By Powerscourt on 02/02/2021
Powerscourt Coronavirus Briefing – 02 February 2021
ANALYSIS
Ursula von der Leyen, the President of the European Commission since December 2019, is probably in her worst spell in the job.
She became the focal point for frustration among member states at the Commission’s bungled efforts to lead the vaccine rollout program. The Commission also made an enormous miscalculation by including Article 16 of the Northern Ireland protocol when drafting legislation aimed at controlling the export of vaccines from the bloc.
Article 16 would enable Brussels to block the possible transport of vaccines from the Republic to Northern Ireland if the Commission thought NI was being used as a backdoor to move vaccines to Britain.
The Commission reversed its decision following a complaint from Dublin that the move risked undermining four years of Brexit negotiations. Over the weekend the UK media turned the screw on von der Leyen and questioned whether she could survive the debacle.
However, she needs the support of member states, not the Daily Mail, and there was no sign over the weekend of pressure coming from member states, including Ireland, for von der Leyen to consider her position.
Yesterday, however, von der Leyen picked up the nearest spade and started digging a hole for herself. Her spokesman, Eric Mamer, blamed Valdis Dombrovskis, the Trade Commissioner, for including Article 16 in the export legislation. Dombrovskis has gently rebuffed these accusations.
An unseemly spat has developed at the top of the Commission. Now media outlets across the EU are raising questions about von der Leyen’s suitability for the position. Alexander Stubb, the former Finnish prime minister and rival candidate to von der Leyen for the top commission job, joined the chorus of disapproval on social media.
Only once ever was a Commission President forced to resign. Jacque Santer stood down in 1999 for failing to investigate properly accusations of bribery among some of his commissioners. If von der Leyen doesn’t turn around the Commission’s handling of the vaccine rollout, then simmering discontent could gain momentum and force her out the exit door.
Just how misguided the EU’s attempts to restrict the export of vaccines from the bloc is underlined by a story in Bloomberg. Johnson & Johnson, whose one shot jab is a potential gamechanger in the battle against the pandemic in the bloc and elsewhere, will manufacture its vaccine in the EU but then ship the doses to the US for the final stages of production. It is unclear how the process will be affected by new EU legislation.
Frank Appel, the chief executive of DHL, in an interview with the Financial Times, blamed distribution delays in the rollout of vaccines on the failure of governments to adequately plan for local storage and delivery solutions. He said logistics companies had been planning since last February how to roll out vaccines while politicians have been mired in short term thinking. As a consequence the infrastructure is not in place for mass inoculation using the Pfizer/BioNTech and Moderna jabs, which need to be stored at -70C.
Michael O’Leary, the chief executive of Ryanair, took to the airwaves yesterday to claim that foreign holidays will be back up and running this summer. Meanwhile, Ireland’s chief medical officer is quoted today saying there is no chance that foreign holidays will be on the agenda during the summer.
Asian markets were buoyant overnight as hopes grew of a successful bipartisan approach in Washington to the Biden administration’s proposed $1.9 trillion fiscal package. The momentum looked set to carry through into European trade, with FTSE futures up 0.66% and E-mini futures for the S&P 500 index rising 0.52%.
WHAT ARE COMPANIES SAYING?
Industrials
BP
BP reported a 965 drop in fourth-quarter profits as the pandemic’s hit to energy demand endured and the company suffered from weaker trading results. Underlying profit on a replacement cost basis – a measure of income tracked most closely by oil analysts – was $115m in the three months to December 31. This fell short of analysts’ expectations for a profit of $370m, according to a company-compiled estimate. This quarterly profit compares to $2.6bn in the same period the year before. The fourth quarter capped a brutal year for the industry with government-imposed lockdowns and travel bans to contain the pandemic dramatically hitting earnings. For the full year BP slumped to a loss of $5.7bn, its first in a decade. That was driven by the collapse in energy prices, a writedown in the value of oil and gas assets by billions of dollars, weaker refining margins and depressed demand.
