By Powerscourt on 12/01/2021
Powerscourt Coronavirus Briefing – 12 January 2021
ANALYSIS
The European Commission assumed responsibility for the acquisition strategy for coronavirus vaccines for the entire bloc. The rationale was apparently compelling. The purchasing power of 450 million people is much greater than individual, particularly smaller, member states. Furthermore, it would prevent EU countries competing against each other for scare supplies, particularly during the early phase of vaccine rollouts.
It has not quite worked out according to plan, however. The Times among other papers is reporting on the continuing fallout from the news that Germany apparently did two side deals last summer with Pfizer/BioNTech for an extra 30 million doses and CureVac for 20 million jabs. Separately Berlin has bought a further 26 million doses of the Pfizer and Moderna vaccines that were returned by Poland and Belgium as part of their allocated amounts under the EU program.
Ursula von der Leyen, the president of the European Commission, has publicly warned that member states are legally prohibited from going it alone, but so far there has been no official comment, much less threat of legal action, against Berlin. A Commission spokesman has said that Germany’s policy of buying the returned jabs from the EU complied with EU protocols, but declined to comment on the two side deals.
There has been widespread discontent in Germany about the Commission’s vaccine program, amid accusations that it is lagging far behind the UK and the US. The Commission has rejected these claims and cited its portfolio of 2.3 billion jabs, the largest in the world. However, there is popular support in Germany for the side deals negotiated by the government, including among the three candidates competing to replace Angela Merkel as head of the CDU. A number of MEPs have complained that this is an example of how Brussels is unable or unwilling to rein in its largest member state.
Ireland went from having the lowest rate of COVID-19 infections per capita in the EU in early December to having the highest rate of infections in the world last week. The government has blamed the new COVID strain that originated in the UK for the surge in cases. The World Health Organisation said the rampant increase was more likely caused by the government’s decision to partly open up the hospitality sector as well as allowing home visits in December. Either way, the scale of the challenge facing the government is daunting.
Stephen Donnelly, the Minister for Health, said yesterday that Ireland’s frontline health workers as well as the elderly and vulnerable will be fully vaccinated by the end of March. Over that timeframe, the government is scheduled to take delivery of 360,000 Pfizer jabs and 110,000 from Moderna. That means Dublin is reliant on 930,000 doses from AztraZeneca, which has so far not been authorised by the European Medicines Agency.
As hospitals across the UK reaching full capacity, the British government has pledged to vaccinate 32 million adults by Spring, according to The Telegraph.
Stocks marginally retreated from record highs in overnight trading as investors digested ongoing political turmoil in the US and the global spike in COVID-19 infections. US treasuries extended their selloff on the expectation of a very large US fiscal stimulus package.
WHAT ARE COMPANIES SAYING?
Industrials & Transport
Kingfisher
Home improvement firm Kingfisher said that a boom in online sales had seen fourth quarter sales rise 16.9%. In a trading update, the London-listed firm said that it was comfortable with the top end of current estimates for profit of £667m-£742m this year. It added that e-commerce sales had increased by 150% in the fourth quarter, as customers respond to lockdown restrictions. Kingfisher operates well-know brands such as B&Q, Screwfix, and Trade Point across Europe. Recent restrictions mean that some of Kingfisher’s stores in the UK and Ireland have been closed on a temporary basis, although the majority of its 1,380 stores remain open for click-and-collect. The firm added that it expected to pay £85m in exceptional costs this year, including £45m in Covid costs. Kingfisher has already announced that it will give back some £130m in business rates relief received from the government.
Vistry Group
UK house builder Vistry said it would resume dividend payments as it guided for full-year profits at the upper end of forecasts. The company has said pre-tax profit for the year to December 30 was expected at the top end of the expectations at around £140m and added that it was still confident of lifting 2021 full-year pre-tax profit in 2021 to £310m, assuming stable market conditions. Vistry said it intended to pay a ‘modest’ final dividend for 2020 on the back of a strong second-half performance, net cash position and record forward sales. “We have seen strong demand for our homes during 2020 with the group’s private sales rate per outlet per week increasing by 15% in the second half to 0.62m,” the company said in a trading update. “Encouragingly, customers continued to reserve homes during the second national lockdown in November, and throughout December, with our underlying sales rate up around 20% in the last six weeks of the year compared to the prior year equivalent period.”
Very Group
The credit-based online retailer owned by the Barclay brothers, marked its best Christmas trading period with retail sales up 18% in the seven weeks to December 25. Homewares and electrical goods were the best sellers, as has been the case for many rivals. Sales in many subcategories rose more than 40% as families spent on their homes cash that might once have gone on holidays or meals out. Stripping out Littlewoods, its legacy catalogue business, sales grew more than 25%. Henry Birch, chief executive, said the economic picture remained unpredictable, but that the group had “strong momentum”. “As we begin the year. I believe our resilient, flexible and proven business model, which is online, multicategory and offers customers flexible payment options, will continue to help us thrive in 2021,” he said.
