Powerscourt

By Powerscourt on 20/01/2021

Powerscourt Coronavirus Briefing – 20 January 2021

ANALYSIS

The COVID-19 pandemic has set a number of grim milestones. On the day that Joe Biden is inaugurated as the 46th US president, deaths in the country have passed the 400,000 mark. Record deaths have also been recorded in the UK, Portugal and Indonesia. Hospitalisations are at close to capacity level in most countries.

There was another chink of light however with the news than an extensive study by Liverpool University has found that ivermectin, a cheap off-patent anti-parasitical drug, could reduce mortality rates in moderate to severe covid patients by up to 75%. Dr Andrew Hill from Liverpool University said that the results were encouraging but further studies were needed to provide global regulators with evident robust enough to warrant approval.

Greece, the Czech Republic, Austria and Denmark have written to Charles Michel, the Council President (effectively the co-ordinator between EU heads of government, urging the bloc to send out a strong signal to the European Medicines Agency to ensure the approval procedure for vaccine candidates is as efficient as possible when the 27 member states meet via video conference in Thursday. The EU has a target of vaccinating 70% of its adult population by the summer. The only hope it has of reaching this target is if easier-to-distribute vaccines are authorised. AstraZeneca submitted an application for regulatory approval on January 12, but a decision is not expected until January 29. Johnson & Johnson is expected to submit an application next month for its single shot vaccine, which is seen as a gamechanger in combatting the pandemic.

As it stands only the Pfizer and Moderna jabs have been authorised in the EU. The UK is much further along the vaccination curve as it has given regulatory approval to Pfizer, AstraZeneca and Moderna. However, The Times is reporting that UK government ministers are becoming increasingly concerned about the rollout of the Pfizer vaccine following a sharp reduction in supplies. The number of people receiving their first dose on Monday fell for the third day in a row to 204,076 from a high of 324,000 on Friday. Pfizer said it would be lowering supplies this month and next as it upgraded its factory in Belgium.

New York City expects to close vaccination centres on Thursday because of a lack of supplies. Bill de Blasio, its mayor, says he wants to offer the jab to 300,000 people this week but only has enough doses for 90,000. He warned of an impending crisis. Pfizer is supplying 200 million doses to the Federal Government but hasn’t considered sales direct to states, according to Bloomberg.

The Daily Telegraph carries two stories from Israel reporting on two contrasting outcomes of the ongoing vaccination program. Nachman Ash, the country’s coronavirus czar, said that the first dose of the Pfizer jab offered less protection than originally expected. Ash said there are a number of reports of Israelis becoming infected between the first and second jabs. However, a second study found that Israelis who had received the Pfizer jab are unlikely to transmit the virus to others.

EU leaders are also expected to discuss vaccine passports when they meet via video conference on Thursday. Greece, in particular, wants the travel industry up and running before the summer. But there are likely to be a number of logistical problems with a vaccine passport, such as the considerable resources it would require to create the IT infrastructure and concerns over whether privacy would be compromised by such a database.

Shares hit record highs in overnight trading as Janet Yellen, the US Treasury Secretary nominee, called for a very hefty stimulus package to help the US out of the pandemic induced economic slump.

 

WHAT ARE COMPANIES SAYING?

Industrials & Transport 

Cairn Energy
Ahead of announcing its preliminary results for the year to 31 December 2020 on 9 March 2021, Cairn, one of Europe’s leading independent oil and gas exploration and development companies, today provides an update on its operations and trading performance together with guidance for 2021. Group cash at year end was $570m, with no drawn debt. Oil and gas sales revenue was $324m. Interestingly, the International Tribunal established to rule on Cairn’s claim against the Government of India found unanimously in Cairn’s favour and awarded damages of $1.2 bn plus interest and costs.

Diploma
The international group supplying specialised technical products and services, is today issuing its first quarter trading update in respect of the year ending 30 September 2021. Reported Group revenues increased by 24% over the comparable period, in line with last year’s pre-Covid comparative, said to reflect strong execution of organic growth initiatives.

BHP 
The leading global resources company published its operational view for the half year ended 31 December 2020. Group copper equivalent production was broadly flat in the December 2020 half year. Production guidance for the 2021 financial year remains unchanged for petroleum and metallurgical coal, with iron ore increasing and copper guidance narrowing. The financial results for the December 2020 half year are expected to include an impairment charge of between $1.15 bn and $1.25 bn.

