Powerscourt

By Powerscourt on 24/09/2020

Powerscourt Coronavirus Briefing – 24 September 2020

ANALYSIS

Drugmaker Johnson & Johnson provided a shot in the arm in the race for a virus on Wednesday, announcing it has moved into the final stage of a clinical trial for a coronavirus vaccine. The vaccine candidate is not the front-runner from a timing perspective, but it is by far the largest trial with over 60,000 subjects and, critically, the only candidate aiming to immunise people with a single shot, in contrast to most other vaccine programmes which rely on several.

With volume of doses of the virus likely to be in huge demand once a vaccine is approved, a single-shot candidate offers a significant advantage.

The update on the vaccine advance was a rare glimmer of hope amid a slew of gloomy disease and economic data. Predictably, the J&J news was seized upon by the US President.

President Trump immediately tweeted about the trial, adding “FDA must move quickly” – a reference to medicines regulator the US Food & Drug Administration, which Trump has been pushing to accelerate the process of reviewing and approving vaccine candidates.

Separately on Wednesday, Trump had amped up the existing distrust between himself and the FDA when he publicly refused to confirm whether the White House would approve new guidelines the FDA has put in place requiring outside expert advice before the approval of a coronavirus vaccine. The President said the FDA’s decision to require third party advice was a “political move”.

Trump has been at loggerheads with the regulator for several weeks. He has promised the American public a vaccine “within weeks” on several occasions and sees the FDA as dragging its feet on the approval timeline in order to frustrate his prospects of getting elected in November. But the FDA scientists – apparently furious at what they may see as an attempt to politicise their work – have made it clear they will not be railroaded into approving drugs before they can be sure they are safe and effective.

The United Nations today picks up on the growing politicisation of science with a call to arms to its member states to tackle what it calls an “infodemic” – misinformation about the pandemic spread through the internet. It, alongside a number of major tech companies such as Google and Facebook, issued a statement demanding the promotion of “science-based health information” at its 75th United Nations General Assembly.

The General Assembly has been derided for the clunkiness and irrelevance of its format in the COVID age: a long procession of monologues by world leaders delivered over the internet to a largely empty chamber hardly stands up against the slick webinars and presentations companies are offering: the Guardian sneeringly called it “the world’s worst Zoom call”.

Meanwhile, world leaders are grappling with the challenge of how to finance support for their populations as it becomes clear a second wave of the virus will delay recovery.

The UK Chancellor, Rishi Sunak will, according to several newspapers, announce a replacement for the furlough scheme as part of a multibillion pound economic package to support the UK through another six months of COVID-related restrictions. The Chancellor is expected to announce today that when furloughing ends at the end of October, it will be replaced with a wage top-up scheme for those able to work at least half their contracted hours, according to reports.

But businesses impacted by the coronavirus crisis, and the rules imposed to tackle it, are becoming increasingly exasperated by the government and the constantly changing rules.

Julian Metcalfe, the founder of sandwich chain Pret a Manger, yesterday accused the Prime Minister, Boris Johnson, of “nonsense leadership” during the pandemic.

He told the BBC’s World At One: “The repercussions of this six months is going to be devastating to so many people, to local councils, to industry, to people all over our country, just devastating. We have just not begun to touch the seriousness of this.”

Business and union leaders in the UK in the form of the CBI and the Trades Union Congress, have issued a statement urging employers to do what they can to limit job losses.

The UK will today launch its long-promised coronavirus tracing app. But with confidence in testing – and in the government – in short supply and amid reports that the app delivers a significant amount of false positives, it isn’t clear if this will be the key to recovery that the government once promised.

The global coronavirus disease statistics don’t suggest respite, either, mostly confirming that second waves are underway. The UK daily infection case load has now passed 6,000, while the US has achieved a grim milestone of 200,000 deaths since the start of the crisis. Canada’s Prime Minister Justin Trudeau said on Wednesday that second waves of the pandemic are underway in four major provinces.

Global stock markets fell sharply again overnight as markets fretted that the second waves underway would hit global demand.

 

WHAT ARE COMPANIES SAYING?

 

Consumer & Retail 

Cineworld
Cineworld said today it might need to raise more money if it is required to shut its theatres again following fresh pandemic curbs, as one of the world’s biggest cinema operators swung to a $1.64 billion loss for the first half. The British company, which counts the United States as its largest market, said it was in talks with lenders to avoid an impending loan default, and flagged risks to its ability to continue as a ‘going concern’ as studios delay major releases and people stay away from theatres. “If governments were to strengthen restrictions on social gathering, which may therefore oblige us to close our estate again or further push back movie releases, it would have a negative impact on our financial performance and likely require the need to raise additional liquidity,” the company said. The new restrictions could be a major blow to the company, which has reopened 561 out of 778 sites and highlighted the strong performance of Christopher Nolan’s “Tenet” earlier this month. Cineworld posted a pretax loss of $1.64 billion for the six months ended June 30, from a profit of $139.7 million last year as its cinemas were shut from mid-March until August

DFS
Revenues at furniture retailer DFS slipped about a fifth to £724.5m in the year to June with the lockdown-induced shutdowns pushing sales lower. The purveyor of sofas said that sales online and in showrooms picked up strongly following the easing of the lockdown but going ahead it was “concerned by lower consumer confidence and a potentially slower residential property market.”

