Swissport to axe 53pc of UK workforce
Swissport has announced plans to cut as many as 4,175 job UK jobs.
The airport baggage handler said that the staff was informed of the cuts it planned to make to over 50% of its workforce on Wednesday morning.
Swissport’s chief executive for western Europe, Jason Holt, said in a memo sent to its workforce: “The unfortunate fact is that there simply aren’t enough aircraft flying for our business to continue running as it did before the COVID-19 outbreak, and there won’t be again for some time to come. We must adapt to this new reality.”
“We are now facing a long period of uncertainty and reduced flight numbers, along with significant changes taking place to the way people travel and the way goods move around the world. There is no escaping the fact that the industry is now smaller than it was, and it will remain so for some time to come,” he added.
Airports are suffering a huge amount during the pandemic due to because of lower passenger numbers and grounded flights. According to the Airport Operators Association (AOA), up to 20,000 jobs at UK airports are at risk.
Due to the range of jobs at risk, GMB and Unite, which represent Swissport employees, have urged the government to take action and protect the workforce across the whole sector.
“With Swissport now considering job cuts on this scale we have deep concerns about the viability of many of our regional airports and the benefits for regional connectivity that they bring,” said Nadine Houghton, GMB’s national officer.
Across the airline industry, British Airways, Virgin Atlantic and jet engine maker Rolls-Royce are cutting 12,000, 3,000, and 9,000 jobs respectively.
Swissport employs around 8,500 people in the UK and Ireland. The number of jobs will represent 53% of the total workforce.
Avacta well-positioned with positive data from COVID-19 test strips
Biotherapeutics developer Avacta Group (AIM:AVCT) announced on Wednesday that its partner Cytiva had reported positive initial performance data on the its COVID-19 rapid test strips.
The company said that in mid-May it had provided Cytiva with ‘Affirmer’ reagents which are specific to the SARS-COV-2 spike protein, and that its partner had now developed the first lateral flow test strips using these reagents.
The data from these tests show that the test strips detected spike protein in model samples within the range of concentration one would expect to find within the saliva of patients with COVID-19. Avacta said that they would now continue to refine the test strip define and optimise the product’s performance, in order to generate the highest possible sensitivity in the finalised rapid test strip.
Following optimisations of the test by Cytiva, the design will be passed on to UK manufacturing partners selected by Avacta. The company will work closely with manufacturers to minimise the time frame of manufacturing, clinical validation and regulatory timelines, as time is very much of the essence regarding the utility and potential profitability of the test strips.
Avacta has both short and long-term potential
Speaking on today’s news, and how it adds to the pipeline of opportunities which could make the company attractive to investors, Turner Pope Research Analyst, Barry Gibb, commented:“Having recently put the necessary financial resources in place, Avacta now appears positioned to reach a major inflection point. Timing of course is of the essence for all COVID-19 product developments. Today’s news confirms rapid progress with the Group’s key POC antigen test, which offers significant commercial opportunity given its potential to limit global progression of the disease. Having partnered with a major international distribution agent and with advanced talks with suitable manufacturers underway, TPI considers the potential for the Group to claim a good part of this prospectively huge international opportunity to be high.”
“Combined with development of its potential ‘neutralising’ therapy for COVID-19 infection and its BAMS diagnostic test being developed with its partner Adeptrix, along with the Group’s core novel cancer immunotherapies that incorporate its two proprietary platforms, Affimer biotherapeutics and pre|CISION tumour targeted chemotherapy, Avacta appears to be ideally placed for the creation of significant short and long term value for shareholders.”
Despite the seemingly positive update, however, Avacta shares dipped 3.55% to 136.00p per share 24/06/20 12:29 BST.
Naked Wine shares up 5pc as demand soars in lockdown
Sales in Naked Wine soared 81% during April and May compared to the same period last year as orders during the lockdown surged.
The Naked Wine share price grew 5% on Wednesday morning as the group released its first annual results since selling off Majestic Wines.
The wine retailer is still making a loss, however, sales grew 14% to £203 million in the year to the end of March.
The company said in a statement: “We entered the new financial year with good momentum as COVID-19 has influenced customer shopping behaviour and driven increased demand for the Naked Wines offer.”
Naked Wine share price has surged 70% this year alone.
