Coronavirus - Setting in the East

Korea and China have both seen marked declines in new cases over the past few days. South Korea has carried out extensive testing across the country, with nearly 7% of the population tested, while China has conducted mass quarantines and ramped-up its frontline response. This success shows that the disease can be pushed back if the correct steps are taken. It is hoped Italy’s response will have the same effect.

 - 4,390 Deaths - 198

 - 1114,572 Deaths - 4,025

• Sacramento – No longer trying to contain the virus.
• Fiat Chrysler – Plants & key functions are operating as planned.
• Future – Does not expect an impact on profits.
• RBS – Will allow people affected by coronavirus to defer mortgage and loan repayments for up to three months.
• Playtech – All Snaitech shops closed.
• DFS# – Seen change in consumer footfall in recent days.
• Informa – Deferring events with revenue of £425m, resulting in a c12% downgrade to profits.
• The Czech Republic – Has closed all schools and events with more than 100 participants.
• Harvard – Asking students to work remotely.
• Spain – Has suspended parliament for at least a week after MP tested positive.
• – Has withdrawn guidance.
• Spain – La Liga matches will be behind closed doors for at least two weeks.
• Italy – Mortgage payments suspended.
• Santa Clara – Has banned gatherings of over 1,000 people.
• Peter Rabbit 2 delayed.
• Panama & Mongolia – First reported cases.
• Italy – All Seria A matches cancelled until 3 April.
• Poland – All mass events cancelled.

Italy stands out as an anomaly; the death rate has now risen to 5% of confirmed cases. Although these numbers look concerning, it is important to note that South Korea, which has tested 7% of its population, has found only 0.01% positive for the virus with 0.0001% dying.
A large number of countries are now reporting a growing number of cases and no or relatively few deaths. However, the outbreak is still in its early stages in most of these countries and testing is typically limited to those with symptoms, so we should be wary of extrapolating early results. So far in the UK, 24,900 people have been tested and the latest estimate for tests in the US is 5,861 (according to the CDC on Saturday), although two tests are done per person.

