By Powerscourt on 25/03/2020

Powerscourt Coronavirus Briefing – 25 March 2020


Yesterday’s historic surge in US stock markets was replicated in Asia overnight with Korea’s Kospi index rising 5.9%, Hong Kong’s Hang Seng up 3.2% and Japan’s Nikkei 225 finishing 8% higher on the back of news that the White House and Congress had reached a $2 trillion stimulus deal for the US economy.

In the UK, despite the FTSE100 closing 9% higher, yesterday’s flash PMI data brought into sharp relief the scale of the downturn facing the UK economy with a read of 37.1 for March the lowest since records began and a considerable way beneath February’s reading of 53 (any reading beneath 50 represents a contraction in activity).

This morning’s corporate announcements continue to underline the impact of COVID-19 on current trading with warnings from firms in the waste management, engineering, support services and retail sectors.

The UK construction industry continues to feature prominently in discussions around sectors of the economy that are deemed essential and, this morning, a trio of FTSE250 construction firms have updated the market.

Housebuilder Bellway has pointed towards the “unprecedented challenge and uncertainty presented by COVID-19” which it says will result in a period of “substantial disruption”, cutting its interim dividend, halting all new site acquisitions and focusing only on sites that are in advanced stages of construction.

St Modwen, which specializes in the regeneration of brownfield and urban environments, has cancelled its AGM which was originally scheduled for this Friday, paused any new development commitments and announced that it is temporarily closing all construction sites within its St Modwen Homes division.

Construction and regeneration business Morgan Sindall has also today warned that construction site closures are expected to increase.

While all three firms have reiterated their robust balance sheets, liquidity positions and banking arrangements in their respective statements, they underline the scale of the challenge facing the UK construction industry which remains such a fundamental element of the domestic economy.

Separately, Robert Jenrick, Secretary of State for Housing, has this morning appeared across a number of broadcast media outlets to reiterate the Government’s desire for the UK construction industry to remain operational while urging construction employers to enforce existing guidelines around social distancing measures.




Consumer and Retail


The consumer goods brand said yesterday Unilever will contribute €100m to help the fight against the pandemic through donations of soap, sanitiser, bleach and food. This includes product donation of soaps and sanitiser of at least €50m to the COVID Action Platform of the World Economic Forum. In addition, Unilever will adapt its current manufacturing lines to produce sanitiser for use in hospitals, schools and other institutional settings. For its customers and suppliers, it will offer  €500m of cash flow relief to support livelihoods across its extended value chain including early payment for their most vulnerable SME suppliers and extending credit to selected small scale retail customers.

SSP Group

SSP Group reported that it has seen an unprecedented and rapidly escalating impact of the COVID-19 virus on the travel operating environment, particularly in airports. In terms of the financial impact of COVID-19, their expectation is that for the month of March 2020, revenue across the Group will be approximately 40% to 45% lower YOY. To protect profit and cash, SSP are therefore making operational and headcount reductions as well as reduced discretionary overhead expenditure and capital expenditure. It will also defer the payment of the final dividend to 4 June 2020. Separately, SSP announced a proposed equity raising.


Halfords provided an update on the impact of COVID-19, stating that trading in the near term “is likely to be severely impacted.” The Group said they were “seeking to strike a balance between providing essential motoring and cycling services to the UK public alongside guaranteeing the personal safety of our customers and colleagues”. The Group reported that it has access to substantial liquidity and a overdraft facility and were taking a series of measures to preserve cash including the suspension of the dividend.


Whitbread announced trading since 27 February 2020 to the year-end has been “materially adversely impacted by COVID-19”. It went onto confirm that all pubs and restaurants were temporarily closed with effect from 20 March 2020. There are beginning the process of temporarily closing all Premier Inn hotels in the UK with immediate effect and are in discussions with the UK Government regarding the use of some hotels, in locations near hospitals, to support front-line key workers.


Fast food chain Leon announced that it was remaining open to serve takeaway and delivery meals to the UK public, saying meals for the NHS and homeless are set to be the vast majority of their work. Leon is also giving all NHS staff a discount of 50%. In a twitter post on Tuesday the restaurant said that it had served 13,843 takeaway and delivery meals to NHS workers in the last week alone. Leon said it is giving all its employees the option to come into work or stay at home and that the company is assisting workers in accessing the government furlough scheme.

Biffa plc

The UK’s leading sustainable waste management company, issued an update regarding the impact of the COVID-19 outbreak on its business. Biffa said whilst they had started to see the initial impacts of coronavirus these are not expected to have a material impact on results for the year ended March 2020. However, they said that the developing impact meant that the Group now expects significant disruption to its operations for several months. It will not be providing guidance for FY21 at the current time.

Hilton Food Group

The leading specialist international food packing business, today announces a delay in publication of its preliminary results at the request of the FCA. They added they were pleased to report that the Group has performed slightly ahead of the Board’s expectations. On Covid-19, the Group said that all facilities remain fully operational, and have established business continuity and flexible buy models and supply options, which may be tested during this period as Hilton Food Group “continues to play our part in feeding the nation and supporting ongoing demand”.


The footwear and clothing group reported on their Q3 results on Tuesday. On Covid-19, Nike said whilst they have shut the majority of their stories globally, they disclosed that about four out of five of its 7,000 stores in China were now open again. Nike chief executive commented that the worst of the coronavirus crisis in Europe and the US “would be over in the near future.”

