Powerscourt

By Powerscourt on 18/11/2020

Powerscourt Coronavirus Briefing – 18 November 2020

ANALYSIS

We may have jam tomorrow (or vaccines next month, if your prefer) but right now, it still looks pretty miserable.

A Bloomberg headline today captures it neatly: “America Locks Down From Atlantic to Pacific as Covid Rages”. The piece has a memorable contribution from Ellie Murray, assistant professor of epidemiology at the Boston University School of Public Health: “The whole country is on fire. Since people can be infectious before they have symptoms, a lot of people right now are infectious and transmitting to people and don’t know it. We’re trying to get a grip on this large explosion.”

Tokyo and South Korea are also seeing surges and facing new measures. However, the numbers of new infections look very low to a UK or US reader. South Korea is worried after 313 news cases in a day, while local authorities in the Tokyo region are concerned after announcing 493 new cases today. South Australia faces a six day hard lockdown after 22 new cases in a suburb of Adelaide, the state capital. Closer to home, France, Italy and Sweden all have dismal numbers. (Any takers for the Swedish model now?)

In general, the lack of joined-up government is coming home to roost on both sides of the Atlantic.

The US government stands accused of allowing political point-scoring over the elections to disrupt vital health planning while in the UK, allegations of nepotism and an opaque approach to the tendering of critical COVID-19 frontline services are creating a major political headache.

In the US, President Donald Trump’s apparent disengagement with the day job following his election defeat by Joe Biden earlier this month is starting to alarm health officials as virus levels continue to soar.

Dr Vivek Murthy, the co-chair of Biden’s COVID-19 taskforce, said he and his colleagues had been unable to contact their counterparts in the Trump administration. Dr Murthy told reporters on a conference call this could impact the ability of the incoming administration to plan for and administer vaccines as they are approved.

“We should not find ourselves in this position,” Dr Ashish Jha, Dean of Brown University’s school of public health, told NBC on Tuesday. “We’re 10 months into this pandemic, everybody knew this was coming, and again our federal government just didn’t prepare in the last couple months.”

In the UK, meanwhile, a court case has lifted the lid on contract tendering and fuelled concern over what the media describes as the “chumocracy” surrounding Boris Johnson’s government: the tendency to give personal and political contacts priority over critical decisions and contract awards with an impact on health policy.

In an ongoing court case a Spanish businessman, Gabriel Gonzalez Andersson, is alleged to have been paid £21 million indirectly by UK taxpayers as part of a bungled attempt to procure personal and protective equipment (PPE) as part of a frantic scrabble to protect NHS workers from the virus when the crisis got underway in March.

Documents from a US court claim Michael Saiger, a US businessman, was awarded contracts by the Department of Health worth more than £200 million in March to procure PPE. Mr Saiger says he then paid Gonzalez Andersson, a business associate, £21 million to find manufacturers of PPE in China to fulfil the deals he had signed, effectively acting as a fixer.

The case comes as the UK’s public spending watchdog criticised the government for its approach to the award of COVID-19 related contracts. The National Audit Office said the Cabinet Office and the Department of Health and Social Care had failed to explain why companies with government connections or records or a slapdash approach to due diligence were chosen to provide critical services worth up to £17.3 billion during the pandemic.

The report highlighted a series of contracts awarded where suppliers had close links to the Government or the Civil Service, apparently without tenders and with little recognition of the potential for a conflict of interest.

Asian shares were lower into Wednesday following a days-long rally inspired by positive news on vaccines. Soft US retail data and the lack of any updates on expected US stimulus have corrected the previous optimism driven by positive efficacy data from vaccine developers.

 

WHAT ARE COMPANIES SAYING?

