Bakkavor sales steadily increase after Coronavirus challenges

Jamie Gordon
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Bakkavor sales steadily increase after Coronavirus challenges
UK fresh food provider Bakkavor plc (LON:BAKK) issued a tentative update at the end of the week, stating that its sales were stable, and were even beginning to improve. The company said that its Chinese business had been ‘severely’ impacted by Coronavirus in January, while a positive start to the year in its UK and US operations was blighted by a sharp dip in sales volumes between March and April.

Since then, Bakkavor said that it had seen early signs of recovery, with sales having stabilised in all three regions. Despite this, the company’s like-for-like revenue was down by 5% year-on-year, for the five months to the end of May.

The company spoke on its UK operations, saying that its like-for-like revenues were down on-year by 19% in April and 13% in May, with its salad and ‘food-to-go’ offering being the hardest hit. It said, however, that it had seen a gradual increase in demand for these products, and that it would work to expand ranges it had simplified at the start of the outbreak.

Regarding its overseas operations, Bakkavor said it had adjusted its US offerings to accommodate lower demand, and that these measures had helped it to mitigate against the worst of the financial fallout. In China, the company said that the lifting of restrictions has allowed restaurants and stores to open, which will allow the Group to resume regular service.

Bakkavor weathers the storm

Speaking on the company’s prudence and flexibility, Chief Executive Agust Gudmundsson commented,

“I would once again like to express my thanks to all of my Bakkavor colleagues, who are working tirelessly to help keep supermarket shelves well stocked. I am hugely grateful for their support and extremely proud of their commitment and determination during these difficult times . We continue to make their health, safety and wellbeing our foremost priority, and have been working in close cooperation with the various regulatory bodies, our colleague representatives and the unions to maintain a safe working environment for all our stakeholders.”

“In the UK, consumer behaviours continue to adjust, and while it will take time for sales to return, I have been encouraged by the recent increase in volumes. Current events have also reinforced my confidence in the vital role we play in partnering with our customers to deliver the fresh, healthy and convenient food that consumers look for every day.”

“In the US and China, both businesses have managed incredibly well through the turmoil, and we continue to support our customers as they reopen their stores and restaurants.”

Investor insights

Following a careful but positive Coronavirus trading update, Bakkavor shares rallied 2.28% or 1.80p, to 80.60p per share 15:08 BST 12/06/20. The company’s p/e ratio is 6.20, their dividend yield stands at a generous 5.01%.

UK economy shrinks record 20.4% in April

Bronte Carvalho
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UK economy shrinks record 20.4% in April
The UK economy nosedived 20.4% in April 2020 in the largest monthly fall since records began, according to the Office for National Statistics (ONS). The report described the impact of the coronavirus pandemic as a “significant shock” to the economy, citing the dramatic fall in GDP and “record broad-based falls in output for production, services and construction”. Analysis collated from more than 15,000 businesses for the ONS’s Monthly Business Survey showcased the extensive and almost indiscriminate impact that lockdown and social distancing measures have had on the UK economy. With wide-ranging business and factory closures, and a sharp decline in consumer demand, the vast majority of British companies have had to resort to unprecedented action in order to stay afloat. The April contraction is three times greater than the decline seen during the entirety of the 2008 to 2009 recession. At its peak in between February 2008 and March 2009, GDP contracted by 6.9%. This year’s GDP contraction of 20.4% between March and April represents a fall equivalent to £30 billion in Gross Value Added. On the bright side, analysts have suggested that April is likely to be the worst month as lockdown measures have been incrementally eased from May onwards to allow economies to open back up. Alastair George, the leading investment strategist for Edison Group, commented on the significance of the findings, “This is a truly historic rate of GDP contraction but not a surprise. The risk has been that central banks have almost been too effective in supporting markets, masking the economic cost of lockdowns as well as dimming employment and training prospects for younger people less at risk from COVID-19. These will be important figures to frame the debate on the government’s lockdown policy for the remainder of the year”. UK Prime Minister Boris Johnson also added his insight, stating he was “not surprised” by the ONS figures: “We’ve always been in no doubt this was going to be a very serious public health crisis but also have big, big economic knock-on effects. The UK is heavily dependent on services, we’re a dynamic creative economy, we depend so much on human contact. We have been very badly hit by this.” The news comes in light of reports that the number of Brits claiming unemployment benefit soared to 2.1 million during April, a jump of more than 856,000 on the previous month as the full impact of the lockdown set in.

