Powerscourt

By Powerscourt on 13/08/2020

Powerscourt Coronavirus Briefing – 13 August 2020

ANALYSIS

European countries, who six weeks ago seemed to be over the worst of the crisis, are now struggling to curb a renewed surge in infections.

Germany has recorded its highest number of new coronavirus cases in more than three months, with 1,200 new cases recorded in the past day. France recorded 2,524 new cases in 24 hours, the highest daily rise since its lockdown was lifted in May.  Spain is facing the worst coronavirus infection rate in Western Europe, recording 1,418 new infections on Tuesday.

In a move which shows how important virus counts now are for the political capital of governments around the world, the UK government has adjusted the way it counts coronavirus deaths. The adjustment is expected to reduce the headline UK death total by as much as 5,000.

The new daily count will be based on a 28-day limit between the date of a positive lab-confirmed test and the date of death, designed to reduce the inaccurate linking of a coronavirus diagnosis with a death. Deaths that occur more than 28 days after a positive test will not be included in the headline count.

BP on Wednesday announced plans to radically downsize its office footprint across the world, shifting as many as 50,000 of its employees to remote working.

The plan is part of a dramatic restructuring of the oil major under new CEO Bernard Looney, who is seeking to reduce the company’s cost base.  However, it also demonstrates the impact that coronavirus has had on the culture of business, underlining the reduced role that corporate offices may now play for many businesses.

US Federal Reserve policymakers have warned that US economic growth will continue to be sluggish for several months as a result of COVID-19.

Consumer spending will continue to underwhelm as people avoid high levels of social interaction, the President of the Boston Federal Reserve Eric Rosengren said during an online event organized by the South Shore Chamber of Commerce in Massachusetts.

Robert Kaplan, the President of the Dallas Federal Reserve, echoed this, warning that Americans need to learn to “live with” the virus, using protective equipment and avoidance strategies where they can in order to allow economies to stay open.

More gloom from economic policymakers no doubt helped US Democratic Presidential nominee Joseph Biden as he unveiled his new running mate, Senator Kamala Harris on Wednesday, a key staging post on the way to November’s US elections. In her first speech since the confirmation, Ms Harris, a former prosecutor, said the case against President Trump and Vice President Pence in the mismanagement of the virus was “open and shut”.

 

WHAT ARE COMPANIES SAYING?

 

Industrial & Travel

Renishaw
The British engineering company released its full year results today, reporting a fall in revenue of 11 per cent year on year to £510.2 million, as a result of the challenging global macroeconomic conditions throughout the year and the impact of Covid-19 on production lines. Adjusted profit before tax fell by 53 per cent year on year, to £46.8 million. Executive Chairman David McMutry said: “it has been a particularly challenging year for the Group and we are extremely proud of the commitment our employees have shown during these exceptional times”. 

 

Retail & Consumer 

TUI
The travel and tourism company issued its third quarter trading update today, in which it reported a 98 per cent fall in Group revenue to €75m, reflecting the business standstill for most of the quarter. The company reported a loss in earnings of €2.3 billion in the nine months to June to this year, and included that bookings for the summer season remain significantly lower than usual, at 81 per cent of 2019 levels. Just 15 per cent of its total hotel portfolio opened during the quarter, as lockdown restrictions eased worldwide from mid-May.

National Express
The coach operator published its half year results for the six months ended 30 June today, in which it reported that Covid-19 had had “an immediate and unprecedented impact” on all of its businesses from March onwards, with patronage falling by 80 per cent during lockdown. However, the company also included that it had reduced mileage during this time by 80 per cent, and was still able to secure 50 per cent of expected revenue. CEO Dean Finch said: “We remain fundamentally positive about the future. The diversification of the Group in recent years has provided resilience during the pandemic, as risk has been spread”.

GVC
The global sports-betting and gaming Group announced its interim results today, reporting strong trading despite an overall fall in revenue, and including that annual profits would be higher than expected. The company beat expectations for the period, seeing a 19 per cent growth in net revenue for its online business, with double digit growth in all major markets. This strong performance, coupled with the return of the sporting calendar and the re-opening of retail operations means that the Group is “well placed for the balance of the year”. CEO Shay Segev said: “Given the unprecedented trading environment, GVC has delivered an encouraging performance in the first half, underlining the strength of our diversified business model and the expertise, adaptability and dedication of our people”.

Watches of Switzerland
The British retailer announced its full year results today, reporting an increase in revenue of 5.9 per cent for the year ended 26 April 2020. The company also published a trading update for Q1 FY2021, in which it saw increased domestic demand offset tourism decline, with Group revenue for the 13 weeks to 26 July beating management expectations with a fall of just 27.6 per cent year on year, despite stores trading for only 38 per cent of potential trading hours. The Group also included that online sales had increased by 79.3 per cent during the period. 

 

Financials & Real Estate 

Just Group
The specialist UK financial services group announced its interim results today, reporting an increase in underlying operating profit to £117 million, compared to £114 million for the same period last year. It also reported an improved capital coverage ratio of 145 per cent, during what the company describes as a “turbulent and difficult time in financial markets”. CEO David Richardson said: “We are optimistic about the future. We hold leadership positions in valuable segments of economically attractive markets and will continue to innovate to selectively grow our participation in these markets”. 

 

TMT

4Imprint 
The marketer of promotional merchandise released its half year results today, in which it reported a 34 per cent fall in revenue for the period, and a 99 per cent fall in underlying profit before tax, with the pandemic having a significant impact on operations during the first six months of the year. Trading was severely affected, with weekly order counts falling to less than 20 per cent of 2019 levels in mid-April. They have since recovered to approximately 50 per cent of 2019 levels. Chairman Paul Moody said: “Although significant uncertainty remains over the likely duration and extent of the pandemic, the Board is confident that the core strength of the Group’s highly flexible business model and competitive positioning will allow it to take advantage of the opportunity presented by a recovering market”.

 

IN THE NEWS

Sunak told to safeguard recovery or watch it failThe Times

UK Covid death toll revised down by 5,377 after data reviewThe Financial Times




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