Powerscourt

By Powerscourt on 14/07/2020

Powerscourt Coronavirus Briefing – 14 July 2020

ANALYSIS

The much-attacked  World Health Organisation warned that coronavirus will get “worse and worse and worse” if health guidelines are not followed, just as the most populous state in the US, California, effectively shut down for a second time.

“Let me be blunt, too many countries are headed in the wrong direction, the virus remains public enemy number one,” WHO Director General Tedros Adhanom Ghebreyesus said in a virtual briefing from Geneva on Monday on the world’s response to coronavirus. He added: “There will be no return to the old norm for the foreseeable future.”

The WHO warned that of the 230,000 new coronavirus cases to be announced on Sunday, 80% were located in eight nations and 50% in just two: the US and Brazil.

The WHO comments come as the Governor of California, Gavin Newsom, announced that bars, theatres, restaurants and zoos would be closed in 30 counties, with two of the state’s biggest urban areas, Los Angeles and San Diego, closing schools. The re-closing of California after several weeks of being open, is a potent symbol of how the virus resurgence has been fuelled by a patchwork of approaches across the US.

The Trump administration has frequently appeared to be at odds with its own disease experts, particularly Dr Anthony Fauci, a leading immunologist. On Monday Dr Fauci attributed the new California shutdown specifically to America’s haste to reopen state economies when virus levels were plateauing but not yet in full retreat. The President appeared to retaliate, retweeting a comment by Chuck Woolery, a former game show host which accused everyone, including the US Centers for Disease Control, of “lying” about the virus.

Not all the news from the US is bad. In Texas, new infections, hospitalisations and deaths were lower while the nationwide toll of new cases fell on Monday.

The UK government is set to make the wearing of masks in shops mandatory in England from July 24, according to the BBC. Secretary of State for Health Matt Hancock is expected to make the announcement, which will bring England into line with Scotland and most European countries, today.

The UK’s economic performance has been worse than expected with only 1.8% growth in May compared to April which was down 20.3% on March. Overall, the FT calculates that the economy in May was 24% smaller than a year earlier.

Although the virus is under reasonable control at present in the UK, a government-commissioned report has warned that a winter resurgence could lead, in a worst-case scenario, to more cases and deaths than the March peak. In a worst-case scenario where no action was taken, according to the report, deaths could reach as high as 120,000

Exports from China, the world’s second-largest economy, rose in June as overseas economies reopened after lockdowns, while imports grew for the first time this year. The Chinese government warned trade conditions were grim but it is clear that China is doing better, sooner, than might have been expected.

The S&P 500 closed down almost a percentage point on Monday and the Nikkei was trading down at similar levels ahead of the European open.

 

WHAT ARE COMPANIES SAYING?

 

Consumer & Retail 

Ocado
The online supermarket released its interim results today for the half year ended 31 May, reporting retail revenue growth of 27 per cent. The statement explained that Covid-19 has significantly accelerated the shift to online grocery shopping, with sales nearly doubling in the UK over just a few months. The Group believes this shift is sustainable, with 30 per cent of consumers in the UK saying that they will order more of their groceries this way after the pandemic. CEO Tim Steiner said: “The world as we know it has changed. As a result of Covid-19 we have seen years of growth in the online grocery market condensed into a matter of months; and we won’t be going back”

Center Parcs 
CEO Martin Dalby has indicated that the company is likely to use the government’s job retention scheme bonus, explaining that “we’ll look at the detail and make a call fairly soon, but I’m fairly confident we’ll go for it”. The network of holiday villages, which reopened yesterday, furloughed the majority of its 8,500 UK employees and could be eligible for an estimated £8 million if it decides to use the scheme, which would allow it to collect £1,000 for every worker re-employed until at least the end of January 2021.

DFS Furniture
The UK retailer reported a fall in annual revenue in a trading update today, as a result of all operations – other than the website – being suspended on 23 March and deliveries of sofas and furnishings slowing during the lockdown. Online trading has accelerated however, increasing by 77 per cent from 23 March to 12 July, and order intake in stores has increased 69 per cent year on year since they reopened, with the company believing this performance benefited from latent demand from customer that would otherwise have completed purchases during lockdown. 

AO World
The electical retailer announced its full year results today for the year ended 31 March, reporting revenue growth of 15.9 per cent to £1.04bn for the period. The implications of Covid-19 began to impact the business during the final weeks of the reporting period, with the electrical market migrating to nearly 100% online overnight. Although customers are now able to return to bricks and mortar stores, initial data shows that the online market has in fact continued to grow year on year. 

 

Industrials & Transport 

Halma
The industrial safety company announced its full year results today for the 12 months to 31 March, reporting revenue growth of 11 per cent to £1.3bn, and a year on year increase of adjusted profit before tax of 9 per cent to £267m. A small percentage of the workforce has been furloughed, although Halma has funded this without any government support. The group is to pay a final dividend of 9.96p, bringing the total dividend for the year to 16.5p, representing a 5 per cent increase from last year. 

QinetiQ
The defense technology company has released its first quarter trading update today, reporting an impact on revenue and profit despite strong order intake throughout the period.  The company has seen limited impact from Covid-19 however within EMEA Services, with the division benefiting from long-term contracts and “delivering work that is critical to sovereign defense capabilities”. 

 

IN THE NEWS

UK economy still a quarter smaller than its peak after weak rebound – The Daily Telegraph

Sir George Iabcobescu in call to ease public transport rules – The Times

Shoppers without face masks risk £100 fine as Government moves to make them mandatory – The Daily Telegraph




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