Powerscourt

By Powerscourt on 06/01/2021

Powerscourt Coronavirus Briefing – 06 January 2021

ANALYSIS

The vaccine race is on and the stakes could not be higher.

The World Bank estimates that global growth will rebound by 4% this year, but only if the COVID-19 vaccines are rolled out successfully. The global economy shrank by 4.3% last year as governments shut down larges swathes of the economy to control the pandemic. The bank has pencilled in a 7.9% growth rate for China, 3.5% for the US and 3.6% for the euro area, but this is based on an effective vaccination programme, that along with other measures, subdues the pandemic. If the rollout hits bottlenecks, then the bank estimates the global economy could grow by a feeble 1.6%.

The UK’s deployment of vaccine seems to be faring better than most other developed countries. The Times is reporting that 2 million Pfizer jabs that were being held back as second booster shots will be rolled out over the next two weeks as the government shifts its priority to providing the vaccine to as many first time recipients as possible. That means that Britain has 5 million doses ready to go on top of the 1.3 million who have already had their shots.

Brexit might be a done deal but Brexiteers’ obsession with the break up of the EU has not diminished, judging by the latest Ambrose Evans Pritchard commentary in The Telegraph. He is warning that responsibility for the bloc’s vaccination programme is beyond the competency of the European Commission and the allegedly  botched rollout so far poses an existential crisis for the Union.

As Powerscourt sees it, the rationale for the European Commission assuming responsibility for buying vaccines was to avoid member states taking a beggar thy neighbour approach. So far the commission has amassed a warchest of 2 billion doses, the largest portfolio in the world. The problem with the sluggish rollout lies with individual member states. However, the European Medicines Agency has so far only authorised the Pfizer vaccine, which has been a source of growing frustration in capitals across the bloc. A decision is expected today on the Moderna vaccine. It will be at least next month before a decision is made on the Oxford AstraZeneca vaccine as an application has not yet been submitted.

The pandemic might have put the aviation sector into abeyance, but Ryanair is still managing to stay in the headlines. The UK advertising watchdog is investigating the airline following a flood of complaints over its Boxing Day campaign that urged potential holidaymakers to ‘jab and go’. Many of the complainants claimed the ad was in poor taste and trivialised the pandemic.

Global stock prices slipped bond yields rose overnight as Democrats threatened to gain control of the US senate following two run-off races in Georgia yesterday. (As we write, they are projected to take one seat while the other is too close to call).  Investors are taking the view that if Democrats are in control of the Presidency, the House of Representatives and the Senate,  it will pave the way for higher taxes and higher levels of corporate oversight. 

 

WHAT ARE COMPANIES SAYING?

Consumer & Retail

Greggs plc
One of the UK’s leading food-on-the-go retailer has today released its fourth quarter trading update, indicating performance which has been somewhat hampered by the impact of covid-19 on operations. Throughout the financial year 2020, the group saw total sales of £811m, compared to £1,168m in 2019. Similarly, traffic was down within stores as sales averaged 81.1% of like-for-like levels in 2019. The company predicts a full year loss before tax to be up to £15m. These is cause for optimism however, as 28 new shops opened as at 2 January 2021. Chief Executive Roger Whiteside comments that he is enormously proud of how the business has dealt with the challenges presented by covid-19, while taking an optimistic outlook for the year ahead, particularly due to a partnership with Just Eat.

Informa plc
The information services, advanced learning, B2B exhibitions and events group today issued a trading update ahead of its 2020 Full Year Results on 22 April 2021, confirming the group’s performance will be in line with revenue guidance provided at the Half-Year results in September 2020. The group notes that there was significant disruption to physical events, given the necessary restrictions imposed as a result of covid-19. However, on the contrary, digital services and virtual events grew at pace in 2020, accelerating the integration of data and digital technology into physical event brands. Full year 2020 revenue is expected to be in line with the guidance previously provided at Half-Year results, in the range of £1.65bn to £1.68bn, with adjusted operating profit expected to be in a range of £250m to £270m.

Auto Trader
The UK’s largest digital automotive marketplace today provides an update as a result of the ongoing covid-19 situation. As a result of the current lockdown restrictions, all UK car retailers have been forced to, once again, close their showrooms. In Q3, demand for car buying has remained strong with visits to the Auto Trader marketplace 20% above prior year levels. However, the group expects sales volumes to be impacted in January and February. The Company has consistently supported its customers throughout the pandemic, and will continue to offer its support by providing advertising packages for free during February, as well as extending January payment terms.

Topps Tiles plc
Topps Tiles benefitted from a DIY wave in its first quarter ending in December, with retail like-for-like sales rising by a fifth and buoyed by strong demand from professional tile fitters and homeowners alike. This marked a significant uptick from the same three months of 2019, when retail edged down 5%. The company’s performance remains in line with its plans and as an essential retailer, it will be able to continue trading during England’s new lockdown rules. The Company does still remain cautious about tougher nationwide rules as it is difficult to predict how the market will be affected.

 

IN THE NEWS

Millions more vaccines on the way – The Times

Frontline UK teams query ability to vaccinate most vulnerable – Financial Times

Covid ‘lottery’ Doctors draw up triage protocol in the event treatment has to be rationed – The Telegraph




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