By Powerscourt on 05/08/2020
The campaign for preference of “schools before pubs” is gathering momentum with an intervention by Anne Longfield, the Children’s Commissioner for England, supported by prominent scientists.
Longfield maintains that a mistaken comparison with flu has led us to overestimate the importance of schools to the transmission of coronavirus. Scientists point to the relatively low transmission risk that children pose, highlighting the fact that schools outbreaks are usually centred around infected teachers. Regular testing will be central to keeping schools open and identifying breakouts of flu.
The annual High Pay report from the Chartered Institute of Personnel and Development and the High Pay Centre takes aim at companies making only short-term reductions to executive pay in response to the pandemic. 36 FTSE 100 companies reduced executive pay, usually by 20%, and 11 cut short-term incentive plans, but none touched long-term incentive plans which typically account for up to half of total pay. At a time when businesses continue to cut jobs, Luke Hildyard of the High Pay Centre describes these trends as undermining solidarity.
The British Chambers of Commerce has run the rule over the Chancellor’s plans for supporting business as unveiled at the summer statement and wants a rethink. Its survey showed that fewer than half of businesses intend to take up the furlough bonus, which is intended to smooth the transition away from the furlough scheme by giving £1,000 per employee head to companies which keep staff on until January. Over half of the businesses polled don’t intend to take part in the kickstart scheme either, which will provide funding for work placements for young people.
Office rental business IWG hub has said that enquiries about flexible office space on the outskirts of cities have surged, accelerating a trend towards hub and spoke working.
In the US, in a car crash interview with Jonathan Swan of Axios on HBO, President Trump declared of 156,000 deaths that “it is what it is” and attempted the selective use of figures to defend the US government effort.
It was announced that Health Secretary Alex Azar will soon become the highest-ranking US diplomatic visitor to Taiwan for 40 years. His trip will praise the transparency of the country’s fight against the pandemic, in a clumsy implied contrast with its neighbour, China.
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WHAT ARE COMPANIES SAYING?
Retail & Consumer
Pizza Express is considering closing 67 of its UK restaurants, 15 per cent of its UK estate which would mean the loss of 1,100 jobs after trading was halted by the pandemic. The pizza chain has put its UK business up for sale and will offload its Chinese business. The company announced a fresh £144m cash injection to refinance debt and fund the reopening of its 449 UK restaurants.
Beyond Meat, the US plant-based meat group, saw second-quarter revenues jumped 69 per cent as sales increases at retailers more than offset the fall in fast-food chains and restaurants because of the pandemic. Beyond Meat said revenues for the three months to June totalled $113.3m after its retail sales almost tripled to $90m while food service revenues fell 61 per cent to $6.5m.
Disney took a $3.5bn hit to operating income at its theme parks. The company faced three months in which Covid-19 bruised nearly all of its businesses apart from streaming. Disney has depended on its theme parks and blockbuster movies to deliver profits even as traditional media has declined. “Despite the ongoing challenges of the pandemic, we’ve continued to build on the incredible success of Disney+,” said Bob Chapek, CEO.
Wynn Resorts reported the $637.6m net loss in the three months to the end of June, from a $94.6m profit in the same period last year. Revenue from Wynn Resorts’ casino business fell by more than 99 per cent to $9.4m during the period. Casino revenue in Macau was negative in the second quarter, from $1bn a year earlier. “In Macau, the authorities have begun to gradually and thoughtfully ease some visitation restrictions, and we are confident the market will benefit from the return of the Chinese consumer as we move through the back half of 2020,” said Matt Maddox, Wynn Resorts chief executive.
Alibaba’s healthcare arm said it would use the proceeds of a more than $1bn follow-on share sale to develop its ecommerce offering. “Online healthcare consultation services have had a significant positive social impact during the Covid-19 pandemic.The net proceeds of the placing will provide further flexibility and allow it to have access to and compete in new areas in the internet healthcare industry,” the company said in a statement.
Deutsche Post DHL, one of the world’s biggest post andfreight companies, said operating profit rose 19% to 912 million euros (823.10 million pounds) on revenue up 3% to 16 billion euros. It reiterated the guidance it gave last month for 2020 and its medium-term outlook.
Diageo, the world’s largest spirits maker, took a 1.3 billion pound writedown as it reported a bigger than expected decline in underlying net sales as demand for its whisky, vodka and gin fell in nearly all markets. It reported an 8.4% drop in organic sales for the year ended June 30.
Ralph Lauren reported its quarterly revenue plunged by nearly $1 billion, citing coronavirus-led store closures and a slowdown in demand for luxury goods across the world. Ralph Lauren’s net revenue fell 66% to $487.5 million and reported a mere 3% rise in North American online sales.
British electrical retailer Dixons Carphone said it planned to cut 800 jobs to create a leaner management structure across its stores in the UK and Ireland. The company said in a statement that it was committed to its remaining stores, which compliment its growing online offering.
Booking.com intends to reduce its 17,000 work force by 25% as a result of business lost during the coronavirus pandemic. “Unfortunately, as a result of the crisis, we, like so many other travel companies, need to take the extremely difficult step to reduce our global workforce, with up to 25% of the global employee base intended to be impacted.”
UDG Healthcare plc, a leading international provider of healthcare services, reinstated its interim dividend and annual guidance, citing greater visibility as lockdowns eased. ‘While some parts of our operations have been impacted by the pandemic and we continue to respond as required, the strong market positions and resilience demonstrated across the majority of the business leave the group well positioned for the future,’ UDG said. The company said profit had fallen in the third quarter due to the pandemic, following a ‘strong’ first half.
