By Powerscourt on 28/01/2021

Powerscourt Coronavirus Briefing – 28 January 2021


The AstraZeneca row with the EU rumbles on with no solution in sight that is likely to find favour in Brussels. In fact, the spat has the potential to lead to a deterioration in relations between the EU and the UK.

Pascal Soirot, the chief executive of AstraZeneca, gave a series of interviews on Tuesday night to defend his company over its failure to meet its EU supply target. The Frenchman said the commitment to deliver 80 million jabs to member states was agreed on a “best efforts” basis. Technical problems at its Belgian plant meant that it would only deliver 30 million doses. He added that he understood why the shortfall had made EU leaders “emotional and aggravated.”

Soirot’s interviews had the opposite effect than what was intended. Stella Kyriakides, the EU Health Commissioner, and a number of EU officials appeared to be even more emotional and aggravated as they digested Soirot’s comments. They challenged the veracity of a number of his claims and called on him to publish the contract agreed with the EU.

Contrary to what Soirot has claimed, the EU’s version of the spiralling disagreement is that AstraZeneca signed a contract to deliver 80 million jabs. It was not done on a “best efforts” basis and what’s more, the agreement is that the supplies would come from four of its plants, including two in the UK. The EU said that it paid the company hundreds of millions for the development of the vaccine and it wanted its fair share and that would mean AstraZeneca would have to divert supplies from the UK.

The EU demand has inevitably prompted a “furious backlash”* from Tory MPs, which is widely reported in today’s papers.

There was a further meeting last night between AstraZeneca and Kyriakides, which both sides described as “constructive”**. Bloomberg reports that, despite the official communique, the meeting was far from constructive and both sides remain at loggerheads. AstraZeneca said that it would not divert supplies from the UK and pledged to do everything it could to make up the shortfall. EU officials were privately briefing the company offered a few vague promises but could not provide any details about how it intended to make up the shortfall when pressed.

The stakes could not be higher. From the EU’s perspective, Kyriakides said at a press briefing yesterday that this undersupply of vaccines would cost lives. Unless AstraZeneca can produce a contract that backs up Soirot’s claims, then it is likely to face very damaging legal action.

There is also the possibility that the EU could block the exports of the Pfizer vaccine to the UK. If that were to happen, then it could trigger a series of retaliatory measures that could undermine global efforts at mass inoculation.

There was some good news for the EU yesterday. Sanofi, the French pharma company, which has recently abandoned efforts to develop one of its vaccine candidates, will manufacture 125 million doses of the Pfizer jab at its Frankfurt plant starting in July.

A delegation from the World Health Organisation will exit its two week quarantine period in the Chinese city of Wuhan today and start its official investigation into the origins of the coronavirus.

Asian markets followed the sell-off on Wall Street as investors took the opportunity to book profits following recent rallies. Jitters were initially triggered by retailers piling into GameStop shares, which could potentially undo short positions taken by hedge funds. Ongoing concerns over the rollout of vaccines and the growing rate of infections added to the momentum to book profits. 

*A “furious backlash” in news speak means that they were delighted to give it

**And “constructive” means frosty and unproductive



Industrials & Transport

Wizz Air Holdings PLC
The fastest growing European airline today issued unaudited Q3 results for the three months to 31 December 2020. The company continued to focus on strengthening its market position and protecting liquidity during the period, with sustained government restrictions considerably impacting air travel. The Airline carried over 2.2 million passengers with a load factor of 63.1%. Overall, total revenue was at €149.9 million, with ticket revenues decreasing by 79.7% to €68.3 million and ancillary revenues decreasing by 72.9% to €81.6 million. Wizz Air remain optimistic about the future post-pandemic, having invested in three new bases in Oslo, Bari and Cardiff, while also expanding the base in Abu Dhabi.

easyJet PLC
The British low-cost multinational airline group has today released a trading statement for Q1, ending 31 December 2020. easyJet’s first quarter financial performance was in line with management expectations despite increased uncertainty due to the changing environment which saw strengthened travel restrictions across Europe. Passenger numbers in the quarter decreased by 87% to 2.9 million, in line with a decrease in capacity of 82% to 4.4 million seats, representing 18% of FY2019 capacity levels.  Load factor decreased by 26 percentage points to 66%. Total group revenue for the quarter ending 31 December 2020 decreased by 88% to £165 million. Passenger revenue decreased by 90% to £118 million and ancillary revenue decreased by 84% to £47 million.

Euromoney Institutional Investor PLC
Euromoney, the international B2B information services provider of essential information to global and specialist markets today issues a trading update for Q1 ended 31 December 2020. The Company’s outlook remains unchanged due to uncertain trading conditions, despite very encouraging performance. Revenue for the three months was £78.2m, compared to £99.2m in the prior year, demonstrating the impact of covid-19 on physical events and a continuation of the trends seen in the previous quarter. Group events revenue of £8.6m was 30% of the same period last year. The impact from not holding physical events was mitigated by running successful virtual events, both one-off and those previously held as physical events. Euromoney’s financial position and underlying cash generation remain strong, with net cash at the end of December 2020 of £20.3m. During the quarter, the group completed the acquisition of WealthEngine for £11.1m. The final dividend for the financial year 2020 totalling £12.3m, will be paid in February 2021.