Chief financial officer, James Crawford, will soon become the group’s managing director of the UK arm.
Chief executive officer, Nick Devlin, said: “In his long-standing role as CFO of Naked, James has guided the business through start-up challenges and along its rapid growth trajectory. Under his tenure the Naked business has grown 4x in size, demonstrated its potential in the US market and navigated the challenges of transition to a listed environment.”
The company has not provided a full-year outlook. As pubs and restaurants are set to open on 4 July, the demand for online alcohol sales could see a fall in demand.
“Whilst predictions are harder than ever this year, I am excited about our plans for growth and confident that the mission of Naked to connect everyday wine drinkers to the world’s best winemakers is more relevant than ever. I believe the enduring impact of COVID-19 will be to accelerate trends towards direct, online models in categories like wine and that Naked is well positioned to deliver the combination of quality, value and community customers are looking for,” said Devlin.
Naked Wine shares (LON: WINE) are up 5.76% at 389.20 (1034GMT).
Internet use reaches record levels during lockdown
According to a new Ofcom report, the UK population is spending a quarter of their waking day on the internet during the lockdown.
During the height of the UK’s lockdown in April, Britons were spending an average of four hours and two minutes online every day.
The number of people using video-calling apps was seen to double during the pandemic as workplaces and families are commonly using videocalls to hold events.
“Lockdown may leave a lasting digital legacy,” said Yih-Choung Teh, Ofcom’s director of strategy and research. “Coronavirus has radically changed the way we live, work and communicate online, with millions of people using online video services for the first time.”
The report found that those aged between 18 and 24 spent the longest time daily online, averaging five hours and four minutes. However, the highest increase was for over-54s.
According to the report, the three apps that grew most during the quarantine were TikTok, Houseparty, and Zoom as people are finding more creative ways to stay in touch, entertained, and keep fit.
Mobile phone use has also grown during this period as Britons are making calls more often and for longer.
Despite the growth in internet use, the report found that one in eight people continue to not go online at all – a figure that has remained high for many years.
Poorer households are often left behind, which has caused issues for children during the lockdown who were not able to access educational resources and online lessons.
Nasdaq at all-time high as tech bubble overrides underwhelming PMI data
The Dow Jones saw a bright start to trading on Tuesday, up 1.08% or 281 points to 26,308. This figure wasn’t quite as impressive as the one analysts were predicting at lunchtime, and this was likely led by underwhelming US PMI data. Instead, The Nasdaq Composite stole the spotlight, with the index hitting its all-time high by rallying 1.56% to 10,213 points.
After housing market data stagnated US markets on Monday, promises of a big point bounce on Tuesday were dashed by US manufacturing falling short of the 50.0 PMI forecast. The US data for the June reading came out at 49.6, which, crucially, means that manufacturing failed to return to growth.
While this represents a marked improvement on the 39.8 reading in May – alongside a services PMI improvement from 37.5 to 46.7 – it bucks the trend set by the Eurozone and UK, who posted vastly outperforming flash PMIs.
Additionally, the underwhelming US data sapped some of the energy out of the European gains. After the DAX hit 12,600 points a few times during the day, the FTSE stopped at 6,340 and the CAC hit 5,045 points around lunchtime. Despite falling, the DAX was still up 2.13%, the FTSE rallied 1.21% and the CAC bounced 1.39%, to 15,524, 6,320 and 5,017 points respectively.
The headline, though, went to The Nasdaq Composite, which had the greatest advantage over both the Dow and the S&P 500 since 1983. Among the parties credited for Tuesday’s gains were Apple (NASDAQ:AAPL), which bounced 3.07% as the company posted strong financials. Also noted were Amazon (NASDAQ:AMZN), up 2.19%, and Facebook (NASDAQ:FB), which rallied by 1.91%.