French Connection

French Connection Group confirmed that all sites including concessions were closed following the UK Government’s announcement on Monday 23rd March. The Group said it “very much welcome the Government’s exceptional level of support for businesses in these extraordinary times” and are in the process of reviewing the details of the various schemes.



Centamin plc

The gold mining company said it would postpone publishing its 2019 Annual Results at the request of the FCA. As of 24 March 2020, Centamin has no cases of COVID-19 amongst its workforce and has experienced no material disruption to operations, supply chain or gold shipments.


Chevron, the US oil group is making large cuts to its spending plans for this year and abandoning its $5bn share-buyback programme. The company said it would “continue to execute” plans to reduce operating costs by more than $1bn by the end of the year.

General Motors

General Motors said intends to drawdown approximately $16.0 billion from its revolving credit facilities. This is a proactive measure to increase the Company’s cash position and preserve financial flexibility. The Company is “aggressively pursuing austerity measures” to preserve cash and taking the necessary steps to manage their liquidity. The automaker is also suspending its 2020 outlook, citing the uncertainty caused by the coronavirus pandemic. GM has closed all its North American factories until at least March 30.


Forterra plc, a leading UK producer of manufactured masonry products, confirmed that the Board has decided to suspend all business operations as soon as possible until further notice. The Group said it enters this uncertain time with a strong balance sheet and had access to a £150m revolving credit facility extending to July 2022, it has cash reserves of c£70m and access to an undrawn overdraft facility of £10m. It has suspended its dividend.



Financials & Real Estate

Unite Group

Unite provided an update stating that the company is “well positioned” to withstand the impact of COVID-19 until trading conditions normalised. Unite reported their balance sheet and liquidity position were “robust with significant headroom against debt covenants”. The Company said it will offer to forgo rent for students who choose to return home for the remainder of the 2019/20 academic year. The Company are implementing a number of actions to mitigate cash shortfall from this reduction in cashflow, including deferring development and non-essential operational capex and cost savings. They have also decided to cancel the final dividend for 2019.

McCarthy & Stone PLC

The UK’s leading developer and manager of retirement communities, today holds its AGM and provided a business update on its response to COVID-19 and intended cash organisation measures. The Group confirmed it had a strong balance sheet and its cash measures “would ensure that the business would be able to with no sales revenue for a period of c.2.5 years”. Additionally, more than 300 newly completed apartments in unoccupied developments have been offered to help Government and local authority care providers to address the acute shortage of beds for older people during this period and/or for NHS keyworkers.

 Bellway Plc

National housebuilder Bellway announced their interim results and provided a coronavirus update. They said that there was a “significant risk” to production capability and demand in the weeks and months ahead and threat to liquidity across the wider economy. Therefore, they were taking immediate action to preserve the strength and resilience of the balance sheet.  This includes a pause in new site acquisitions and a re-prioritisation of production expenditure to focus on plots which are in the later stages of construction programmes. In addition, the decision to pay an interim dividend will be postponed until later in the calendar year.

Morgan Sindall Group

The construction and regeneration group said it was experiencing disruption to its operations in a number of areas. Certain construction sites have already closed under instruction from the relevant clients and this is expected to increase across a number of divisions and activities. In addition, activity on other sites and projects is slowing and progress with some development schemes in the regeneration activities is becoming more uncertain. The Group provided detail on its strong financial position and committed bank facilities.

St Modwen Props

St Modwen, which specializes in the regeneration of brownfield and urban environments, announced that it would be cancelling its AGM which was originally scheduled for this Friday. St Modwen have paused any new development commitments and announced that it is temporarily closing all construction sites within its St Modwen Homes division.

RIT Capital Partners

RIT Capital Partners said that it would postpone its AGM scheduled for 27 April 2020 and now expected it to take place before 30 June 2020. The announcement also added that the Company had activated its full remote working protocols as of Wednesday 18 March 2020. These remote working procedures are operating satisfactorily and the Company currently expects to publish the March NAV in mid-April as normal.



Virgin Media

Virgin Media has said it will employ 500 new call-centre staff in the UK to deal with the impact of coronavirus in countries including India and the Philippines where offshore workers handle customer service calls. This move comes after a huge increase in calls and wait times by customers complaining of network issues or wanting to upgrade to better broadband packages.

Diploma Plc

The British-based business which supplys specialised technical products and services said as of today all business facilities are open and operating effectively. The Group said they had a resilient and proven business model, with a robust balance sheet and healthy liquidity that will help them manage the challenges presented by Covid-19.


Travel & Leisure 

Qantas Group

The Qantas Group announced today it has completed a new round of debt funding, securing $1.05 billion in additional liquidity to strengthen its position as it manages through the Coronavirus outbreak. This debt has been secured against part of the Group’s fleet of unencumbered aircraft, which were bought with cash in recent years. The loan has a tenure of up to 10 years at an interest rate of 2.75 per cent.

Borussia Dortmund

Borussia Dortmund released a statement that players had “voluntarily waive part of their salaries” which would apply as long as match operations standstill or matches are played and carried out without spectators “behind closed doors”. Like the players, the managers in a modified way and the coaching staff also waive part of their salaries.




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