By Powerscourt on 21/03/2020

Powerscourt Coronavirus Briefing – 21 March 2020

CORONAVIRUS PUBLIC SENTIMENT POLLING

The latest set of measures to combat the spread of infection and to deal with the economic impact of the pandemic have had a positive effect on public confidence in the Government’s handling of the coronavirus crisis. Exclusive polling conducted for Powerscourt before and after Friday’s 5pm press conference showed that:

– The proportion of people who think the Government is doing a good job when it comes to protecting jobs and the economy increased from 25 per cent before yesterday’s 5pm announcement to 39 per cent after

-A majority still thinks the Government needs to go further, though this dropped from 58 per cent prior to the 5pm press conference to 48 per cent after

-The proportion of people who think the Government has got its social distancing policy right increased from 33 per cent before the 5pm press conference to 43 per cent after the announcement that pubs, clubs and other leisure venues are to close

-The proportion who thought the Government should go further fell from 52 per cent before 5pm to 42 per cent after

-Only 4 per cent of people who responded after yesterday’s announcement think the Government has gone too far

Source: findoutnow

WHAT ARE COMPANIES SAYING?

Consumer and Retail

Biofontera AG

Biofrontera AG, an international biopharmaceutical company, announced that it has adopted comprehensive measures to reduce costs during the global COVID-19 pandemic.

The Company will implement short-time work for all employees in Germany and similar measures being assessed for its UK and Spain subsidiaries. Biofrontera Inc., the US-based wholly owned subsidiary, will also initiate substantial cost cutting measures by significantly reducing its workforce and implementing a mandatory program where all employees will be required to take temporary periods of unpaid time off.

C&C Group plc

C&C Group plc is a leading, vertically integrated premium drinks company which manufactures, markets and distributes branded beer, cider, wine, spirits, and soft drinks across the UK and Ireland. COVID-19 will have a material impact on Group performance in the current financial year.

A material reduction to the prior expectations for FY21 is expected. The scale of this reduction will depend upon how the situation develops, over what timeframe, and the impact of further measures implemented by the Irish and UK Governments.

Hotel Chocolat

Hotel Chocolat, premium British chocolatier and multi-channel retailer, noted that Company’s trading in March-to-date has slowed as the outbreak of COVID-19 has impacted footfall both in the UK and internationally with Group retail revenue having decreased by 5% year-on-year in March-to-date. The Group anticipates the ongoing effect of COVID-19 and the continued reduction in high-street footfall is likely to result in some or all of the Company’s stores being closed for a period, which will impact Company sales and profits.

The Group announced it is undertaking a placing to raise £20 million through the issue of 8,888,888 new ordinary shares. Notwithstanding the challenges currently being faced due to COVID-19, the Group says it remains committed to the long-term growth plans which should deliver meaningful Shareholder value over the next five years.

Loungers

Loungers, the operator of 167 café/bar/restaurants across England and Wales under the Lounge and Cosy Club brands, announced that it has taken the decision to temporarily close all of its sites as of 3pm on Friday 20 March 2020.

Vapiano

Vapiano SE, a global restaurant chain, is facing further dramatic losses in net sales and expects a further decline in results due to the current COVID-19 crisis. Almost all of the more than 230 restaurants worldwide had to be closed. Due to the drastic decline in net sales and revenues, an insolvency reason in the form of cash flow insolvency occurred on Friday 20 March 2020. Vapiano will apply at short notice for support under the financial assistance programs announced by various governments in Europe regarding the COVID-19 crisis.

Villeroy & Boch

Despite an intrinsically good business development at the beginning of the financial year, Villeroy & Boch, an international lifestyle brand, is preparing itself with these measures for a phase of temporarily lower demand. The supply chains have so far remained intact and inventories are sufficiently high to cover normal demand in the coming weeks despite the interruption of production in Europe. The Management Board expects that sales and earnings for the current financial year will be below the previous forecast, which envisaged slight growth.

Industrials

Assystem

In light of COVID-19, Assystem, an international engineering services consulting company, will not be in a position to meet the revenue, EBITA margin and free cash flow objectives for 2020 that it announced on 9 March 2020.

CHN Industrial

CNH Industrial announced a two week suspension of its assembly operations in Europe in response to the COVID-19 pandemic.