Today’s Nasdaq rally, however, may be as short as it is sweet. According to Credit Suisse analysts, Tuesday’s bullishness was led by what it describes as a ‘tech bubble’. The majority of Nasdaq stocks are currently above their forecast average price, and Credit Suisse anticipates a correction in the near future. “A close above 10155/230 and then 10400 would suggest there is a real possibility the Tech sector is entering ‘bubble’ territory and further parabolic strength may emerge, with resistance seem at 10610/710 next.” read the Credit Suisse statement. “96% of Nasdaq 100 stocks are above their medium-term average and whilst this points to strong market breadth, it also speaks further to the current highly overextended state of the rally. Furthermore, 74% of Nasdaq 100 stocks are above their long-term 200-day average.”News round-up – markets rally as lockdown eases
The FTSE 100 (INDEXFTSE: UKX) surged by 81 (1.3%) points to reach 6,326 at its peak on Tuesday after PM Boris Johnson announced further lockdown easing measures and reports indicate that the UK’s economic activity is beginning to pick up. Markets were buoyed by good news on Tuesday, but the long-term implications of the coronavirus pandemic continue to take their toll across the board.
The end of lockdown is nigh in England, with the PM’s announcement that pubs, restaurants, hotels and hairdressers can all reopen come 4th of July – alongside a relaxation in the government’s current 2 metre social distancing guideline. People should continue to try and stay at least 6 feet apart where possible, but a “one metre plus” rule is set to be introduced in order to help close contact hospitality companies resume business as normal. The news comes as a welcome relief to an industry hit especially hard by lockdown, even as a number of restaurant chains – including family favourite Wagamama – call for further government support and prepare for mass redundancies once the UK’s furlough scheme comes to an end in October.
The manufacturing industry has seen a sharp rise in activity during June, according to data released by IHS Markit on Tuesday. Preliminary reports indicate that factories have returned to a growth trajectory having risen from 40.7 in May to 50.1 this month – crucially only just above the 50 point margin which represents stagnation. Manufacturing has no doubt benefitted from the easing of lockdown restrictions across the UK, although concerning reports of outbreaks of coronavirus at a meat processing factory in Wales threaten to undermine the good news. A total of 175 employees at the factory in Llangefni have tested positive for the virus and the site has been forced to close as local authorities attempt to stop the infection from spreading.
Despite the surge in economic activity, the car industry continues to struggle amid warnings that 1 in 6 jobs could be at risk. The Society of Motor Manufacturers and Traders have said that the industry is in “critical need” of government support, with a third of employees still on furlough and a record 99.7% free-fall in car volumes to the lowest level since World War II. The transport and motor industry have been among the hardest hit sectors of the UK economy and grim predictions of a no-deal Brexit on the horizon rub salt into the wounds of any hopes of a sustained recovery. A combination of reduced demand, social distancing and scuppered trade deals across Europe leave the industry in a difficult position with little solace that the hard times are over just yet.
Coronavirus is also set to change the office landscape permanently, according to reports by Reuters. The financial districts in Bank and Canary Wharf told record numbers of employees to work from home during the peak of the pandemic, but even as lockdown measures are eased, a significant proportion of those that have been working out of office are set to be encouraged to do so for the foreseeable future. Banks are planning to cut office space and “reset” their operations after large numbers of employees proved that working from home was effective and sustainable in the long-term. The strategic move is also likely to help cut costs, as renting space in London is notoriously expensive and working remotely is expected to remain attractive to businesses while social distancing measures remain in place.
Tomorrow is Quarter Day for the UK retail sector, as businesses are expected to pay rent for the next 3 months to their landlords. The expectation is that less than half of due amounts will be collected as high street businesses were forced to shut between March and June. A number of commercial landlords are facing bankruptcy – including INTU Properties, which owns Lakeside shopping centre – after a collapse in rental payments from tenants as stores labelled “non-essential” by the UK government. INTU (LON: INTU) has since appointed accountancy firm KPMG to help develop a “contingency plan” for the months ahead. The company’s share price has slid 4.56% or GBX -0.21 BST 16:35 23/06/20 on the eve of the long-awaited collection date.
Rounding up the news of the day, the Euro jumped to its highest level in the last 4 months following Markit’s upbeat economic report, as the manufacturing PMI in the eurozone jumped to 46.9 this month from the previous 39.4 in May. The USA’s PMI rose to 46.8 from 37.0 in May, showing signs that the economy across the pond is also starting to recover, although it still remains considerably below the 50 point stagnation mark. Meanwhile, the British sterling remained largely unchanged against the US dollar by today’s updates.
So, a mixed bag for global markets overall on Tuesday, but hopes that economic recovery is imminent continue to be stoked by glimpses of good news across the majority of sectors.
