXX share price has seen a significant slide, falling off a cliff on several occasions over the past six months. The most recent plunge was mid-September when a $500m bond offering failed to transpire and now the share price is close to 3p.
The company recently signed a 10-year deal with a Qatari firm Muntajat to supply and distribute POLY4, once producing, but when that will be remains to be seen.
The future of SXX hangs in the balance and I think it’s far too risky a share to consider at the moment.
BT customer service
BT Group BT (LSE: BT.A) has a love-hate relationship with the British public. There’s no doubt its customer service leaves a lot to be desired. Once tied into a contract, it can be ridiculously frustrating an experience trying to deal with anyone.
Yet, when its products work, they are first class and its superfast broadband, TV channels, and landlines have had customers locked in for decades. Its brands EE and BT Sport have also risen to prominence in recent years and enjoyed their own success.
After what seems like forever, BT has finally acknowledged it needs to improve its customer service. It has pledged to return all its call centres to the UK by 2020, with the promise to attempt to connect customers with the call centre closest to their location when possible. It also intends to put together a team of 900 ‘home tech’ experts to assist people in their homes.
Plans are also afoot to relaunch its EE high street stores, inclusive of BT signage, to be more transparent and helpful to customers face-to-face.
Dividend threat
BT currently has a low price-to-earnings ratio of 9, earnings per share are 21.8p, and a dividend yield of 7.5%. These are very appealing financials, particularly the dividend. Unfortunately, a dividend cut is possibly on the cards because the rollout of fibre to 15m homes across the UK has to be completed by 2025 and is going to be a very costly affair.
Dividend cover is 1.4, so it stands to reason the company may not be able to maintain it if fibre costs escalate. However, given that 7.5% is a high yield, even a cut should still leave a reasonable dividend for shareholders.
BT share price
In the past six months, the BT share price has fallen over 10% partly because of the dividend threat. Other FTSE companies that already had their dividends cut this year are Centrica, Vodafone, and Marks & Spencer.
As political and macro-economic uncertainty continues in the UK, British stock prices will continue to suffer. If it can pull off a customer service transformation, along with a successful fibre roll-out, then I think the BT share price will be a success story.
