By Powerscourt on 27/07/2020
Powerscourt Coronavirus Briefing – 27 July 2020
ANALYSIS
The relief felt by Europeans a few weeks ago when travel restrictions started to be dropped has been short-lived.
Spain has reacted defensively to the quarantine rules which have been reimposed by the UK after infection rates started to spike in three regions. The UK government on Saturday said that UK citizens returning from Spain would have to self-isolate for two weeks.
Spain’s foreign minister, Arancha Gonzalez Laya retorted that Spain is a “safe country”. But it seems that the summer holiday season has encouraged a spike in reinfection rates in some regions and the UK is taking no chances.
The travel industry, which has seen its revenues battered by restrictions and low confidence due to the virus, was clearly exasperated by the decision. TUI, Europe’s biggest tourism business, said: “The UK government must work closely with the travel industry as this level of uncertainty and confusion is damaging for business and disappointing for those looking forward to a well-deserved break.” The Times reported that an estimated 1.8 million people had holidays booked to Spain from the UK over the next month.
The UK is not the only country to impose new restrictions on travelers. Greece said that from Tuesday, travelers arriving from Romania or Bulgaria will be required to carry certificates showing they are virus-free.
In the US, Florida is now close to overshooting California as the state with the highest number of COVID-19 cases. Total cases in the Sunshine State rose by 9,300 to 423,855 on Sunday.
The Southern US, already ravaged by the virus, is now at the beginning of the hurricane season. Tropical Storm Hanna lashed parts of Southern Texas and northern Mexico, while Hurricane Douglas bore down on Hawaii.
The WHO reported 284,083 new cases of coronavirus on Saturday, with over 640,000 people dying since the start of the pandemic.
Meanwhile UK Prime Minister Boris Johnson, having recovered from coronavirus earlier in the year, has now declared war on the junk food industry, with a ban on selling buy one, get one free on targeted products, and a ban on sweets and chocolates sold at the end of shopping aisles. The Prime Minister has acknowledged that his weight was probably a factor in him needing hospital treatment for coronavirus.
Asian indices were trading slightly lower on Monday morning ahead of European market open.
WHAT ARE COMPANIES SAYING?
Retail & Consumer
Gousto
UK-based Gousto is planning to recruit an extra 1,000 staff as demand for its online meal kits soars during the pandemic. The company, which made as much revenue in the first half of the year as in all of 2019, wants to take its workforce above 2,000 across sites in London and Lincolnshire. Gousto provides pre-packaged meal kits for more than 50 recipes, from chilli paneer masala to pesto chicken caprese salad. The group delivered 5m meals in June, up from 2.5m in January 2020. The companies founder, Timo Boldt, said that the business planned to triple its capacity by 2022 and that it had benefited from the switch to online shopping during the pandemic: “The UK recipe box market has come of age, with the recent lockdown accelerating structural trends that were already firmly under way…We have maintained record sales, even with the progressive easing of lockdown restrictions, and view this shift as part of a wider permanent redrawing of the grocery landscape”.
City Pub Group
The British pub operator has said it traded profitably in its first three weeks after opening, but revenues were just 63% of the equivalent period last year. It has reopened 32 of its 48 pubs since July 4, posted total sales of 1.8 million pounds and said it intends to reopen all of its pubs in the next two months, or earlier if social distancing measures are eased further.
Ascential
Ascential has said that it has swung to an interim loss as revenue declined due to the pandemic. The company hailed a “resilient” performance in a challenging environment, with strong growth from digital businesses but “considerable headwinds” for live events and the marketing sector, both of which were dented by Covid-19 lockdowns. In the six months to 30 June, the business-to-business media group, which specialises in exhibitions and festivals, swung to a pre-tax loss of £78.3m from a profit of £30.5m in the first half of last year, with revenue down to £144.3m from £236.2m. Still, this was ahead of expectations of £138m.