Glencore

Glencore noted that the scale and diversity of its operations meant that COVID-19 varies by location. It introduced a number of additional precautionary measures across Glencore offices and industrial assets including a Health Advisory channel for our people to seek advice and support, flexible working, and restrictions on all non-essential travel. To date, there have been no material disruptions at the Company’s operating assets or within the supply chain. It’s marketing business is delivering annualised EBIT performance within it’s through the cycle long-term guidance.

OMV Petrom

OMV Petrom, the largest energy company in South-Eastern Europe, is ready to respond COVID-19. Specific measures have been implemented to ensure security of supply and to protect employees and customers. A dedicated management team monitors the situation daily and is working intensively to contain the impact on operations and critical infrastructure. The company has implemented working from home for the employees who can perform their activities remotely, as well as flexible working hours. All the measures recommended by the authorities were implemented in our OMV and Petrom filling stations, from strict hygiene measures to prevention messages for customers and temporary suspension of gastro areas, with products available only to-go.

Pure Gold Mining

Pure Gold Mining is closely monitoring the COVID-19 pandemic and has implemented preventative measures on sites and at the corporate offices to safeguard the health of its employees while continuing to operate effectively and responsibly in communities. Development activities at the Pure Gold Red Lake Mine continue to operate normally, with no significant impact to date beyond the implementation of additional education and safety measures.

Transport for London (TfL)

Transport for London (TfL) is acting on the Government’s direction in response to the COVID-19 virus that all transport services and travel should now be solely focused on ensuring critical workers can move around as needed. TfL is in constructive discussions with Government about how the financial impact of reduction in services and other business interruptions caused by the response to COVID-19, will be managed.

Tricorn Group plc

Tricorn Group plc, an AIM listed tube manipulation specialist, in the current market environment is focused on limiting the impact on the Group’s revenue and profitability, as well as to customers and employees. It is unable to forecast the full impact but the Group is well positioned against the current economic climate as fundraising was completed earlier this year.

United Airlines

United Airlines plans to cut international flight capacity for April by 95 per cent. The carrier and its competitors are suffering from the sudden, precipitous drop in demand for air travel as governments restrict travel and consumers shy away from it as the coronavirus spreads.

Financials & Real Estate

LendInvest Limited

Whilst there has not been an impact on LendInvest’s lending, servicing or financial position from COVID-19, the company is continually and closely monitoring the impact of the pandemic on the business, including from business continuity, operational risk and infrastructure, disruption impact, use of third party service providers and communications perspectives. Given the impact that the pandemic is having on the general UK population, it is expected that there may be an impact on the business and its partners in the future.

NextEnergy Solar Fund Limited

NextEnergy Solar Fund Limited, a closed-end investment company, reassured investors that NESF and the NextEnergy Capital Group, as Investment Manager, continues to monitor the COVID-19 crisis and have taken actions where necessary to protect employees and maintain the Company’s operations. It noted that the situation is unprecedented and the effects on the global economy remain uncertain. The economic slowdown has not yet had a significant impact on the Company or its underlying portfolio, but potentially may do so in the future.

New Star Investment Trust PLC

New Star Investment announced half year results on 20 March 2020. On the current outlook, it noted that risky assets are likely to remain weak and volatile until the Covid-19 outbreak moderates. However, the company has substantial cash holdings and expects its defensive assets to provide capital protection.

The Renewables Infrastructure Group Limited

The Renewables Infrastructure Group, a London-listed investment company, says that the portfolio is performing well with electricity generation approximately 25% above budget for the year-to-date. Monday’s investor call will offer an update on the operations of the portfolio and how the Managers are monitoring and managing risks to the Company arising from the global COVID-19 pandemic.

TMT

First Sensor Group

The First Sensor Group, a global player in sensor technology, announced positive results for FY19 and gave guidance for FY20 under the influence of COVID-19. For fiscal year 2020, the Management Board expects that the novel infectious disease COVID-19 will have a significant impact on the global economy. Subject to a further intensification of the economic impact, First Sensor therefore expects revenues of between EUR 145 and 155 million in 2020. Due to the lower sales level, an adjusted EBIT margin – before expenses for the merger with TE Connectivity Sensors Germany Holding AG – of 3.0 to 6.0 percent is expected.

IN THE NEWS

Coronavirus: the moment for helicopter money – Financial Times

UK government draws up plans to buy into airlines – Financial Times

Coronavirus: ‘Relief’ for businesses after government vows to pay wages – BBC

Boris Johnson announces closure of all UK pubs and restaurants – The Guardian