Ryanair £8.99 flights see them lead airline share price rally
Airlines saw one of their better days of trading since the start of the pandemic, with plans being unveiled for the reopening of airports and cut-price offers on popular holiday routes. Ryanair (LON:RYA) led the charge, with their super-budget July offers, announced just before Tuesday lunchtime.
The company’s flash summer holiday sale illustrates quite how desperate airlines are to drum up demand, with one-way flights going for; £9.99 to Lanzarote, £14.99 to Ibiza and £8.99 for Milan.
Ryanair initially said these offers are available on tickets from July 1st to July 31st, with the sale ending on Wednesday the 24th of June. However, the company decided to relaunch early, beginning flights to Spain on Sunday – the day the country lifted its border restrictions.
On Sunday, a flight to Alicante left from East Midlands Airport at 3:45pm, with a flight leaving Manchester Airport and arriving in Tenerife 5:55pm.
Commenting on the early relaunch, a Ryanair spokesperson said: “Although we are officially back with 1,000 daily flights from 1 July (across the network), some routes are starting from 21 June.”
The Airline’s CEO Michael O’Leary has said that thousands of British families have booked holidays in Spain, Portugal and Italy this summer, and from July 1st, it will also operate flights to Greece and Cyprus, which are deemed ‘key holiday airports’.
The company said it would operate the flights with safety measures such as masks, cashless transactions and limited refreshments, though the Foreign Office’s advice to passengers remains to abstain from all but essential travel.
Ryanair response
Responding to the update, Ryanair Chief Executive Eddie Wilson said: “After four months of lockdown, we welcome these moves by governments in Italy, Greece, Portugal, Spain and Cyprus to open their borders, remove travel restrictions and scrap ineffective quarantines. “Irish and British families, who have been subject to lockdown for the last 10 weeks, can now look forward to booking their much-needed family holiday to Spain, Portugal, Italy, Greece, and other Mediterranean destinations for July and August before the schools return in September. “Ryanair will be offering up to 1,000 daily flights from July 1, and we have a range of low fare seat sales, perfect for that summer getaway, which we know many parents and their kids will be looking forward to as we move out of lockdown and into the school holidays.”Investor insights
Following the update, Ryanair shares rallied 1.68% or 0.19p 23/06/20 14:51 BST, after rallying over 3% around lunchtime. The company’s p/e ratio currently stands at 0.19. Elsewhere, TUI (LON:TUI) hinted that it would secure air bridges with Spain and Greece to secure quarantine-free holidays in July. Despite this, the company saw its shares dip 1.60% to 425.56p. Meanwhile, British Airways saw its shares rally 1.04% to 261.70p, as it announced the recommencement of leisure flights from London City Airport, and Easyjet shares rose 0.81p to 804.07p, as it announced its London to Cyprus flights were fully booked for July.Gear4music shares bounce 21% as annual earnings more than double
A rare story of financial success emerged during the Coronavirus chaos, with musical instrument and equipment retailer Gear4music (AIM:G4M) watching their shares spike on an impressive set of full-year results.
For the 12 months ended 31 of March, the company booked a 9% year-on-year jump in revenues, up to £120.3 million. This led a 16% jump in gross profits, up to £31.2 million, and a year-on-year swing from a net loss of £0.2 million, to a £2.6 million profit for the full-year ended March 2020.
Further, the company noted that its growth margin rose from 22.8% to 25.9% on-year, while its number of active customers jumped 11% to 807,000 and its EBITDA skyrocketed by 239%, to £7.8 million.
Looking ahead, the company is in a strong position. cash at the end of the period was up year-on-year, at £7.8 million compared to £5.3 million the year before. Gear4music also noted that trading was ‘exceptionally strong’ in April and May 2020, and it remained confident in further profit improvement in FY21.
Gear4music response
Company CEO Andrew Wass, said in response to the positive update:“With an increasing number of people throughout the COVID-19 lockdown recognising the benefits that playing , creating and recording music can bring , we have seen a significant increase in demand during this exceptional period. Positive sales trends with improved margins have continued into June, and we have also incurred lower marketing costs than we would typically expect.”
“The improvements we have made during FY20, and the exceptionally strong trading we have experienced during the lockdown period, mean we are financially stronger and better placed than ever to make the most of future growth opportunities within our market.”
“Therefore, whilst still early in the current financial year, the Board is confident of continued financial improvements during FY21 and look forward to the year ahead with optimism.”
