• IAG plans for 30% capacity in Q4
• UK’s JSS and self-employment scheme enhanced
• FCA study suggests 12m may fall into arrears as restrictions remain
• Italy’s Lazio region declares overnight curfews
Buildings & Construction
• Travis Perkins – “Like-for-like sales grew by 3.9% in Q3, although total group sales declined by 3.4%, reflecting branch closures since June. There was no net impact of trading days in the quarter, compared with the same period in 2019. Across the group there was no appreciable impact from price inflation, with the change in sales driven by volume.
There have been significant differences in performance across the group’s end markets, with particular strength in domestic RMI, manifesting as strong sales in DIY categories in Wickes and Toolstation, and good trading levels with local trade customers in Toolstation, Travis Perkins and P&H. By contrast, the larger end of customer activity has been slower to return to normal, and at the end of September both new housebuilding and commercial construction continue to run at levels some way below 2019, specifically impacting the specialist merchants and elements of the P&H business.
The progression of sales recovery has continued throughout Q3, particularly in the trade-focused businesses. During July, volumes picked up strongly, as markets exited the lockdown period. Trading in August was modestly softer, impacted by a protracted holiday season, before then picking up again in September in line with schools reopening and many trades returning to a more normal work schedule.
Continued buoyancy in the DIY markets and a more encouraging trend in trade-focused markets in September has driven like-for-like growth of 8% for the month, with total sales growth, adjusted for trading days, of around 0.3%. The difference between LFL sales and total sales performance was primarily due to the impact of the merchanting branch closures in June and the disposal of PF&P, partially reduced by the acquisition of Toolstation Europe.
Across the Merchant and P&H segments, whilst the branch closures announced in mid-June were significant drivers of the reduction in total sales, businesses have successfully migrated a significant proportion of sales to nearby branches, in line with management expectations. This has been particularly true for larger customers who already trade with multiple branches and customers of the specialist merchants where a higher proportion of sales are delivered. At a group level, this retention of sales added around 3% to likefor-like performance.”
Food, Drinks & Household
• Unilever – “Underlying sales growth accelerated compared to the second quarter. Elevated levels of growth for hand and home hygiene products continued, as well as for food consumed at home. Our food service and out of home ice cream businesses continued to decline; however, at lower levels compared to the second quarter. Performance also improved in our other categories, with declines lessening in deodorants and skin care, while laundry and hair returned to growth. Online channels continued to grow, and our ecommerce business grew 76%.
Emerging markets grew 5.3%, as China’s recovery continued, and India and Brazil returned to growth. Developed markets grew 3.1%, led by ongoing strength in North America. In Europe, volumes grew despite a negative impact from out of home ice cream and food service, although this was more than offset by increased pressure on price, driven by a step-up in promotional intensity.”
• IAG – “On 10 September, IAG announced a reduction in capacity from -74% to -78% in 3Q20 and from -46% to -60% in 4Q20 as a result of the levelling off of bookings following the reintroduction of quarantine requirements by many European governments.
Recent overall bookings have not developed as previously expected due to additional measures implemented by many European governments in response to a second wave of Covid-19 infections, including an increase in local lockdowns and extension of quarantine requirements to travellers from an increasing number of countries. At the same time, initiatives designed to replace quarantine periods and increase customer confidence to book and travel, such as pre-departure testing and air corridor arrangements, have not been adopted by governments as quickly as anticipated.
In response to the high uncertainty of the current environment, IAG now plans for capacity in 4Q20 to be no more than 30% compared to 2019. As a result, the group no longer expects to reach breakeven in terms of net cash flows from operating activities during 4Q20.”
• Sweden is removing special guidelines for over 70s – the same advice now applies to everyone in terms of hygiene, social distancing and avoiding large groups.
• Italy’s Lazio region around Rome has joined two other Italian regions in declaring overnight curfews. Lombardy in the north starts its curfew at 23:00 tonight, Campania and Lazio follow suit tomorrow.
• As many as 12 million people in the UK may struggle to pay bills or loan repayments, as financial resilience worsens due to the pandemic, a survey by the FCA has suggested. It suggested 31% of adults have seen a decrease in income, with households seeing income fall by a quarter on average. Those from a Black and Minority Ethnic background were more likely to be affected, with 37% of BAME adults experiencing lower income.
• The UK chancellor has unveiled increased support for jobs and workers. Instead of a minimum requirement of paying 55% of wages for a third of hours, as announced last month at the launch of the Winter Economic Plan, employers will have to pay for a minimum of 20% of usual hours worked, and 5% of hours not worked. The government will now fund 62% of the wages for hours not worked.
• The UK chancellor also announced increases in the amount of profits covered by the two forthcoming self-employed grants from 20 % to 40%, meaning the maximum grant will increase from £1,875 to £3,750.
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