 

Industrials

British Airways
British Airways is to introduce coronavirus tests on some transatlantic flights in an attempt to convince the UK government to drop quarantine for incoming passengers. Along with its partner American Airlines, the carrier will this month introduce testing on select flights to London from New York, Dallas and Los Angeles. The UK is expected to cut the 14-day self-isolation time for passengers arriving in Britain to about a week after lockdown ends in December. But BA, along with other leading airlines, wants the government to drop quarantine entirely to help reverse the collapse in passenger numbers since the outset of the pandemic. 

Consumer & Retail

Airbnb
It is likely no surprise that the word COVID appears 215 times in Airbnb’s 349-page float prospectus. The document, published on Monday night, shows just how bad it became for the home-sharing service in the worst months of the pandemic. This January, guests made a net 33.3 million bookings on Airbnb for rooms and “experiences” such as city tours, cookery classes and stand-up comedy workshops. In March, they made a net 4.1 million cancellations. Like the rest of the travel industry Airbnb was in crisis. 

Halfords
Halfords reported today a more-than-doubled pretax profit for the first half of fiscal 2021 on higher revenue, with underlying profitability ahead of guidance. The motoring and cycling products provider made a pretax profit of £55.4 million for the six months ended 2 October, compared with £27.5 million in the year-earlier period. Pretax profit more than doubled on the year on an underlying basis too, reaching £56 million. “Growth accelerated quickly through the first quarter, before stabilising in the second,” the company said. Halfords stated the outlook for the second half remains uncertain due to the continuing coronavirus pandemic and the seasonality of the business. 

Safestore Holdings
Safestore Holdings announced revenue for the fourth quarter of its fiscal 2020 was up 5.7% with occupancy now fully recovered from the coronavirus pandemic. Revenue for the quarter ended 31 October was £42.8 million, compared with £40.5 million for the same period last year. Occupancy in the quarter was 79.5% compared with 77%. The London-listed self-storage company’s fourth quarter set a record like-for-like occupancy increase of 228,000 square feet of space, recovering to its pre-coronavirus lockdown position.

Speedy Hire
Speedy Hire saw a sharp fall in first-half profit on lower revenue amid the coronavirus pandemic but said business has been recovering in recent weeks. The equipment and tool-hire company made a pretax profit of £1.4 million for the six months ended 30 September, compared with £16.4 million in the year-earlier period. Revenue fell 21% year-on-year to £162.3 million. The board didn’t declare an interim dividend for the period due to the disruption caused by the pandemic. Assuming current trading continues, the board intends to pay a dividend for the full year, Speedy Hire said. 

 

Financials & Real Estate 

British Land Company
British Land resumed dividend payments and outlined some property sales that have supported its financial position, while warning of more pain in the office and retail sectors due to Brexit uncertainties and the coronavirus pandemic. In the last set of results under CEO Chris Grigg, British Land posted a near 30% drop in underlying profit to £107 million for the six months ended 30 September. Loss after tax ballooned to £730 million from £404 million a year earlier.

International Personal Finance
Leeds-headquartered International Personal Finance has reported continued improvements in its trading performance, despite the impact of the pandemic. In a trading update for October, the business, which provides unsecured consumer credit to customers, says it has recorded a further increase in credit issued to 60% of pre-COVID expectations, along with a net cashflow of £7m, reflecting a progressive shift towards growth. 

TMT

Micro Focus
Micro Focus announced this morning that it expects to report lower revenue and adjusted earnings margin for fiscal 2020. The UK software group said it expects to report revenue of around $3.0 billion for the year ended 31 October, 10% lower than in fiscal 2019 on a constant currency basis but in line with management’s views. Adjusted EBITDA margin for the year is expected to be around 39%, which is lower than the margin of 40.7% Micro Focus reported for fiscal 2019 but toward the upper end of management’s views. The company said the macro-economic environment remains uncertain due to the coronavirus pandemic and that it continues to evaluate its potential long-term impact on the group. 

 

IN THE NEWS

Concern over series of failures on £17bn COVID contracts – Financial Times

Retailers losing £2bn a week in lockdown – The Daily Telegraph




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