William Hill, the UK bookmaker, said it will permanently close 119 shops and merge its retail and online operations after lockdown accelerated a trend towards online gambling. It noted that a “strong recovery” since sports fixtures resumed would allow it to repay £24.5m that the company received from the government to pay its 7,000 employees during the lockdown period.William Hill reported a 32 per cent fall in revenue year-on-year to £554.4m in the six months to the end of June. Without the boost from the tax refund, it reported a £14.2m pre-tax loss.
Soft drinks bottler Coca Cola said its performance recovered steadily from April lows as its markets gradually reopened from coronavirus-led lockdowns. It reported comparable operating profit fell 35.8% to 208.8 million euros (188.45 million pounds) for the six months ended June 26, missing company-supplied consensus of 191.7 million euros.
Industrials & Transport
Virgin Australia said it would lay off 3,000 employees — about a third of its workforce — and shed its long-haul jets as part of a restructuring to make it a “stronger, more profitable and competitive” carrier. The budget Tigerair brand would cease to operate. The airline said the moves were a necessary “reduction in cost base to meet sector uncertainty and Covid-19 market conditions”. “Our aviation and tourism sectors face continued uncertainty in the face of Covid-19 with many Australian airports recording passenger numbers less than 3 per cent of last year and ongoing changes to government travel restrictions,” said Virgin Australia group chief executive Paul Scurrah.
Spirit AeroSystems ported a bigger-than-expected quarterly loss and pushed its target of becoming cash flow positive by another year. Its current-quarter results will be further hit due to fresh production cuts announced in July by Boeing Co and Airbus.
Malaysia’s national carrier has commissioned a survey in the UK on the impact that Covid-19 has had on attitudes towards international air travel. The results found that a significant proportion of UK residents are keen to get back onboard to take long overdue overseas holidays (69%), reunite with family (41%) or return to their usual work travel routines (33%). The poll of over 700 people from across the UK found that only 5% of people do not intend to fly anytime soon. Almost a quarter of people surveyed (23%) already feel comfortable flying and an additional 32% expect to do so within the next six months.
BMW said it expected to post an operating profit for the full year despite coronavirus lockdowns pushing the carmaker to a second-quarter operating loss as deliveries of luxury cars fell by 25% during the period. It reported a 666 million euro (601.08 million pounds) loss before interest and taxes in the quarter ending in June, down from a 2.2 billion euro operating profit in the year-earlier quarter. “We are now looking ahead to the second six-month period with cautious optimism and continue to target an EBIT margin between 0% and 3% for the automotive segment in 2020,” Chief Executive Oliver Zipse said in a statement.
Financials & Real Estate
German insurer Allianz, posted a 29% fall in net profit in the second quarter from a year earlier, noting coronavirus impacts. Net profit attributable to shareholders of 1.53 billion euros (1.38 billion pounds) compares with 2.14 billion euros a year earlier.
AIG reported $730 million (559.3 million pounds) in COVID-19-related losses during the first half of the year. The pandemic is a “formidable and ongoing catastrophe,” AIG CEO Brian Duperreault said during a call with analysts, noting that the impact will affect earnings and not capital. It reported a 56% fall in quarterly adjusted earnings. But AIG expects to recover some losses through reinsurance, AIG’s president and chief operating officer, Peter Zaffino said.
Germany’s Commerzbank said it expected to post a net loss for the full year after net profit declined 21% in the second quarter. The net profit in the second quarter of 220 million euros (198.55 million pounds) compares with net profit of 279 million euros a year earlier. “The effects of the coronavirus pandemic and the ongoing difficult economic conditions have persisted in the year to date and continued to have a significant impact on our earnings performance in the first half of 2020,” the bank said.
Bank of Ireland
Bank of Ireland reported underlying loss of €669 million and total income was 13 per cent lower. Francesca McDonagh, group CEO said, “the severe impact of COVID-19 – on our customers, the economy, and our business – is seen in our first half 2020 results. COVID-19 has had a material impact on the Group’s financial performance and outlook. We have taken an impairment charge of €937 million, resulting in a loss before tax of €669 million for the first six months of 2020.
Metro Bank reported a loss as provisions to cover loan losses due to the coronavirus crisis hit the lender. It reported an underlying loss of 240 million pounds ($313.92 million) for the six months ended June from a 3.4 million pounds profit a year earlier.
Legal & General
British life insurer Legal & General posted a 2% drop in first-half operating profit due to coronavirus impacts. Operating profit from continuing divisions fell to 1.13 billion pounds from 1.15 billion pounds a year earlier. It said it would pay an interim dividend for 2020 of 4.93 pence per share, the same as a a year ago.
Segro, UK’s largest listed property company by market capitalisation, announced that the value of its portfolio had increased during the crisis. The company said it was “clear that the structural trends that have been contributing to occupier demand for our space over recent years have strengthened as a result of the pandemic. E-commerce penetration has accelerated markedly across all our markets, there is a renewed focus on the efficiency and resilience of supply chains, and the demand for data centre space is increasing as a result of the need for additional data storage to support remote working and video streaming services.”
Australia’s largest telecom company Telstra Corp will sell its Clayton data centre facility in Melbourne to property firm Centuria Industrial REIT. Chief Executive Andrew Penn said the company had now sold more than A$1.5 billion worth of assets as part of a strategy announced in 2018 to strengthen its balance sheet.
IN THE NEWS
MPs say lack of early UK quarantine helped to accelerate pandemic – Financial Times
Tokyo Olympics chief strikes defiant tone as sceptic question viability – Financial Times
Schools ‘must come before pubs and restaurants in future’ – BBC