Financials & Real Estate 

Tritax Big Box REIT PLC
The UK’s leading investment company focused on larger scale logistics real estate has today announced an update on its performance for the final quarter of its 2020 financial year. The Company saw record demand for logistics real estate space in the UK. There was record take-up in 2020 of 43-50m sq ft. representing year-on-year growth of over 50%. Additionally, high levels of investment demand in Q4 drove prime logistics yields below 4%. CEO Colin Godfrey said, ‘Despite the broader challenges and uncertainty created by Covid-19 and Brexit, the disciplined execution of our strategy delivered increasing momentum in growth through to the end of 2020, supported by a strengthening UK prime logistics market.’

3i Infrastructure PLC
The investment company whose purpose is to deliver a long-term sustainable return to shareholders from investing in infrastructure today issues a Q3 performance update relating to the period from 1 October 2020 to 31 December 2020. It reports that the Company portfolio continues to be resilient through the ongoing Covid-19 pandemic, meeting expectations. Total income and non-income cash was £24 million for the Period and the Company is on track to meet its dividend target for the year ending 31 March 2021 of 9.8 pence per share, a year-on-year increase of 6.5%. Phil White, Managing Partner and Head of Infrastructure, 3i Investments plc, Investment Manager of the Company, commented: “Our markets remain very competitive despite the uncertainties caused by the pandemic, but we are maintaining our investment discipline and continue to focus on investments that we believe will enhance the Company’s portfolio.”

Workspace Group PLC
The leading provider of commercial business premises across the capital has today offered a Q3 business update for the period ending 31 December 2020. The Group saw resilient customer demand through this ongoing period of Government Covid-19 restrictions, with an average of 672 enquiries per month in the quarter and 109 lettings per month. Like-for-like occupancy was down 3.4% in the quarter to 82.1%. CEO Graham Clemett commented ‘Despite near-term uncertainty, we are seeing signs that customers are starting to look through the pandemic and we believe that our strategy, business model and differentiated customer offer position us to outperform over the medium and longer term.’

Consumer & Retail

Diageo PLC
One of the world’s largest producers of spirits and beers have today announced their interim results for the six months ended 31 December 2020. Reported net sales were down 4.5% at £6.9bn as a 1% growth in organic net sales was offset by unfavourable market conditions. Sales in North America were up 12.3%, offsetting declines in other regions, except Africa which was mostly flat. The company saw operating profits of £2,239m. While market conditions are still improving, Diageo remain cautious regarding the rest of the year. The Company expects organic operating profit growth in the second half of fiscal 21 to be ahead of organic sales growth in all regions as a result of the weak comparator period, except the US, its largest market, where numbers remained strong.

The Rank Group
The UK-based gambling company have today released their interim results for the six months up to 31 December 2020. The group saw a challenging first  half, with decisive action being taken to conserve cash and protect the balance sheet. Group underlying revenue was at £156.9m, compared to £371.2m in the prior year, a 58% decrease year on year. This was largely caused by the closure of venues for much of the time period due to restrictions. The company did, however, strengthen its balance sheet and remains confident that it will meet the £50m liquidity test. The Group anticipates improved results upon the relaxation of covid restrictions.

Tate & Lyle PLC
The British supplier of food and beverage ingredients has today released a trading statement for the three months ended 31 December 2020. Food & Beverage Solutions revenue increased by 8% benefitting from higher volume, good price and mix management and continued growth from New Products. North America delivered double-digit revenue growth reflecting good commercial performance, strong demand for products consumed in-home and improving demand for out-of-home consumption. Asia, Middle East, Africa and Latin America delivered high single-digit revenue growth helped by strong growth in Asia Pacific, especially in China, and good mix and pricing in Latin America, mainly in Brazil. In Europe, revenue was marginally higher than the comparative period reflecting solid demand for in-home consumption.

Britvic PLC
The British producer of soft drinks has today released a Q1 trading statement to 31 December 2020. Trading in Q1 continued to be impacted by covid restrictions, however the Group’s portfolio of family favourite brands continued to perform well in the channels which remained open. Q1 total revenue was £328.1m, representing a 5.8% decline on last year. The Group expects performance to continue to be significantly affected by similar adverse channel and pack mix to that seen in the second half of FY20, and gradually improve following the lifting of restrictions.



UK supply of vaccine ‘more than is needed’ – The Times

EU demands UK Covid vaccines from AstraZeneca to make up shortfall – Financial Times

How UK’s vaccine gamble paid off – and the EU left itself without a leg to stand on – The Telegraph