By Powerscourt on 16/05/2020
Lights are flickering on across Europe but is it too late to avert economic disaster?
Italy announced today that it will ease restrictions on domestic and international travel from June 3. It reopened factories on May 4 and restaurants and bars will reopen this coming Monday, albeit with social distancing. Portugal will reopen beaches on June 6 in an effort to save the tourism season – the industry accounts for 15% of the economy. Ireland reopens golf course on Monday and resumes horseracing on June 8, three week earlier than expected. Leo Varadkar, prime minister said it was a “big economic sector”.
Eurozone economies contracted in the first quarter of the year at the fastest rate on record as Germany went into recession. The French economy shrunk by 5.8%, the Italian economy by 4.7% while Spain declined 5.2%. All this news came as factory output in China started to rebound.
This week’s modest easing of lockdown measures will not be enough to prevent up to sixty protests across Britain today, reports suggest. In the US, meanwhile, Massachusetts and Connecticut are now said to be the only two states not to have eased restrictions, with restaurants, shops and beaches all starting to reopen.
As businesses puzzle over how and when to return to normal office life, reports suggest that a new UK government biosecurity unit will be able to pinpoint individual workplaces that should be temporarily closed to prevent the virus spreading.
WHAT ARE COMPANIES SAYING?
Consumer and Retail
The US consumer giant announced it reached an agreement with French trade unions to start to reopen six warehouses in France. This is following the April 16 shutdown saying it could not be sure it was able to comply with a court order, brought by the unions, that demanded it only handle essential items — or face fines of up to €1m per day.
Hilton Food Group
Hilton Food Group announced that under the latest Government guidance, shareholders will not be able to attend the AGM in person. However, the AGM will proceed with the minimum number of the Company’s officers, who are also shareholders, in attendance to ensure that a quorum of shareholders is present. Shareholders are strongly encouraged to submit their proxy votes by post or online.
JCPenny the mass-market chain and household-name retailer filed for bankruptcy in the US due to the coronavirus shutdown. The company said it has an agreement with most of its lenders on the turnaround plan that will allow it to stay in business as a more financially healthy company, but will include closing an as yet unannounced number of its 846 stores. “Until this pandemic struck, we had made significant progress rebuilding our company under our Plan for Renewal strategy — and our efforts had already begun to pay off,” said CEO Jill Soltau. “Implementing this financial restructuring plan through a court-supervised process is the best path to ensure that JCPenney will build on its over 100-year history to serve our customers for decades to come.”
Industrials & Transport
Canada’s largest airline is laying off half of its employee as passenger traffic collapses by 95% due to the coronavirus. In a memo sent to union members Craig Landry, the company’s executive vice-president of operations, said the cuts would come into effect June 7 and affect 20,000 people. “Sadly, today, the hard truth is that by every indicator we have available to us, we believe that we will be materially smaller for at least three years,” said Mr Landry.
Arkle Resources Plc
Arkle Resources Plc, the Irish gold and zinc exploration and development company, announced further investment by Glencore Canada Corporation in Group Eleven Resources Corp. Patrick Cullen, Chief Executive Officer of Arkle, also noted that “we look forward drilling recommencing in August subject to Covid-19 restrictions.”
Ibstock plc, a leading manufacturer of clay bricks and concrete products in the UK, welcomed the recent government guidance allowing the housebuilding and construction sector to return to work over recent weeks. Activity levels in the industry have started to increase, and the group started to bring some of manufacturing workers back into the business in preparation for a phased restart of production. Initially, the Group will recommence operations at approximately one third of its manufacturing site.
Financial Services & Real Estate
Vistry Group, a British housebuilding company announced that one of the measures the Group was taking to maintain a robust balance sheet, was to postpone the second interim dividend payment.
The world’s largest social media group said on Friday that it agreed to a $400m deal to buy Giphy, the New York-based private company. Sources said that Giphy had initially approached Facebook about a partnership before the pandemic and subsequent conversations turned to an acquisition. This is Facebook’s second major investment during the pandemic. In recent weeks, it bought a $5.7bn stake in Indian telecoms company Reliance Jio in a deal that unites two huge pools of Indian consumers and their data.
IN THE NEWS
House passes Democratic proposals for $3tn more in stimulus – Financial Times
Federal Reserve warns of potential ‘strains’ on US banks – Financial Times
U.S. Economy Adds to Grim Records, Signalling Years-long Recovery – Bloomberg
Germany in recession as eurozone blighted – The Times