Hochschild
In its fourth quarter 2020 production report, the miner delivered attributable production of 94,035 gold equivalent ounces or 8.1 million silver equivalent ounces, representing a strong ongoing recovery versus the previous two quarters, with the Inmaculada and Pallancata mines in full production throughout the period. Overall, 2020 attributable production was 289,293 gold equivalent ounces or 24.9 million silver equivalent ounces, at the high end of the Company’s revised forecasts, but reflecting the impact from Covid-related disruptions throughout the year.

Antofagasta
The mining company announced its fourth quarter production report for 2020. Copper production for the full year was 733,900 tonnes, in line with guidance and 4.7% lower than the record production in 2019. Copper production in Q4 2020 was 192,600 tonnes and gold production stood at 54,700 ounces, 13.6% and 42.8% higher than the previous quarter, respectively. Molybdenum production in the quarter was 3,700 tonnes, 8.8% higher than the previous quarter.

 

Consumer & Retail

Burberry Group
The luxury fashion house, posted its third quarter trading update today. Retail comparable store sales declined 9% as planned reductions in markdown and reduced tourist traffic in outlets offset high single-digit full-price sales growth. This was particularly acute in the EMEIA region, which had store sales down 37%, due to fewer tourists and COVID-19 related store closures. In the move to online, digital full-price sales growth over is over 50%, with Mainland China in triple digits.

Dixons Carphone
Dixons Carphone, the multinational electrical and telecommunications retailer and services company, announced its Peak Trading Statement for 2020/21. Full year profits are expected to be delivered in line with expectations, despite store closures. UK & Ireland Electricals like-for-like revenue is up 8% and online growth up 121%, with online market share increasing by 6%pts. UK & Ireland Mobile total revenue is down by 40%, which is said to be in line with the plan, given UK standalone Carphone Warehouse store closures last April.

Pearson
The leading learning company, is today providing an update on full year 2020 trading. Full year results will be announced on 5th March 2021. Group sales declined by 10% and Pearson expect to report adjusted operating profit in the range of £310m-£315m. The challenging impact of COVID-19 has been felt most acutely across International and Global Assessment due to test centre and school closures, and exam cancellations. However, global Online Learning sales grew 18% due to strong enrolments in new and existing schools in Virtual Schools. 

WH Smith
WH Smith issued an update on trading in its High Street and Travel stores for the 20 week period to 16 January 2021. While Covid-19 continues to have a significant impact, the Group said in today’s statement that the Christmas period was better than anticipated. Despite reduced footfall, revenue in High Street in December is at 92% of 2019 levels. The Group expects its underlying monthly cash burn for the period January to March 2021 to be around £15m-£20m per month assuming the current lockdown conditions continue.

 

Financials & Real Estate 

CMC Markets
A leading global provider of online trading and institutional platform technology solutions, today issues a trading update for the period from 1 October 2020 to 31 December 2020. The Board is confident that net operating income for the Full Year 2021 will be at the upper end of the current market consensus, with net operating income expected to be at the top end of the current range of £370.2m to £387.5m. Profit Before Tax is expected to range from £191.3m to £206.3m.

Galliford Try
The UK construction group, today provides an update on trading for the half year period from 1 July 2020 to 31 December 2020. The Group expects to announce its results for the half year on 4 March 2021. The Group has maintained a strong cash position, said to leave them well placed to manage lockdowns and to continue to support the business. Average month-end cash for the six months ended 31 December 2020 was £158m. Forward order book stood at £3.3bn, compared to £3.2bn in the first half of 2020.

TMT

IWG
IWG plc, formerly Regus, provider of serviced offices, virtual offices, meeting rooms, and videoconferencing, posted its year end trading update, ahead of the publication of full year results on 9 March 2021. There will be a provision of up to £1601m for network rationalisation, which will be taken with the Group’s results for the year ended 31 December 2020, in addition to the net charges of £155.8m directly related to COVID-19, identified in previous results in August. Group revenue for the year ended 31 December 2020 is anticipated to be approximately £2.45bn.

 

IN THE NEWS

Fears over coronavirus vaccine supplies as rate drops – The Times

Small UK businesses are ‘running out of cash’, chancellor warned – Financial Times

Britain got on the front foot with vaccines thanks to Brexit-inspired ‘no deal’ with the EU on jabs – The Telegraph




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