• The UK’s unemployment rate rose to 4.8% in Q3
• Wales cancels 2021 GCSE, AS and A-level exams
• China is to disinfect all imported frozen food
• Trials of the Chinese vaccine suspended in Brazil
• France’s unemployment rate rose from 7.1% to 9.0% in Q2
Buildings & Construction
• Persimmon – “Trading through the summer weeks was robust, with sales rates remaining strong thanks to good availability of homes at an advanced stage of construction. The Group’s increased investment in work in progress over the last eighteen months was designed to position the business to be able to support more customers to achieve their aspiration of owning a newly built home, putting the business in a good position to satisfy this demand. Demand for new homes has remained resilient despite the continued challenges surrounding the Covid-19 pandemic, the UK economy and the uncertainty relating to the nature of the UK’s future global trading arrangements. The Group’s average private weekly sales rate for the period was c.38% higher than last year driven by the strength of the Group’s gross sales levels net of slightly higher cancellation rates. As anticipated, as the wider housebuilding industry has gradually returned to greater activity, the Group’s market share has started to trend towards more normal levels in recent weeks, although sales rates remain ahead of the prior year.”
Food, Drinks & Household
• Premier Foods# – “In the first half of the year, demand for our branded product ranges has been exceptional, particularly in our Grocery businesses which have helped deliver strong profit growth, accelerated debt reduction and a lowest ever Net debt/EBITDA ratio of 2.3x. We have seen many more meal occasions being consumed at home, particularly in the first quarter, followed by a transition towards more normal levels of demand through quarter two. During this entire time, we have continued to drive our branded growth model, launching insightful new products and supporting our three biggest brands with above the line advertising. Consequently, we have continued to grow faster than all our categories, increasing market share in each one; a reflection not only of our strong brands but also the amazing performance of our supply chain colleagues to ensure product availability. In online, we have grown +112% which is again ahead of channel growth, leading to a market share gain of 260 basis points.”
• Direct Line – “Motor own brand in force policies remained flat during Q3 2020 as shopping returned to pre-Covid-19 levels and retention normalised following the increase in Q2. Average premiums were lower primarily due to risk mix, arising from a reduction in new car sales and fewer young drivers entering the market, as well as modest market premium deflation. This led to a reduction in own brand gross written premium of 1.4% compared with Q3 2019.
Motor damage severity was ahead of its long-term average as the repair industry responded to Covid-19 related factors such as longer repair times and additional cleaning requirements, however this was more than offset by lower claims frequency which remained below pre-Covid-19 levels.
Home continued to demonstrate improved competitiveness on PCWs, growing own brand gross written premium by 1.0% compared with Q3 2019 and in-force policies by 1.5% during the quarter. This was offset by a 6.6% reduction in partnership gross written premium, the majority of which was due to the partnership schemes in run-off.
Green Flag Rescue premium growth returned to pre-Covid-19 levels in Q3, increasing 9.6% compared to Q3 2019, demonstrating the brand’s competitiveness as new business shopping increased. Overall, gross written premium in Rescue and other personal lines was 5.3% lower than Q3 2019, primarily due to reduced Travel premiums predominantly in the partnership channel.
Commercial direct own brands delivered 12.4% growth in premiums in Q3 driven by a recovery in small to medium enterprise (‘SME’) trading on the Direct Line for Business platform which reached a peak in July following the easing of lockdown restrictions. Commercial’s Churchill brand also delivered strong growth as it now trades across all four main PCWs, contributing to a 65% increase in gross written premium compared with Q3 2019. Our direct Commercial businesses were recently recognised at the National Insurance Awards as Direct Line for Business won Commercial Lines Insurer of the Year and the Churchill brand was awarded Growth Company of the Year.”
• Meggitt – “In civil aerospace, activity levels improved during the period, with global ASKs and RPKs recovering from -80% and -86% in June, to -63% and -73% respectively in September compared with 2019 levels.
With international flight activity remaining at very low levels, and a large proportion of regional jet flights in the US serving the major international hubs, regional jet activity levels remained subdued during the period at -55% versus 2019 levels at the end of September. In business jets, activity levels have continued to recover with global flight activity increasing from -26% in June to -17% at the end of the third quarter, compared with 2019 levels.
In terms of fleet dynamics, deliveries of new commercial aircraft (a driver of our civil OE revenue) were 36% lower in the third quarter compared with 2019 levels and 51% down for the nine months to the end of September.”
• Signature Aviation – “Revenue for the continuing Group (Signature and EPIC) was down 38% in the ten months to 31 October. On a like-for-like basis (constant currency, adjusting for lower fuel prices and acquisitions and disposals) Group revenue was down 30% for the same ten-month period. On a like-for-like basis Signature revenue was down 27% for the ten months to 31 October, representing a slight improvement compared to the first half.
The recovery in flight activity across our network has stabilised at around 80% of prior year levels and we have yet to see any material changes in the recent customer mix, which continues to be weighted towards leisure destinations and small and mid-size jets. For the remainder of the year, we expect flight activity across our network to remain around these levels with broadly the same customer mix. As previously stated, our effective cost management and the support secured through the CARES Act in the US, underpin an expected improved financial performance in the second half compared to the first half.”
#corporate client of Peel Hunt
#corporate client of Peel Hunt