Powerscourt

By Powerscourt on 28/10/2020

Powerscourt Coronavirus Briefing – 28 October 2020

ANALYSIS

Germany is moving swiftly to a five week lockdown. Chancellor Angela Merkel will tell regional premiers later today that bars, restaurants and all leisure facilities should close to the end of November. Schools, creches, supermarkets and hairdressers can stay open but that is it. Travel is discouraged and house visits are to stop. The country’s economics minister said that the proximate cause was Germany’s vaunted test-and-trace system which is being overwhelmed. Now, people who test positive are being asked to trace their own contacts.

Meanwhile in Italy, demonstrators smashed shop windows and looted luxury fashion boutiques as anti-lockdown protest swept through Italian cities. In the US, about 500,000 were diagnosed with COVID-19 in the last week according to Reuters estimates. Illinois and Idaho have started new measures to restrict people’s activities.

Less gloomy: the death rate in the UK among people admitted to hospital with Covid-19 halved after the peak of the first wave, a study has shown. In late March, 26% of patients admitted to high dependency units died, while the figure for intensive care units was 41%. By June the death rate had dropped to 7% and 21% respectively. The news comes as 367 deaths were reported in the UK, more than three times the number reported two weeks ago.

Almost 85,000 additional companies are likely to be created this year compared with 2019, according to SHL, the recruitment and training business. Possible explanations include a spike in entrepreneurialism unleashed by the pandemic and people being pushed into self-employment having lost their jobs.

The chief executive of Pfizer hinted yesterday that details of its late stage vaccine trial could be released next week.

People who suffer the most from Covid-19 are almost twice as likely to be deficient in vitamin D, a study has found – implying that supplements might help protect against the disease.

Equity markets continued to drift lower on bad pandemic news.

 

WHAT ARE COMPANIES SAYING?

 

Industrials

Ibstock PLC
Ibstock PLC, a leading manufacturer of clay bricks and concrete products in the United Kingdom, today issued a trading update for the period to 30 September 2020. The group saw continued recovery in demand during Q3, with overall volumes recovering to around 90% of prior year levels in the month of September and remaining around those levels in October. As volumes have continued to improve, the benefits of cost cutting actions taken by the group have resulted in stronger margins across both their clay and concrete businesses and they are trending towards pre-COVID levels.

Orsted A/S
Today, the renewable energy company approved the interim report for the first nine months (9m) of 2020, announcing its EBITDA amounted to DKK 13.1bn, a 2% increase compared to the same period last year. Additionally, earnings from offshore and onshore wind farms increased 16% to DKK 11.6bn. CEO and President Henrik Poulsen says ‘despite the tenacious COVID-19 pandemic, our operations and financial performance in Q3 remains stable and fully in line with our expectations from the beginning of the year’.

 

Financials & Real Estate 

John Laing PLC
The responsible investor and active manager of infrastructure projects today issued a trading update for Q3. The quarter was a strong one, with their PPP portfolio driving a 4% underlying NAV growth in the third quarter. Similarly, there was strong underlying growth in the Renewable Energy portfolio in the period. As a result, net asset value (NAV) increased from £1,525m to £1,549m in the period, with NAV per share rising from 309p to 314p. John Laing expects continuing underlying NAV growth for the second half of the year, excluding foreign exchange movements and other external factors.

Deutsche Bank
Deutsche Bank reported its highest profit in six quarters as Germany’s largest lender received a boost from a 47% surge in bond trading revenue and falling provisions for credit losses, beating analyst expectations. Deutsche Bank’s investment bank won back market share in Q3 as its five largest US rivals on average reported only a 26% rise in fixed income trading revenue. Total revenue at Deutsche investment bank increased by 43% and the bank reported €182m in profit attributable to shareholders.

 

Retail & Consumer

Next PLC
The British multinational clothing, footwear and home products retailer today released a trading statement indicating signs of recovery, outperforming initial forecasts. Full price sales in the third quarter were up +2.8% against last year and vastly exceeded the expected level. Additionally, total sales, including markdown sales, were up +1.4%. With full year profit now forecast at £365m, £65m higher than the central scenario given in September, Next are in a strong position.

B&M 
One of the UK’s fastest growing variety retailers today gave notice of an Extraordinary General Meeting (EGM) to be held on 3 December 2020, in which all shareholders are recommended to vote in favour of all resolutions. Vitally, in this process, all current shares will be digitalised with paper-certificated shares being registered in an account with a central securities depository. The other changes are to preserve as far as practicable the legal and regulatory provisions in relation to takeovers and transparency disclosures which currently apply to the Company.

 

TMT

Sony
The consumer electronics company raised has raised its annual profit guidance by 13% as the COVID-19 boost to its PlayStation gaming business helped offset a slowdown in smartphone camera sensors as a result of the US-China trade dispute. For the full year through March 2021, the Japanese entertainment and technology group said it expects ¥700bn ($6.7bn) in operating profit, compared to the August projections of ¥620bn

 

Healthcare

ConvaTec Group PLC
The British medical products and technologies company today announced strong Q3 performance and ongoing strategic progress. The Group reported revenue of $439m which was 6.5% higher year-on-year and 5.6% up in constant currency. This was largely driven by significant growth in Infusion Care and while COVID continued to drive less predictable demand, revenue for the 9 months up to 30 September 2020 was up 4.8% in constant currency. The Company remains optimistic, announcing that they now expect to be towards the higher end of their constant currency revenue growth range of 2-3.5%

GlaxoSmithKline
The British multinational pharmaceutical company today announced that Sanofi and GSK have signed a statement of intent with Gavi, the legal administrator of the COVAX facility, around the pooled procurement and equitable distribution of eventual COVID-19 vaccines. Sanofi and GSK intend to make 200m doses available for their protein-based vaccine if it receives approval and both companies are determined to contribute to COVAX’s ambition to ensuring successful COVID-19 vaccines reach all those in need, regardless of where they live.

AstraZeneca
AstraZeneca and Daiichi Sankyo Company, Ltd. has received acceptance for its supplemental Biologics License Application (sBLA) and has also been granted priority review in the US for treatment of patients with HER2-positive metastatic gastric or gastroesophageal junction (GEJ) adenocarcnioma. There are more than 27,000 cases of gastric cancer in the US per year, of which roughly one in five are HER2-positive. For these patients, there is no other approved medicine.

 

IN THE NEWS

Food tsar Henry Dimbleby serves up £1bn meal plan to Boris Johnson – THE TIMES

Lord Sumption attacks government over coronavirus restrictions – FINANCIAL TIMES

Second wave forecast to be more deadly than the first – THE TELEGRAPH




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