Industrials & Transport
Ryanair
Europe’s largest low-cost airline has reported a narrower than expected loss in its fiscal first quarter today and said it was impossible to say whether it might turn an annual profit due to the impact of the pandemic. The airline posted an after-tax loss of 185 million euros for the three months to June 30, its first-ever loss in the quarter, but less than the 232 million euros forecast in a company poll of analysts. “Given the current uncertainty, Ryanair cannot provide any FY21 profit after tax guidance at this time,” Group Chief Executive Michael O’Leary said in a statement, referring to its financial year which ends on March 31, 2021. He added: “A second wave of COVID-19 cases across Europe in late autumn (when the annual flu season commences) is our biggest fear right now”.
Wienerberger
Austrian construction materials firm Wienerberger has increased its full-year outlook after second-quarter earnings came in better than expected due to a relatively quick recovery in demand. The world’s largest brickmaker now forecasts adjusted earnings before interest, tax, depreciation and amortisation in a range of 460-480 million euros after previously expecting 440-480 million. Second-quarter EBITDA came in at 181 million euros on sales of 960 million euros, the group said.
Signature Aviation
The company has reported a 31% fall in continuing group like-for-like revenue in its first half, which it said was “solely due” to the impact of the pandemic. The FTSE 250 aviation services company said it remained net cash flow positive in the second quarter during the pandemic period, through what it described as “decisive actions” on cost and capital expenditure. It said flying activity was now showing an improving trend, down by an average of 32% for the month of June in the United States, compared to an average of being down 77% in April.
Cairn Energy
Oil producer Cairn Energy sold its 40% stake in Senegalese assets to Russia’s Lukoil for a cash consideration of up to $400m, following a collapse in oil prices due to the pandemic and price war. Cairn Energy will be reimbursed for capital expenditure on the oilfields since the start of the year and it intends to pay investors $250m in a special dividend.
Angola American Platinum
Anglo American Platinum (Amplats) has reported a drop in half-year earnings, hurt by the impact of the pandemic on output and the temporary shutdown of its processing facilities. Amplats said headline earnings per share for the six months to June 30 fell to 26.27 rand per share, a decrease of 7%, compared with 28.15 rand a year earlier. HEPS is the main profit measure used in South Africa that strips out certain once-off items.
Galp
Portugal’s Galp posted a second-quarter loss of 52 million euros as demand collapsed and said the impact of the outbreak was still uncertain. The oil company said in a statement on Monday that coronavirus lockdowns in both Portugal and Spain caused “severe regional demand drops” but in June it had seen “supportive signs”. Despite some positive recovery indicators, including regarding demand, Galp said the outlook for 2020 remained “challenging” as it expects a “weak and volatile refining and trading environment”. It fell to a second-quarter net loss from an adjusted net profit of 199 million euros a year earlier. Oil product sales fell 44% on low demand, especially in the aviation sector and retail, mostly in April and May, as a result of lockdown measures, Galp said.
TMT
Almirall
Spain’s Almirall has lowered its 2020 outlook, expecting a decrease in net sales and core earnings after the coronavirus pandemic hit its dermatology business, bringing net profit down 31.5% in the first semester. The Barcelona-based pharmaceutical company reported a 42.4 million euros (38.65 million pounds) net profit in the first half of the year down from 61.9 million euros a year ago. Almirall now forecasts 2020 net sales to fall in low to mid single-digit compared with a prior forecast of low to mid single-digit growth. Adjusted earnings before interest, taxes, depreciation and amortisation would fall to between 230 million euros and 250 million euros down from 304.2 million euros in 2019. The company previous expectation was 260-280 million euros
Novacyt
The French clinical diagnostics group, whose shares have increased more than 19 times this year, has revealed plans to launch a slate of products to test and detect Covid-19. The products include mobile testing kits, an antibody test and a respiratory testing panel to distinguish between coronavirus and other diseases such as influenza.
IN THE NEWS
Gold hits a record and dollar falls as economic outlook darkens – Financial Times
Rishi Sunak considers online sales tax in bid to save high street – The Times
France and Germany could join Spain on UK’s quarantine list – The Daily Telegraph