SSE
SSE has said that it expects the coronavirus pandemic to cause a considerable hit to fiscal 2021 operating profit, but that it confirms its forecasts for full-year dividends and adjusted earnings per share. The FTSE 100 energy company said the anticipated hit on full-year operating profit coming from the pandemic stands toward the middle of the £150m – £250m range estimated in June 2020. SSE said it continues to expect full-year adjusted earnings per share to be between 85 pence and 90 pence. It added that it intends to declare a full-year dividend of 80 pence a share. The company also said total renewables output in the nine months ended Dec. 31 fell to 7,202 gigawatt hours, from 7,242 gigawatt hours in the year-earlier period.
DHL
The head of DHL has accused governments of failing to prepare adequately for the rollout of Covid-19 vaccines, blaming distribution delays on a lack of local storage and delivery solutions. “Overall, we have not seen enough foresight for how the ‘last mile’ will work,” Frank Appel, Deutsche Post DHL chief executive, told the Financial Times. “That is the key bottleneck — how do you get it to the patient?” The company, which operates more than 260 aircraft, is among those contracted to deliver the BioNTech/Pfizer jab. It has revamped its forwarding facilities across Germany to handle dry ice and keep the product stable at about minus 70C during transport. While Appel conceded that managing dry ice was “a challenge for local doctors”, the former neurobiologist insisted infrastructure could easily be built in large car parks to facilitate local distribution, saying: “It’s not rocket science.”
Financials & Real Estate
Virgin Money
Lender Virgin Money has set aside a further £726 million pounds to protect its balance sheet from potential loan losses, as it reported a “modest” increase in the number of customers needing additional support after exiting pandemic payment holidays. The UK’s sixth-largest lender, set up to challenge the dominance of more conventional and bigger banks in the region, said on Tuesday it had granted Mortgage payment holidays on £12.1 billion of loans as at December 31, equivalent to around 21% of balances, compared with £11.9 billion at its full-year. Virgin Money also posted a 0.3% fall in the size of its loan book to £72.2 pounds during its first quarter, as fresh coronavirus restrictions put pressure on customer borrowing. The bank reported 735 million pounds of bad loan provisions at its full year.
Robinhood
Robinhood, the online broker at the centre of the boom in day trading, has raised $2.4bn in its second capital infusion in a week to shore up finances strained by turbulent trading. The brokerage was hit by a surge in trading last week as retail investors bet against short sellers, driving up the price of previously little-loved companies such as GameStop and AMC, the struggling cinema chain. The company’s latest round of convertible debt financing — which allows investors to swap their debt for equity — comes as Robinhood faced sharp increases in demands for deposits at clearing houses where trades in stocks and options are processed. Robinhood chief executive Vlad Tenev late on Sunday said that its equities clearing house had asked for $3bn of margin deposits overnight on Thursday — during a week marked by chaotic trading in stocks popular with its users — before negotiating a lowered sum of $700m, after the company limited trading in certain stocks.
Consumer & Retail
Moongpig
Online greeting card platform Moonpig has today confirmed its pricing at 350 pence per share, following its market debut. Based on the offer price, the company’s valuation will be £1.2bn at the start of dealings on the main market of the London Stock Exchange. The company raised £491.2m, with £20m coming from new proceeds. Nickyl Raithatha, CEO of Moonpig Group, said: “We are proud to be joining the main market of London Stock Exchange and I would like to thank everyone at the group for their hard work. Listing on the London Stock Exchange is an incredibly special milestone and will provide new opportunities for the business.” The private equity-owned company, which trades as Moonpig in the UK and as Greetz in the Netherlands, has enjoyed a boom in sales during the pandemic, in contrast to its high street competitors. The company reported a 44 per cent leap in revenue to £173.1m in its latest full-year results as coronavirus restrictions sparked a surge in demand.
IN THE NEWS
Covid vaccines may be sent abroad before full rollout in UK – The Times
South African Covid strain prompts ‘surge testing’ in England – Financial Times
Boris Johnson pushes to reopen schools as Covid cases fall – The Telegraph
