• 75% of people do some grocery shopping online, according to Waitrose
• Masks now compulsory in Nice
• Seoul bans gatherings of more than 10 people
• Qantas reports an annual loss of almost £1bn
• Germany reports highest daily infection rate since April
Buildings & Construction
CRH – “The global Covid-19 pandemic had a material impact across the construction markets in which we operate. First-half sales for the group were 5% behind, with like-for-like sales 3% behind the first half of 2019, as a positive performance in the first quarter was followed by significant disruption in the second quarter.
• First-half like-for-like sales for our Americas Materials operations were 1% behind 2019, as the impact of Covid-19 related shutdowns in our North region was partly offset by strong demand in our West region, which experienced more favourable weather conditions than prior year, and improved pricing.
• In Europe Materials, a solid start to the year was offset by the impact of Covid-19 related government restrictions across a number of key markets in Europe and in Asia. As a result, sales in the first half were down 11% on a like-for-like basis against the same period in 2019.
• Like-for-like sales in Building Products were 2% ahead of 2019. Strong residential repair, maintenance & improvement (RMI) demand in North America resulted in positive volumes together with pricing progress across most platforms. This was partly offset by the impact of Covid-19 restrictions on a number of our operations in Europe and North America, particularly those serving the non-residential construction sector.
The near-term outlook for economic and construction activity across our markets remains uncertain and is dependent on an improving health situation. Based on recent trading trends we expect like-for-like sales in the third quarter to be slightly behind the same period in 2019, with Americas Materials slightly behind, Building Products broadly in line, while Europe Materials is expected to be behind prior year levels. Overall EBITDA for the third quarter is expected to be in line with the third quarter in 2019. There is limited visibility for the fourth quarter of the year and as a result the Group is not in a position to provide full-year guidance at this time. The longer-term prospects for CRH remain positive, benefiting from significant financial strength and resilience together with a portfolio of high-quality assets in attractive markets.”
Van Elle# – “The Group experienced a sharp downturn in revenue as working restrictions and sites closures impacted from mid-March. In April, 80% of revenues were lost and this has recovered to 30% below normal levels at the end of July.
At the peak of the Covid-19 lockdown, the group furloughed 50% of its total workforce and pay reductions and other cost reduction measures were implemented. However, several projects remained open and, with the support of our customers, our employees were able to adapt to new ways of working, overcome travel and accommodation challenges, and deliver safely and productively throughout. At the end of July, 25% of our workforce remain furloughed.
As a result of reduced workload since April and operational efficiencies identified across the group, less than 20 redundancies have been consulted or processed to date.
Quarter 1 of FY2021 has seen an encouraging resumption of project workload, up to 70% of prior year levels in June, up from a low point of only 20% in April, although not all divisions are recovering at the same rate. The group continues to monitor workload resumption and productivity levels and remains cautious over the impact of further Covid-19 outbreaks. As a result, the board believes it is too early to reinstate guidance for FY2021.”
Georgia Capital – “From a macroeconomic perspective, there has clearly been a significant negative impact in all areas of the economy but, so far, this has been significantly mitigated by the extensive support packages that have been put in place. The government has secured US$3bn in funding from international financial organizations for Georgia’s public and private sectors, which is expected to be more than sufficient to provide an extra buffer (5.4% of GDP) in case of any ongoing negative economic impacts. The anti-crisis stimulus plan includes a social assistance package for individuals, together with substantial support for businesses, including tax exemptions and various funding mechanisms. The International Monetary Fund (IMF) estimates Georgia’s GDP growth will contract by 4% in 2020 and rebound to 4% growth in 2021.”
Food, Drinks & Household
• Estee Lauder – “Estée Lauder has reported a 32% fall in fourth-quarter sales on Thursday, as travel restrictions and store closures imposed to contain the spread of the coronavirus dampened demand for its high-end beauty brands. The MAC brand owner also said it would cut 1,500 to 2,000 jobs globally, including point-of-sale employees. It also estimated that it would close 10% – 15% of its freestanding stores. The company’s net sales fell to $2.43bn in the quarter from $3.59bn a year ago.”
Antofagasta – “As previously announced, group copper production for the full year is expected to be at the lower end of the original 725-755,000 tonnes guidance range, on the basis that no Covid-19 related shutdowns occur during the rest of the year. Net cash cost guidance has been reduced by 10c/lb to $1.20/lb, assuming production guidance is achieved and the Chilean peso averages 800 pesos to the US dollar for the year.
With the widespread onset of Covid-19 in March copper prices fell to below $2.20/lb, but with the recovery in markets and confidence since then the price rose to $2.74/lb by the end of the period and has since increased to over $2.90/lb. The outlook for the remainder of the year depends largely on the impact of Covid-19 on global consumption. The company will continue to seek to achieve its production targets and to control its expenditure.”
Frasers Group – “Group revenue increased by 6.9% to £3,957.4m in the year. UK Sports Retail increased by 0.7% to £2,203.3m, which includes USC, Evans Cycles and GAME UK fascia sales. Premium Lifestyle revenue increased by 34.9% and European Retail increased by 16.3% to £697.7m including Heatons (Republic of Ireland) and GAME Spain. Rest of World Retail revenue was £174.2m, down 19.3% and revenue in the Wholesale & Licensing division decreased by 2.0%.