Company news

• Fiat Chrysler – “Currently the group’s Italian plants and key functions are continuing to operate as planned. The group has put into place extensive preventative measures to secure continuity of its supply chain.”
• Schaeffler (auto & industrial supplier) – “Plants are running at 80% utilisation in China. Expects car sales recovery in March accelerating in April.”
• Informa (events) – “In 2020, our subscriptions-related businesses, representing around 35% of group revenue, continue to trade well, underpinned by strong renewal rates, at 90%+ on average, and consistent low to mid-single digit growth in Annualised Contract Values. However, like a number of businesses, we are seeing an impact from the outbreak of COVID-19 within our events portfolio. We are making all the decisions necessary to look after colleagues and customers and ensure the long-term strength of our brands and customer relationships . . . As of 10 March 2020, across the group we have successfully agreed or are in the process of agreeing the re-scheduling of around 45 large event brands to a date later in 2020, representing budgeted revenue of around £350m. Around 70 smaller brands have also been re-scheduled with revenue of around £50m. In addition, we have localised or virtualised several brands to deliver the best solution for customers in those markets this year. We have also re-phased (biennials)/cancelled 13 brands in 2020, with budgeted revenue of £25m . . . For those brands we have re-scheduled, localised or virtualised in 2020, we would expect to incur some incremental investment in venue capacity, customer marketing and other duplicative costs of re-scheduling and virtualisation, subject to in-market support budgets and insurance outcomes. At this point we are not providing market guidance for the Informa Group in 2020.”
• John Menzies(aviation services) – “On 27 February 2020 the group announced that the outbreak and continued spread of COVID-19 (coronavirus) is having a direct impact on the operations of the group. This impact has been at its greatest within the operations in Macau and where Chinese carriers are handled across the network. The situation is still evolving, and the group only has limited visibility of what flight schedules are being impacted into March and beyond, so it is difficult to assess how extensive the impact could be at the date of the signing of the annual report and accounts 2019 on 10 March 2020. The board currently estimate that there is likely to be an adverse profit impact in 2020 of approximately £6m-£9m on the assumption that the impact of the virus subsides towards the end of the first half of the year. Wherever possible mitigation actions have been put in place along with a tight control on costs and expenditure . . . The board is focused on delivering profitable growth in the 2020 full year and given the previously stated impact of COVID-19 on the operations of the group and the ongoing uncertainty of the extent of the impact on the aviation industry, the board believes it prudent, and in the best interests of shareholders, to suspend the dividend temporarily.”
• Future (platform media) – “Given the continued momentum within the group, the board does not expect there to be an impact on profit for the year to 30 September 2020 and no impact on the following financial year . . . we have taken the decision to postpone two UK events: The Photography Show and The Homebuilding & Renovating Show, both of which were scheduled to be held at the NEC in Birmingham later this month. We expect that The Photography Show will now run in September 2020 and anticipate that the National Homebuilding & Renovating Show will run in July 2020 (both within the current Financial Year). The decision to postpone has been agreed in partnership with the headline sponsors of both events and in anticipation of the requirements of other sponsors and exhibitors. We do not expect any impact on profit as a result of postponing these events, while the decision to delay in a timely manner means we can avoid unrecoverable costs. We have a number of other smaller events, both in the UK and the US, over the coming months, however their impact to the wider group is not material. A decision will be made regarding each event based on the local market dynamics. Overall, we are seeing limited impact of coronavirus in our day-to-day business model; our strategy is working well in terms of audience, product and end market diversification. The fundamentals of our business have not changed, our headline audience numbers continue to be strong, and our operating disciplines mean that we are well placed to meet the challenges and opportunities arising from these dynamic market conditions. Whilst the board continues to monitor the situation closely, the group does not expect any impact on profit as a result of postponing these events.”
• Air France – Cutting March long-haul capacity by 13% and European by 25%.
• American Airlines – 10% reduction in international peak summer capacity, 7.5% reduction in April domestic capacity.
• Atari (game developer) – Coronavirus can have a temporary impact on the profitability of the current financial year.
• Barclays – Is contacting business customers affected by coronavirus to offer 12-month capital repayment holidays on existing loans over 25,000 pounds, as part of a package of measures to support companies hit by the outbreak.
• Bluegreen Vacations (time shares) – Recent outbreak might impact its operating results or financial condition in 2020.
• – “As we explained when we provided first quarter 2020 guidance during our fourth quarter earnings announcement on February 26, 2020, the circumstances of the COVID-19 outbreak are changing rapidly and our guidance was based on the information we had at the time. As the situation has worsened and the negative impact on travel demand has increased since we provided guidance, in particular more broadly across Europe and in North America, we have decided to withdraw that guidance. Given the rapidly evolving situation, we are unable at this time to reliably quantify the impact of the COVID-19 outbreak on our future financial results.”
• Delta – “Currently expect March quarter unit revenue to be down mid-to high-single digits. International capacity reduced by 20-25%, domestic by 10-15%.”
• DFS(furniture) – “At present we believe our supply chain position should normalise before the financial year end, and it is only in very recent days that we have observed any change in consumer footfall to our showrooms. While any disruption to order intake over the key trading periods of Easter and the May Bank Holidays is likely to impact our financial year 2020 results, it is reasonable to believe this may ultimately be transitory in nature; following periods of subdued demand we typically see much of that latent demand returning.”
• French Connection (fashion retail) – “The performance this year has not been as anticipated and we are not being assisted by the continued difficult trading conditions in the UK and also uncertainty as to the impact of COVID-19 coronavirus, both due to the spread of the infection to further territories and the potential impact on our supply chain. We are monitoring this situation closely and will take whatever actions are necessary to manage any delays that may arise.”
• Host Hotels & Resort – The company has withdrawn it FY20 guidance due to the ongoing financial impact of reduced travel demand due to the global outbreak.
• LSL Property Services – “Whilst we have been encouraged by the residential property market conditions to date in 2020, the situation regarding the COVID-19 virus is rapidly evolving and we have in recent days, seen some slight softening of our lead sales indicators in estate agency. We are monitoring the situation very closely as it may create headwinds for our business in 2020 if changes in consumer behaviour impact residential property market conditions. As and when any potential impact on the group becomes clearer, we will provide updates as necessary.”
• Midwich (technology) – “At the time of writing, incidents of the COVID-19 virus are growing outside China. Although we have seen little impact on the business to date, the board considers that the situation represents a potential challenge to product supply, customer demand and our operations in 2020.”
• Park Hotels & Resorts – The company has withdrawn its previously-announced 2020 outlook as a result of the continuing concern caused by COVID-19.
• Playtech (gambling software) – “At the company's full-year results on 27 February Playtech plc (‘Playtech’) outlined that its Italian business, Snaitech, had experienced a strong start to 2020 but had seen a recent impact due to the outbreak of COVID-19. Following the decree from the Italian Government issued on 8 March 2020, Playtech is providing the following update on its Snaitech operations in Italy. As part of the decree all betting shops, arcades and bingo halls across Italy will be closed until 3 April 2020 and accordingly all Snaitech retail shops are now closed. Snaitech’s online activity will continue and may prove to mitigate some of the impact. In addition, an increase in market volatility has led to a very strong performance within TradeTech year-to-date.”
• Royal Bank of Scotland – is offering a three-month holiday on mortgage and loan repayments for customers affected by the coronavirus outbreak. The group will also allow customers to temporarily increase their credit card limit and access cash in fixed savings accounts with no early closure charge. It is also offering to scrap fees on credit card cash advances and increase cash withdrawal limits up to £500.
• Royal Caribbean Cruises Ltd (NYSE: RCL) – Today announced that due to the spread and recent developments related to the COVID-19 outbreak, the company has increased its revolving credit capacity by $550 million bolstering the company's liquidity. The company is pursuing additional actions to improve its liquidity by reducing capital expenditures, operating expenses and taking other actions to improve liquidity by at least a further $1.7 billion in 2020. The company is also planning reductions to the 2021 capital expenditures and operating expenses. The company had previously communicated that its 2020 guidance did not include the impact of the COVID-19 outbreak. Given the recent government actions and the heightened impact and uncertainty of changes in the magnitude, duration and geographic reach of COVID-19, the company is withdrawing its first quarter and full-year 2020 guidance.
• Princess Cruises – Is temporarily modifying its cancellation policy for cruises and cruise tours departing through 31 May 2020. The cruise line is implementing this revised policy to assist guests making decisions regarding their upcoming cruise vacations during the evolving worldwide COVID-19 situation. The details vary by departure date.
• Date of Departure* & Policy Update:
• 3 Apr or earlier: Cancel up to 72 hrs before sailing to receive Future Cruise Credit (FCC) for 100% of cancellation fees.
• 4 Apr-31 May: Cancel by 31 Mar 2020 and receive FCC for 100% of cancellation fees.
• 1 Jun-30 June: Final Payment moves to 60 days prior to sailing (from 90 days).
• Stitch Fix (online personal styling) – To date no material impact due to the outbreak, but too early to quantify potential impact to the supply chain or demand but some is expected.
• STV(TV programming) – “Despite uncertainty following the UK's exit from the EU and the coronavirus, we are positive about the outlook for 2020. We have made a strong start to the year on screen and online, in line with our expectations, and have an exciting programming line-up to look forward to.”
• TP ICAP(broker) – “The overall macroeconomic backdrop remains uncertain driven largely by COVID-19, global growth and ongoing Brexit negotiations. While this environment impacts our clients’ activity, the resulting volatility also creates market opportunities that gives us confidence for the future.”
• Vail Resorts – Has withdrawn its fiscal 2020 guidance. Visitor numbers have fallen, the company expects this trend to continue and potentially worsen in the coming weeks.
• Ultra Electronics – “The duration of the COVID-19 virus and its impact is uncertain at this stage, however it is not impacting current trading and our preliminary assessment is that we don't currently believe it will have any material long-term impact.”