Mitchells & Butlers
Rishi Sunak’s “eat out to help out” scheme helped the pub group  to record year-on-year sales growth in August and limit the fall in September’s revenue to 6.4 per cent. Chief Executive Phil Urban said: “The future remains both challenging and uncertain, with only this week a curfew and other additional restrictions being imposed on how and when we can operate”

Pets at Home

The pet supplier said that its full-year underlying pre-tax profit should come in ahead of market expectations, after its retail and veterinary businesses achieved double-digit like-for-like revenue growth in the eight weeks to September 10.

 

Industrials 

SIG
SIG posted a first-half loss of £53.7 million pounds today due to the coronavirus hit to construction activity, but the building materials supplier said its 2020 revenue would be modestly higher than prior forecast. The Sheffield, UK-based company, which in May expected 2020 revenues to be about 500 million pounds lower than 2019, said the underlying pretax loss for the six months to June compares with a profit of £17.4 million. In May, SIG Chief Executive Officer Steve Francis, who took the helm earlier this year, had laid out a new strategy for the business, focusing on sales and reviving margins as the British firm looks to put past troubles with financial forecasts behind it. Francis today in a statement said: “In the short term, significant economic uncertainty remains in all of our markets, although government stimulus for the construction sector, notably in the UK, is welcome”.

National Express 

The interim boss of National Express has said the group remains “resolutely optimistic” about its longer term prospects. The listed transport giant has said it traded “slightly above” its previously guided base case as it “closely managed” customer relationships, contract details and service requirements throughout the pandemic. The business had previously said that it anticipated its revenue to be about 50 per cent of pre-Covid-19 expectations until the end of August. Interim group chief executive and group finance director Chris Davies said: “We continue to be pleased that our strong customer relationships are sustaining high levels of revenue during the pandemic’s on-going uncertainty.”

Volkswagen
The carmaker said yesterday that it will pay about 36 million reais (£5.1 million) in compensation and donations to atone for the persecution of former employees during Brazil’s 1964-1985 military dictatorship. A government-appointed commission investigating abuses during Brazil’s dictatorship found evidence that companies including Volkswagen secretly helped the military identify suspected “subversives” and union activists on their payrolls. Many of the workers were then fired, detained or harassed by police, and were unable to find new jobs for years afterward, a Reuters investigation here showed in 2014. Volkswagen said it signed a settlement agreement on Wednesday with Brazilian state and federal prosecutors in Sao Paulo that includes the payment of 16.8 million reais to an association of former employees and their surviving dependents. The remainder of the money will be donated to various human rights-related efforts.

Smiths Group
The engineering company, recorded a 23 per cent decline in operating profit to £327m in its financial year ending July, driven by lower volumes and additional costs to support business continuity during the pandemic in the final six months. The group plans to pay a total dividend of 35 pence a share, lower than the 45.9p a share paid last year, and kept its guidance withdrawn as uncertainty persisted.

United Utilities
Water supplier United warned of lower first-half revenue today due to lower consumption by businesses during the pandemic and allowed regulatory revenue changes. The UK’s largest listed water company also said it expects bad debt to increase as government support schemes come to an end, and forecast an about 5% fall in revenue for the half-year ending September 30.

 

Financials & Real Estate 

WeWork
The U.S. office-sharing firm WeWork has said it will sell control of its China division to one of its investors – private equity firm Trustbridge Partners – as it steps back from a competitive market where it has suffered low-occupancy rates. The deal effectively offloads the China unit away from the parent, which has faced fundraising issues since a failed attempt to go public in 2019. WeWork said it will maintain a minority stake and “participating interest” in WeWork China and that it will receive an annual fee from the unit for use of the WeWork brand. Concurrent with the deal, the division has received $200 million in funding from existing investors, WeWork said. Michael Jiang of Trustbridge Partners will serve as WeWork China’s acting chief executive officer.

 

IN THE NEWS

Sunak scraps Budget to focus on jobs and business support – Financial Times

Rishi Sunak puts billions into new Coronavirus rescue plan – The Times




DAILY CORONAVIRUS BRIEFING - How business is responding to the crisis MENU