• UK economy grows 15.5% in Q3
• NHS waits of over 52 weeks up 100x YoY to 139,545
• New York brings in new restrictions with a 10pm curfew
• Scotland bans drinking on trains
Buildings & Construction
• Grafton – “Trading in the four months to 31 October 2020 was ahead of expectations. Group LFL revenue was up by 6.3% and total revenue was up by 5.1% to £1.0bn (2019: £962.0m).
There was a strong recovery in the period following the significant disruption to trading in the second quarter caused by the pandemic. Demand was strongest in the Woodie’s DIY, Home and Garden business in Ireland and in the residential repair, maintenance and improvement (“RMI”) segment of the distribution markets in the UK, Ireland and the Netherlands. The group leveraged its well-established trading positions in these markets and benefited from investments made in recent years in its higher-margin businesses, including the accelerated rollout of its digital strategy.
The group also benefitted from pent-up demand that developed during the lockdown and, in management’s view, from households investing part of the savings from reduced spending on travel, leisure and hospitality in their homes. The increase in the number of people working from home due to the pandemic also contributed to higher demand in our stores and branches.”
• Marshalls# – “Trading since the half year has continued to improve and in the four months ended 31 October 2020, group sales have returned to the same level as 2019 on a LFL basis. The trend of sales growth has continued to increase during this period and, on a LFL basis, group sales in October 2020 were up 5% compared with the equivalent prior year period. The key drivers of this growth have been continued strong demand in the Domestic end market, a return to more normal levels of trading in the Public Sector and Commercial end market and continued strong growth in the International market.”
• OneSavings Bank – “We are lending prudently, with a controlled risk appetite, and current application volumes are strong across our Kent Reliance and Precise Buy-to-Let and Residential brands. Total application levels for the Group are c.65% of pre-Covid-19 levels, as we remain cautious with the criteria offered in our more cyclical market segments. We continue to expect double-digit underlying net loan book growth for 2020, excluding the impact of structured asset sales, although we remain cognisant of the potential impact of the latest lockdown on the timing of completions and redemptions.
Underlying NIM improved as expected when the full impact of the base rate cuts was passed on to retail savers towards the end of the third quarter, and we expect it to be broadly flat to the first half for full year 2020. We maintained our cost discipline in the third quarter and the underlying cost to income ratio for the full year is expected to be marginally higher than in the first half, due primarily to the impact of gains on structured asset sales in the first half.
Our loan book continues to perform well, with a slight improvement in arrears in the third quarter and no significant change in IFRS 9 economic scenarios, staging criteria or impairment provisions. Live payment holidays have reduced to only c.3% of the group’s loan book by value, with very low levels of new arrears for borrowers that were due to resume payments.”
• Vesuvius – “Demand in our end markets has improved, albeit slowly, in both our Steel and Foundry divisions during Q3 2020 and these trends have continued into Q4. On a constant currency basis, our sales in Q3 were up 7.0% quarter on quarter and although down 14.3% year on year, this is an improvement on the sales decline of 26.2% in Q2 compared to Q2 2019. The improvement in trading continued into October 2020 with sales down a more modest 7.5% compared to October 2019.”
• Youngs & Co Brewery – “Since the period end and prior to the latest lockdown, trading had been encouraging, with the business achieving 73% of last year’s sales, despite additional Government restrictions and the introduction of Tier 2 status for London, which affected 80% of our managed estate.
Following the latest national lockdown introduced last week, all our pubs closed on 5 November. Whilst we were hoping that a further lockdown could have been avoided, the second lockdown with the financial support available from the government will be considerably less damaging to our business than the potential move to Tier 3. For the four-week closure we would expect a cash burn of £4.0-5.0m, achieved by the reintroduction of the Coronavirus Job Retention Scheme. We are hopeful that when we reopen on 3 December, we will see the back of the 10pm curfew and London move to Tier 1.
We remain positive at the prospect of trading in December. Unfortunately, the typical excitement of the festive period and the opportunities this usually brings us has been replaced with uncertainty. At this time, we would usually have 90% of bookings already in the diary; without the prospect of hosting large group get togethers, corporate Christmas parties and spontaneous festive drinks, the outlook for this December is far from certain.”
• ITV – “We are seeing encouraging signs in both our divisions. Advertising trends are improving, with Q4 forecast to be slightly up year on year and 85% of our productions in the UK and internationally that were paused as a result of Covid-19 are back in production or have been delivered. However, Covid restrictions and further national lockdowns have added production costs and are making it challenging to bring ITV Studios productions back to full capacity.
ITV Studios has successfully resumed the majority of its productions. However, the delay to productions, further national lockdowns, social distancing and other Covid-19 measures will continue to impact revenue and margin in Q4, which is up against a strong delivery schedule in 2019, and into 2021.
We forecast total advertising revenue to be slightly up YoY in Q4, with November up around 6% compared to the same period in 2019. This assumes the current Covid restrictions in England end as planned on 2 December.”
• WH Smith – “As lockdown restrictions eased throughout the world we saw a gradual recovery. While passenger numbers continue to be significantly impacted in the UK, our North American business, where 85% of passengers are domestic, is beginning to see some encouraging signs of recovery. In addition, we continue to open new stores in the US and win significant tenders across major US airports.”
• National Express – “North America: We are currently operating services on 75% of our school bus routes, either through full ‘traditional’ (five days-a-week) or ‘hybrid’ (a mix of in-school and at home learning) arrangements. This situation appears to have stabilised with limited expectations of the remaining 25% of routes returning to school in 2020.
UK: Our UK bus business continues to benefit from government support, fully underwriting the cost of operating service. Patronage levels have also proved resilient. From 9 November we temporarily reduced our UK coach network to around 9% of last year’s service, reflecting the restrictions of England’s second lockdown.
• The UK’s economy bounced back from recession with record growth of 15.5% in the third quarter. The improvement came from all sections of the economy – services, manufacturing and construction. However, the growth had stalled by the end of the quarter, with a further drop expected in Q4.
• South Africa will open up travel to all countries and restore normal trading hours of alcohol.
• Sweden’s PM, Stefan Lofven, said his government plans to ban nationwide the sale of alcohol after 10pm in bars, restaurants and nightclubs from 20 November.
• People will not be allowed to drink alcohol on trains or at stations in Scotland from Monday, ScotRail has announced.
• Cyprus has announced partial lockdowns in the towns of Limassol and Paphos, to curb a surge in Covid-19 cases. The local measures, which include a ban on travel into and out of the towns and a nightly curfew, will take effect from Thursday and last until the end of November.
• Greek authorities announced stricter restrictions on movement, extending a curfew nationwide between 9pm and 5am.
• New York Governor Andrew Cuomo imposed a new round of restrictions. Taking effect on Friday, Cuomo ordered bars, restaurants and gyms in the state to shut down on-premises services at 10pm nightly, and capped the number of people who could attend private parties at 10.
• The number of people waiting over a year for hospital treatment in England has hit its highest levels since 2008. Nearly 140,000 of the 4.35m people on the waiting list at the end of September had waited over a year. In September 2019, the figure was just 1,305.
#corporate client of Peel Hunt
#corporate client of Peel Hunt