Powerscourt

By Powerscourt on 26/01/2021

Powerscourt Coronavirus Briefing – 26 January 2021

ANALYSIS

AstraZeneca was in the headlines yesterday for all the wrong reasons. It had been in the crosshairs of the European Commission since Friday evening when it announced that its vaccine delivery to the EU would be slashed from 80 million to 31 million doses because of reduced yields at its manufacturing plant in Belgium. Ursula von der Leyen, the President of the Commission, had a phone call with Pascal Soriot, the chief executive of AstraZeneca, early yesterday. She demanded that the Anglo-Swedish pharma company honour its contract to deliver 80 million doses.

This was followed by a meeting between Stella Kyriakides, the EU Health Commissioner, and AstraZeneca executives. She said the company failed to provide a credible explanation over its failure to meet its obligations. She added the EU had given the company a €336m upfront payment for the development and delivery of the vaccine to the bloc. EU officials had been briefing all day the commission’s suspicions that vaccines produced in the region had been exported to third countries, including the UK. Stella Kyriakides had another inconclusive meeting with the company last night with another scheduled for tomorrow. She wants AstraZeneca to provide her with evidence of how many doses have been manufactured in the EU and how many of these have been exported. EU officials had been wondering aloud how the company was able to meet its commitments to other countries including the UK. The Commission said that it may invoke a transparency clause that would force all pharma companies to show how many covid vaccines were being manufactured in the EU. Furthermore, pharma companies would have to meet their contractual obligations with the Commission before exports would be permitted to third countries.

This proposal was met with outrage in the UK. The splash in The Telegraph is reporting claims by government ministers that the EU will block Pfizer jabs destined for the UK “out of spite” because of its own botched rollout program.

The World Health Organisation has consistently warned that ‘vaccine nationalism’ was one of the biggest threats to the rollout of jabs. Simmering tensions between the UK and the EU could descend into tit-for-tat measures unless the current standoff between the Commission and AstraZeneca finds a satisfactory resolution.

As if fisticuffs with Brussels wasn’t enough to deal with, AstraZeneca was plunged into a public relations nightmare following German press reports that its vaccine was ineffective in over-65 year olds. A story in Handelsblatt claimed German government sources were briefing that the Oxford/AstraZeneca vaccine only had an 8% efficacy rates among over 65s and the European Medicines Agency would not authorise the drug for this age cohort when it grants regulatory approval later this week. AstraZeneca quickly issued a statement to say the story was incorrect and baseless. It should be noted that the Handelsblatt story had no official sources and no data to back up its claims.

Moderna said that its vaccine worked against the new B117 strain of the virus that had emerged in the UK, although it was less effective against the South African variant. It was now launching fresh trials to tackle the South African strain.

There was more good news from Israel. According to a study of 128,000 Israelis who had been vaccinated, only 20 subsequently contracted the virus and even then they were very mild doses.

Asian markets posted their biggest losses since late November amid reports that the Biden administration’s proposed €1.9 billion fiscal stimulus package could face roadblocks. Concerns over further lockdown restrictions and the slow rollout of vaccines added to negative sentiment. US treasury yields fell to a three week low while oil prices also edged lower.

 

WHAT ARE COMPANIES SAYING?

Industrials 

Rolls-Royce Holdings plc
The British multinational aerospace and defence company today issues a trading update addressing the Group’s full year 2020 outturn, subject to audit, and its initial expectations for 2021 considering developments in the COVID-19 pandemic. The Group reported that trading in December was broadly in line with expectations across all business units, that full year 2020 Group free cash outflow was in line with previous guidance, and in-year cash cost savings of more than £1 billion were achieved from the Group’s mitigating actions. However, it stated: “Enhanced restrictions are delaying the recovery of long-haul travel over the coming months compared to our prior expectations, placing further financial pressure on our customers and the wider aviation industry, all of which are impacting our own cash flows in 2021.”

Petropavlovsk PLC
The London-based gold mining company with operations in Russia today issues its sales and production results and corporate update for the period from 1 October 2020 to 31 December 2020, as well as its full year sales and production results. The Company reports that FY 2020 gold sales totalled 546.5koz (FY 2019: 514.0koz) – a 6% year-on-year increase despite logistical issues associated with the COVID-19 pandemic. Mr Denis Alexandrov, CEO said: “Faced with several challenges in 2020, and in Q4 in particular, we were still able to deliver a notable… increase in gold production, slightly below our guidance but broadly in line with market expectations.”

