Powerscourt

By Powerscourt on 22/07/2020

Powerscourt Coronavirus Briefing – 22 July 2020

ANALYSIS

President Donald Trump pivoted overnight to becoming an advocate for caution in the management of the virus. The President said in his first televised press briefing on coronavirus for nearly three months, that things would “probably” get worse in the US before getting better. Trump also tweeted a picture of himself wearing a face mask, in sharp contrast to his previous bare-faced look.

The shift in tone reflects the grim reality in US. California, the most populous state, surpassed 400,000 cases on Tuesday, bringing the total close to that recorded by New York. Trump’s former communications chief and now “counsellor”, Kellyanne Conway, has reportedly urged him to adopt a stance which recognises the fears of ordinary Americans.

According to a Reuters report scientists advising the White House on coronavirus are frustrated by the reluctance of administration officials to heed scientific advice and the perceived attempt to undermine them and in particular Dr Anthony Fauci, the leading immunologist.

Pharma company bosses were in Washington DC to reassure Congress that a successful vaccine could be produced in the US, as opposed to China. This comes against a background of ever growing antagonism between China and the West. In a private meeting in London on Tuesday Mike Pompeo, the US Secretary of State, told MPs that the World Health Organisation was in the pocket of the Chinese government and was responsible for “dead Britons”.

“The Chinese Communist party’s exploitation of this pandemic to further its own aims has been disgraceful,” Pompeo is reported to have said.

Spain is reportedly close to being struck off the UK’s list of countries for which a quarantine is not required for returning citizens, says the Daily Mail. With over 4,500 new cases reported over the weekend – reportedly driven by summer hedonism among young people – Whitehall is considering whether to reinstate the quarantine rules.

Meanwhile, a row in Japan over a new tourism campaign has underlined the knife-edge dilemma many countries face between protecting their citizens and restarting economic activity. Japan kicked off a new tourism campaign, called “Go To Travel”. But many state governors are calling on the national government to pull the plug, predicting that it will push infection levels higher. Citizens have mocked the campaign, calling it “Go To Trouble.”

 

WHAT ARE COMPANIES SAYING?

 

Retail & Consumer

Kingfisher
In its Q2 pre-close trading update, the owner of B&Q and Screwfix reported a like-for-like sales increase of 21.6% compared to the same time last year, while overall sales were only down 3.7% since the end of January. As a result, the company said it expects to see pre-tax profit come in ahead of the prior year. The company said that it had seen a significant spike in e-commerce sales in recent months, up 225% in June when compared to June of last year. The company however warned that despite the strong first half, “second half visibility remains low” given the degree of uncertainty and so did not provide guidance for the full year.

Britvic
The soft drinks producer reported a 16.3% decline in revenues to £328.9m for Q3, saying that Covid-19 had impacted performance as expected. They said that “significant declines” in Out-of-Home consumption were however partially offset by strong growth in At-Home consumption, which allowed them to gain market share in some areas. CEO Simon Litherland said that while there were some strengths to the results “in the near term there remains a high degree of uncertainty about the pace and level of full recovery.”

 

Industrials & Transport 

ABB
The Swiss engineering company said in its Q2 update today that its operational EBITA fell 21% to $651 million, however this was significantly above the $46 million market expectation. It also reported a rise in net profit, up to $319 million from $69 million in the same period last year. CEO Bjorn Rosengren said the company had been heavily impacted by the pandemic and that “a lot of uncertainty remains”. The company saw an operating profit margin of 10.6% for the quarter down from 11.5% but ahead of analyst expectations at 8%.

Melrose
In a trading updated today, the FTSE 100 industrial conglomerate reported that revenue for the first six months of the year (to the end of June) fell 27%, as factories were shut down as a result of Covid-19. Its aerospace business reported an 18% fall in sales and the company said that over the full year, it expected that figure to be close to a 30% fall compared to last year. The company highlighted that it has increased committed bank headroom to over £1.1 billion, as well as holding cash in hand of over £300 million.  It also said said that it was protecting its R&D spend and continuing to develop new technologies including electric and hydrogen powered aircraft. 

Stagecoach
Bus operator Stagecoach reported at its full year results that revenues were down to £1.41 billion compared to £1.88 billion in 2019. It said that prior to the impact of Covid-19, the business was on track to meet full year expectations and delivering against objectives, however it now expects a “lasting effect” of Covid-19 on travel patterns. It also said that it will be “some time” before demand for public transport services returns to pre-Covid levels, but that the company is continuing to review its cost base to manage those risks.

 

TMT

Computacenter
The technology business said in a trading update today that it expected adjusted profit before tax for the first half of 2020 to come in substantially ahead of the same period last year. It said that it had seen a surge in demand for IT equipment to enable home working, as well as a boost to its services business as corporate clients have needed more support to manage the new challenges presented by Covid-19. The company said that while it wouldn’t give a precise estimate for full year performance, it expects 2020 to “be a year of material progress” for the business. 

 

IN THE NEWS

Trump says coronavirus will ‘get worse before it gets better’ Financial Times

UK passport application backlog reaches 400,000 – BBC News




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