Consumer & Retail
The Hut Group
The Hut Group has revealed fourth quarter sales came in ahead of guidance, helped by the online beauty and sports nutrition business attracting 3.5 million new customers. The UK tech darling, which as well as selling its own goods online also licenses its technology to others, said revenues in the three months to December 31 leapt 51%. That was above guidance of 40%-45% given on December 7. Sales in the beauty division jumped 66.2% in the quarter. The firm, which floated at 500p per share in September and is led by founder Matthew Moulding, also announced a number of new partnerships it has inked a number of new partnerships within its ‘ingenuity’ division, such as with skincare brand Erborian and fragrance brand Creed. Matthew Moulding said: “Following our successful listing on the London Stock Exchange in September 2020 we have accelerated our sales growth across all areas of the group, underpinned by record new customer numbers.” The company, which late last year revealed a deal to buy US online skincare retailer Dermstore for £259 million, expects revenue growth in 2021 to be between 30% and 35% higher. It had previously guided 20% to 25% growth. In a separate update, THG showed how it is making moves to improve its corporate governance. It said Tiffany Hall has been appointed as an independent non-executive director. She is a NED at discount retailer B&M and has previously been chair of the remuneration committee at Howden Joinery. It also added two new members to its special advisory panel which was set up to bolster its non-executive directors in 2020.
Moonpig
Moonpig Group Plc said it intends to list in London, buoyed by an acceleration in online shopping amid the pandemic. The online greeting card and gifting platform, comprising the brands Moonpig in the U.K. and Greetz in the Netherlands, adds to the strongest start to the year for London initial public offerings since 2008. Moonpig Group held a 60% market share in the U.K. among online card specialists in 2019 and a 65% share in the Netherlands among the top three online card players in 2019, the company said, citing estimates. “As the leaders of the accelerating shift to online now is the perfect time for us to bring the company to the public market,” Nickyl Raithatha, chief executive officer of Moonpig Group, said in a statement today. At least 25% of Moonpig’s share capital will be available for trading upon listing, the company said today, adding that it expects to be eligible for inclusion in the FTSE U.K. indexes. The company is backed by Exponent Private Equity Partners, which owns a 41.3% stake. Moonpig did not provide details on the size of the IPO. Its revenue rose 44% to 173.1 million pounds ($234.6 million) in the year ended April 30, while its underlying earnings before interest, tax, depreciation and amortization was 44.4 million pounds, representing an underlying Ebitda margin of 26%, the statement showed. Citigroup Inc. and JPMorgan Chase & Co. are joint global co-ordinators, while HSBC Bank Plc, Jefferies International Ltd. and Numis Securities Ltd. are joint bookrunners.
Games Workshop
Games Workshop, the Warhammer boardgames sensation whose shares have jumped from £5 to £116 in the past five years, today reported strong sales and profits as it benefited from the Covid stay-at-home restrictions on its customers. Fans of the tabletop games, where players move fantasy figurines, became ever more hooked on its products. Last month it said it would have sales for the six months to November 29 up 25% to £185 million and a 53% jump in profit to at least £90 million. In the event, the figures came in slightly higher, at £186.8 million and £91.6 million. Chief executive Kevin Rountree praised “another cracking performance from a truly amazing, global team.”
Financial & Real Estate
Land Securities
One of the country’s biggest landlords, has received just a third of the rent it is owed by retailers in its estate, underlining the pain in a sector that has faced enforced shutdowns for much of the past nine months. The company has said it had received just £5m of the £14m it was owed by regional retailers and £2m of the £7m owed by retail, leisure and hospitality businesses in London to cover the 3-month period from December 25. Some of that rent has been deferred to give struggling tenants breathing space. The low rent take highlights broader issues across the retail sector, with all but essential stores in England forced to close under new lockdown measures. Across the UK, retail landlords have collected 54 per cent of the rent they are owed for the December quarter, according to property data company Re-Leased. Office tenants have fared far better through the pandemic. Landsec, which owns a big campus in Victoria, the One New Change shopping centre and office development near St Paul’s Cathedral and Deutsche Bank’s new offices at 21 Moorfields, has received 87% of the rent it is owed by office occupiers for the current quarter. Derwent London, a specialist office landlord focused on the capital, also announced on Tuesday that it has received 87% of the £40.9m owed by its office tenants. Shops and hospitality businesses in the company’s portfolio, meanwhile, have paid just 26% of the £3m they owed for the December quarter.
IN THE NEWS
Police vow to fine the Covid lockdown refuseniks – The Times
Sunak says Brexit will ‘reinforce’ City as world leading financial centre – Financial Times
Pressure on NHS for Covid vaccinations round the clock – The Telegraph