The group now intends to invest in excess of £100m in its digital elevation strategy. With a particular focus on Flannels and an enhanced customer experience, this investment will be integral in supporting the continued growth of our online channels. This commitment will support the group’s wider ongoing elevation strategy. With digital transformation now at the forefront, the successful reopening of our stores after the Covid-19 lockdown and continuing strong web performance, we are confident in achieving between a 10% and 30% improvement in underlying EBITDA during FY21.”
Vertu Motors – “July trading continued the trends seen in June and was significantly stronger than both what we envisaged and the group’s original business plan for the month. A robust recovery in customer demand for our vehicles and servicing has continued, aided by our investments in omnichannel retailing. A very successful 0% finance used-vehicle sale event was executed in a majority of the group’s English dealerships and this, together with strong used car margins, aided the delivery of a record month for used car profits. The group’s high margin aftersales operations also performed well, delivering year on year growth in revenue, gross profit and margin. I would like to thank colleagues for their continued enthusiasm and commitment in delivering this great result whilst ensuring all our sites have remained safe for both customers and colleagues.
The group is in a significantly better position than anticipated during the lockdown, both in terms of profitability and cash flow generation. Consumer demand has been stronger than initially anticipated and we took steps to ensure the group maximised its cash liquidity, despite the already strong balance sheet position. Whilst much of management’s time and energy was focused on navigating the business through the immediate effects of the pandemic, time was also invested in the improvement of its systems and omnichannel retailing capability which have delivered benefits already, with further efficiency enhancements expected.”
John Laing Group – “Despite the uncertainty caused by Covid-19, we are seeing good momentum in our preferred and short-listed bidder positions in the PPP business. These positions have increased over the last six months.
The fundamental drivers of the infrastructure market and the need for new infrastructure remain as strong as ever: population growth, urbanisation, energy transition, and the growing role of data and therefore the need for communications infrastructure. Oxford Economics estimates that c.USD3.7tr must be invested in infrastructure globally every year to 2040.
Whilst uncertainty stemming from Covid-19 has caused some short-term delays to bid processes, we believe that the crisis has strengthened the medium- to longer-term outlook for infrastructure investment. Governments around the world view infrastructure investment not only as a means to support economic recovery, but as essential to the functioning of a modern economy. This includes investment in our traditional sectors, such as transport and social infrastructure, as well as infrastructure to improve digital connectivity and build resilience in the future, as well as infrastructure to support the energy transition as the world looks to a low-carbon future. Private finance will be needed to support this, which will provide new opportunities for us to invest. John Laing has strong liquidity and is well funded, which allows us to capitalise on these future opportunities. We bring strong greenfield expertise with experience of having invested in, and managed, over 150 projects. We are also adding to our team further expertise and capabilities, specifically in these new and emerging sectors, to ensure that we are well positioned. We also have a good international footprint, allowing us to access opportunities in different geographies as and when they emerge.”
AO World – “The trading momentum announced at the time of our preliminary results in July has continued and the significant change in demand for AO’s products and services has been maintained. As a result, in the four months ended 31 July 2020 we have recorded strong year-on-year revenue growth in the UK of 58.9% to £401.3m and of 91.5% to €74.3m in Germany.
Operationally, our business continues to support our customers at a time when social distancing and continued changes to official Covid-19 guidance become the new normal. We have made investments to strengthen our teams and our infrastructure to ensure the business remains resilient and that we maintain our high levels of customer service during on-going periods of strong demand.
Outlook – The demand for AO’s products and services has been sustained since competitor stores started to re-open at the beginning of July. This reaffirms our belief that this is a structural shift in demand where customers have found a better way to shop the electricals category. We are investing in our capacity and capability to serve customers ever more in the AO way.
We remain cognisant of the significant level of economic and customer uncertainty driven by both Covid-19 and the prospect of Brexit in December and the impact this may have on demand for electricals in the medium-term.”
• Countries in Europe are seeing a rise in coronavirus cases, with Spain, Italy and Germany reporting their highest daily figures in months. Germany has recorded its highest daily case numbers since April, with 1,707 new infections.
• Australian airline Qantas has reported an annual loss of almost $1.4bn. “The impact of Covid on all airlines is clear. It is devastating and it will be a question of survival for many… Recovery will take time and it will be choppy” Qantas Group Chief Executive Alan Joyce said in a statement.
• Germany’s public health agency on Thursday declared the Croatian counties of Sibenik-Knin and Split-Dalmatia coronavirus risk regions.
• Researchers from Massachusetts General Hospital (MGH) and Mass General Hospital for Children (MGHfC) in the US, suggest that children play a larger role in the community spread of the virus than previously thought.
• Airbnb has imposed a global ban on all parties and events at its rental properties. The new rule includes a maximum limit of 16 people in any of its rental homes.
• Belgian schools will reopen on 1 September when the academic year starts, with children above 12 years old and teachers required to wear masks, Prime Minister Sophie Wilmes has announced.
• Average daily cases of coronavirus in Africa fell last week, a “hopeful sign” for the continent’s fight against the disease, the head of the Africa Centres for Disease Control and Prevention (Africa CDC) said.
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