• 11 Scottish areas enter Level 4 restrictions
• easyJet expects planned capacity to be c.20% for Q1 2021
• Some US states, including California, increase restrictions
• Second national lockdown in Austria
• Experian – “We delivered organic revenue growth of 2% for the half, which included a (2)% decline in Q1 and a rebound to growth of 5% in Q2. Q2 growth was at the top end of our guidance range. Positive drivers of performance stemmed largely from North America and Brazil while our other regions remained in negative territory. We also benefitted from growth in revenues from countercyclical activities and as the strategic decisions and investments we have made over the years pay-off, notably those in Consumer Services.”
Food, Drinks & Household
• Imperial Brands – “Tobacco pricing is expected to remain strong although with some ongoing mix headwinds and with lower stock profits. The temporary Covid-19 benefit to duty paid market size is expected to unwind with sector volumes reverting to more normal decline rates. The duty free channel is likely to remain depressed for much of the year. Operating costs will continue to reflect somewhat higher regulatory costs and further manufacturing inefficiencies caused by Covid-19 related disruption to our working practices.
Lockdowns, the restrictions on travel and the benefit of fiscal stimulus measures in several markets have resulted in some changes in consumer behaviour. These have resulted in slightly better market size trends for the Group overall as a result of several factors.
• It would appear smokers have chosen to allocate more of their discretionary spend towards tobacco. More time spent at home has resulted in consumers reducing expenditure in certain areas, such as holidays or going out;
• Fiscal stimulus measures in several markets have increased consumer discretionary spend;
• Border and other restrictions have reduced the level of illicit trade in certain markets such as the UK, resulting in better volumes in the duty paid market;
• Markets in areas such as Northern Europe have benefited from consumers having to stay at home, leading to a temporary switch in volumes from traditional holiday destinations in Southern Europe; and
• It would also appear Covid-19 has resulted in consumers going to the stores less often with increases in bulk buying and greater demand for big box formats.
These positive drivers have offset the negative consumption impacts from Covid-19, which include:
• The temporary closure of certain retail channels, such as duty free and hospitality outlets; and
• Travel restrictions which have led to significantly lower demand in traditional holiday destinations, such as Spain and the Canary Islands.
Covid-19-related restrictions in some of our manufacturing facilities have disrupted production capacity and affected operating efficiencies. We expect that changes in consumer behaviour and our manufacturing operations will be temporary and will reverse once Covid-19 restrictions are relaxed. However, given the rising number of Covid-19 cases in many markets and the greater uncertainty, we have increased provisions, mainly in respect of stock and debtor positions, which has impacted profit delivery.”
• Johnson Services – “Since the interim results announcement on 2 September 2020, the Group has continued to see disruption, particularly within its HORECA business, with increasing uncertainty in recent weeks on the back of the various lockdowns and associated reduced activity within the hospitality sector.
Encouragingly, in our Workwear division, which serves both industrial and food processing customers, volumes have continued to increase with the 6% year on year reduction reported in August improving to a 2% reduction at the end of September and being slightly ahead of pre-Covid levels by the end of October. The latest lockdown in England is currently expected to have a limited impact on the division.
95% of customers who had advised that they were closed during the national lockdown earlier in the year had returned at varying levels of activity by the end of October, up from 91% at the end of August. Testament to the high service levels of JSG, the annualised year to date customer retention levels within Workwear increased to 94.0% at the end of October, compared to 93.8% in July 2020, and customer satisfaction levels remained at circa 86% in the third quarter.”
• HomeServe – “HomeServe exited the first half with the business trading well, having recovered earlier and more strongly from the effects of the first global lockdown than originally anticipated. In Membership, retention remains strong, marketing has resumed and the operating units are focused on satisfying high levels of claims from customers spending more time than ever in their homes. The Home Experts businesses continue to experience high levels of consumer demand.
With the business having performed better than expected in the first half and with marketing and full claims handling now resumed, HomeServe now expects to grow in the year and deliver Group PBTA for FY21 (FY20: £181.0m) slightly ahead of current consensus earnings estimates.”
• easyJet – “Total revenue decreased by 52.9% to £3,009 million (2019: £6,385 million). Total Airline revenue per seat decreased by 10.6% to £54.35 (2019: £60.81). Airline revenue per seat at constant currency for the year ending 30 September 2020 decreased by 10.3%, reflecting growth of 10.2% in H1 and contraction of 27.5% in H2.
Reported loss before tax of £1,273 million (2019: £430 million profit).
Based on current travel restrictions in the markets in which we operate, easyJet expects to fly no more than c.20% of planned capacity for Q1 financial year 2021.”
• United Airlines – Has launched a free transatlantic coronavirus testing pilot programme for customers. The airline is offering free rapid tests to every passenger over two years old and crew members on select flights from Newark to London Heathrow. They will have to take the test three hours before departure.
• Hungary and Poland have blocked approval of the EU’s budget over a clause that ties funding with adherence to the rule of law in the bloc. The package includes €750bn for a Covid recovery fund
• A number of US states, including California, New Jersey, Iowa and Ohio, have imposed new restrictions as the number of cases continue to surge in the country ahead of the holiday season, which kicks off with Thanksgiving later this month. State governors and mayors are restricting gatherings and encouraging or requiring people to wear face coverings.
• Sweden has announced new restrictions on public gatherings, banning public events of more than eight people from next Tuesday. Currently, up to 300 can attend some events.
• Level 4 lockdown is to be imposed in 11 council areas in Scotland, affecting 2m people. This will mean the closure of non-essential shops, pubs, restaurants and gyms. Those council areas are: the City of Glasgow, Renfrewshire, East Renfrewshire, East Dunbartonshire, West Dunbartonshire, North Lanarkshire, South Lanarkshire, East Ayrshire, South Ayrshire, Stirling and West Lothian.
• Travel rules have been relaxed for people arriving in England to work on poultry farms to help make sure turkeys are available for Christmas. From today, seasonal workers from abroad can work straight away during their 14-day quarantine. They will still have to self-isolate from the rest of the public during those two weeks.
• A second national coronavirus lockdown has come into effect in Austria. Schools and all non-essential shops have closed, and people are only allowed out for specific purposes, such as shopping for essential supplies, exercise, and if they have to travel for work.
#corporate client of Peel Hunt
#corporate client of Peel Hunt