 

Financials & Real Estate 

Crest Nicholson Holdings plc
The British housebuilding company today announces its Preliminary Results for the year ended 31 October 2020. The Group reported revenue at £677.9m (FY19: £1,086.4m), stating that it had been impacted by COVID-19 disruption in FY20. The Group reported adjusted profit before tax at £45.9m, (FY19: £121.1m), ahead of £35m-£45m guidance range. Peter Truscott, Chief Executive, commented: “The impact of COVID-19 has clearly had a defining impact on this year’s financial performance… It has challenged all of us in ways we could not have predicted… We had to make some difficult decisions during this year but because we acted swiftly we have ensured the Group enters 2021 in strong shape and will remain resilient to whatever challenges this year brings.”

Quilter plc
The British multinational wealth management company today issues its Fourth Quarter 2020 Trading Statement. The Group reported that following the successful second client asset migration at the end of November, by end-2020 c.80% (approx.£50 billion) of UK Investment Platform assets had been migrated onto the new Platform technology, despite UK lockdowns. It states that the final migration of assets onto the new UK platform continues to be scheduled to complete over the weekend of 27/28 February 2021. Paul Feeney, CEO of Quilter plc, commented: “2020 was a year of unprecedented challenges in so many respects and one of extraordinary market volatility. It is in challenging times like these that our advice-based model comes to the fore and this is reflected through the higher levels of client retention experienced in 2020, at 92% versus 88% in 2019.”

Saga plc
The UK’s specialist in products and services for people over 50 today provides a trading update covering the period from 1 August 2020 to 25 January 2021. The Group reported that its travel business had secured £140m of cruise bookings by mid-January; it is preparing to restart sailing in May after more than a year of suspension. Euan Sutherland, Group Chief Executive Officer, commented: “We have made good progress in delivering our new strategy and have accelerated the pace of change at Saga, against the backdrop of the challenges that the COVID-19 pandemic has brought to our business. We are confident in our strategy, the strength of our brand and the loyalty and economic resilience of our customers”

 

Consumer & Retail

Greencore Group plc
One of the leading manufacturers of convenience foods in the UK has today issued a trading update covering the 13 weeks to 25 December 2020. The Group’s reported revenue in Q1 was £312.7m, a decrease of 15.0% on the prior year, reflecting the impact of COVID-19 related restrictions on demand in food to go categories. Commenting on the performance, Patrick Coveney, Chief Executive Officer, said: “We secured a number of new business wins in the quarter and have a healthy commercial pipeline as we look forward. We are confident that we have the capability and resources to build back the business rapidly as soon as market conditions allow, and we are optimistic about the medium-term prospects for Greencore.”

PZ Cussons PLC
One of the leading consumer products groups has today announced its interim results for the six months ended 30 November 2020. The Group reported revenue growth of 14.6% with growth in all Regions and stated that Focus Brands revenue grew 21.9% driven by Carex, Morning Fresh, Cussons Baby and St Tropez. The Group reported “In the second half we expect continued economic uncertainty associated with COVID-19, the risk of weaker consumer confidence combined with already evident upward cost pressure. Despite these external headwinds we plan to continue to increase investment in our brands.” Commenting today, Caroline Silver (Chair) said: “The external environment continues to remain very challenging and volatile but we remain focused on developing our strategic plans that will benefit all stakeholders in the longer term.”

 

Healthcare

UDG Healthcare plc
A leading international provider of healthcare services has today issued a Q1 trading update covering the period from 1 October to 31 December 2020. The Group announced that it has made a good start to the financial year with constant currency adjusted operating profit for the quarter ahead of the same quarter last year. This performance was driven by Ashfield’s adjusted operating profit being ahead of a strong comparative last year and a strong performance from Sharp, well ahead of the same quarter last year. UDG announced FY21 guidance of constant currency adjusted diluted EPS of 9-11% ahead of last year. The Group has also announced the acquisition of PHMR, a market access consultancy for up to £32m and launched a revised brand architecture and a new shared purpose for its Ashfield division to drive increased collaboration and create a more integrated service offering for its clients.

 

IN THE NEWS

Brussels moves to tighten rules on Covid vaccine exports – Financial Times

Coronavirus: Primary schools ‘safe to open soon’ – The Times

Holidays abroad could be off until 2022 if quarantine hotels introduced, Government told – The Telegraph




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