Investor insights
Following the news, Gear4music shares rallied 20.78% or 66.49p, to 386.49p per share 23/06/20 13:59 BST. The company are not currently paying dividends.Velocity Composites shares rally despite demand falling by 75%
Supplier of advanced composite material kits to the aerospace market, Velocity Composites (AIM:VEL), saw their losses widen year-on-year as Coronavirus hits the airline sector.
The company saw its revenues fall from £12.2 million to £9.5 million on-year for the first half. This led a switch from an adjusted EBITDA of £0.2 million for the six months ended April 30 2019, to an EBITDA loss of £0.3 million during the same period in 2020.
Similarly, the company’s operating loss widened from £0.4 million to £0.7 million, while its gross margin dropped from 20.9% to 20.5% year-on-year during H1.
The situation was equally bleak for the company’s shareholders, with first half losses per share widening from 1.2p to 1.7p per share.
Operationally, the company noted that air travel restrictions and poor airline confidence created negative impacts for aircraft production, and in turn, a circa 75% reduction in near-term customer demand.
Further, Velocity Composites said that it had taken advantage of the Government’s JRS to fund the furloughing of 60% of its staff. It also stated that in April, it commenced production of PPE for NHS staff.
On a brighter note, the company announced that it had secured a supply agreement with Boeing in January (LON:BOE), which it looks to capitalise on once 737 Max production resumes. Additionally, the company received NADCAP Merit approval for ‘all special processes at all Velocity production facilities’, and once normal trading resumes, they have a pipeline of over £30 million worth of tangible opportunities being developed.
Velocity Composites response
Commenting on the results, company Non-Executive Chairman Andy Beaden, said:
“The effects of the COVID-19 pandemic and resulting lockdowns on the aerospace industry have been dramatic and unprecedented. Whilst we are not where we expected to be right now, our vision and strategy for Velocity’s growth are unchanged. The increased challenges facing our industry provide an even more meaningful commercial rationale for Velocity’s technology and services, as the industry drives for even greater efficiencies in their production programmes.”
“The Company’s financial liquidity remains robust and the Board believes it has adequate cash and banking facilities to work through this disruption. With this in mind, the Board is confident that Velocity is well placed to benefit as production levels pick up and that the prospects for the Company in the mid- to long-term remain positive.”
Investor insights
Despite a seemingly mixed update, Velocity Composites shares bounced 7.14% or 1.00p, to 15.00p per share 23/06/20 10:22 BST. The company isn’t currently paying a dividend, its p/e ratio is -7.00.UK car industry warns one in six jobs at risk
The Society of Motor Manufacturers and Traders state that there is a ‘critical need’ for help as it claims up to one in six car industry jobs will be at risk as the furlough scheme comes to an end.
With one in three staff still on furlough across the industry – and with this support coming to an end in the autumn – the SMMT are calling for renewed support in the form of VAT cuts, to help prevent job losses.
Since shutting down in March, many factories are now operating with a reduced output while others remain closed, and in June alone, 6,000 job cuts have been announced across the sector.
The trade body’s recent survey found that nearly a million people are employed across the sector, including 168,000 in manufacturing.
With annual car and van volumes expected to fall by a third, April saw a 99.7% fall in car volumes – to the lowest number since the Second World War. This kind of decline surely cannot come without a lasting impact on performance, and in turn, job losses.
The CBI’s report on Monday cited transport and motor as some of the worst-hit industries of all, as it booked the biggest slow-down in output since records began. Going forwards, the SMMT predicts a combination of reduced demand and social distancing will continue to play a part in reduced productivity.
The organisation are calling for, “unfettered access to emergency funding, permanent short-time working, business rate holidays, VAT cuts and policies that boost consumer confidence”.
However, the SMMT Chief Executive Mike Hawes was keen to praise the government’s so far “unprecedented” support, by way of furloughed salaries through the Job Retention Scheme.
“But the job isn’t done yet. Just as we have seen in other countries, we need a package of support to restart, to build demand, volumes and growth,” he said
Looking ahead, the SMMT is worried about the impact Brexit could have on any potential recovery:
“A ‘no deal’ scenario would severely damage these prospects and could see volumes falling below 850,000 by 2025 – the lowest level since 1953”.