• The International Table Tennis Federation is postponing its Olympic qualifying event in Japan, which was due to take place in April.
• Italy has cancelled all national sporting events including Serie A until at least 3 April as part of its lockdown efforts.
• Matches in Spain's top two divisions will be played behind closed doors for at least the next two weeks because of coronavirus concerns.
• The Europa League match between Manchester United's and LASK Linz in Austria is to be played behind closed doors because of coronavirus concerns.

• British Airways, Norwegian Air, Easyjet and Wizz Air have cancelled flights to Italy.
• China has shut all of its temporary hospitals in Wuhan.
• The UK government has relaxed restrictions on delivery hours to allow shops to make sure shelves remain stocked with basic items amid stockpiling concerns.
• The Czech Republic closes schools and bans events with 100+ people due to the coronavirus outbreak.
• Spain’s parliament suspends activities for at least a week after employee diagnosed with coronavirus.
• Poland has cancelled all “mass events” in response to the outbreak.
• Harvard – “From tomorrow morning (11 March), all lectures will be delivered online for the rest of the semester rather than physically in a lecture hall. However, tutorials, seminars and laboratory practicals will all continue to be given in the usual fashion while using social distancing protocols.”
• Korean Air – Has cut 80% of international capacity. Memo from President ‘But if the situation continues for a longer period, we may reach the threshold where we cannot guarantee the company's survival.’
• Peter Rabbit 2 – Has been delayed from 27 March to 7 August.
• Sacramento County – “It is no longer necessary for someone who has been in contact with someone with COVID-19 to quarantine for 14 days. This applies to the general public, as well as healthcare workers and first responders. However, if they develop respiratory symptoms, they should stay home in order to protect those who are well.”
• Santa Clara – Has banned gatherings of over 1,000 people.

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