JP Morgan Brazil Investment Trust provides exposure to economic recovery in Latin America

UK Investor Magazine
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JP Morgan Brazil Investment Trust provides exposure to economic recovery in Latin America
JP Morgan Brazil Investment Trust stands out as a recovery play to the global coronavirus recession with exposure to Brazil’s domestic market, and companies operating on the global stage. Brazil has recorded the second highest number of coronavirus cases globally, as well as the third highest number of deaths. Sadly, as with many other countries, the true number is likely to be a lot higher. The government of Brazil was one of the administrations that failed to act quickly with lockdown measures as the Brazilian president pointed to the possible deaths associated with economic deteriorated as a result of coronavirus economic shutdown. “Are people dying? Oh, yeah. And I feel for them. I feel for them. But there will be more people dying, many many more, if the economy is destroyed by these lockdown measures imposed by governors,” said Brazil’s President Jair Bolsonaro. The Presidents decision to prioritise the economy over coronavirus was met with condemnation and the ratings agency Fitch still predicts the economy will fall 6% in 2020. However a 6% drop is still significantly better than the 11.5% drop the OECD predicts the UK will shrink in 2020. Brazil has roughly the same number of deaths recorded from coronavirus as the UK. The Brazilian economy has also been dogged by the disappointment over the failure of the government to deliver on promises of economic growth, despite massive spending and borrowing. The Brazilian government is proving incredibly unpopular with prior failings and approach to tackling COVID-19, and investors have made there feelings heard. Despite these hurdles, over time, the virus will be brought under control, and the government will either be replaced or push on with its pro economy agenda. It would actually be hard for sentiment around Brazil to get much worse. Coronavirus has caused disruption to Brazils financial assets, but the underlying demographics and natural resources of Brazil remain. With this in mind, any further weakness in JP Morgan Brazil Investment Trust could provide an attractive opportunity with a long term view that the situation in Brazil improves. The trust is highly cyclical in it’s composition with the top ten holdings dominated by natural resources, financials and industrials. Diversified miner Vale accounts for 10% of the trust and is poised to benefit from a global economic recovery and higher demand for commodities. In addition, the financials will facilitate the economic recovery as well as being beneficiaries of it. The trust trades at a significant 17% discount to NAV which represents negative sentiment to Brazil in the market and offers the opportunity for appreciation in the price as sentiment approves.

Morrisons: 35pc shareholders oppose executive pay policy

Safiya Bashir
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Morrisons: 35pc shareholders oppose executive pay policy
Over a third of investors have voted against Morrison’s pay policy at a shareholders meeting on Thursday. Almost 35% of the votes cast were against the current pension deals for the chief executive, David Potts, and the chief operating officer, Trevor Strain. Whilst the UK corporate governance code suggests that pension contributions should be in line across an entire company, shop floor staff at the supermarket receive 5% whilst Potts and Strain’s bank payments are worth 24% of their basic salaries.

“Although the policy vote passed, and we received considerable positive feedback during consultation, the board acknowledges a number of shareholders decided to vote against the policy,” said a spokesperson from Morrisons.

“Kevin Havelock (chair of the remuneration committee), on behalf of the board, will therefore continue to engage with shareholders and will report in due course on the outcome of those discussions.”

The AGM took place virtually to adhere to social distancing rules.

Earlier this week, Potts celebrated his supermarket staff and their efforts during the pandemic.

“All our colleagues have been putting their bodies on the line every day going to meet members of the public. One purpose has galvanised over 100,000 people – to serve people of Britain. We provide the most important thing outside of public health,” he told the Guardian.

Shares in the supermarket (LON: MRW) are trading at 184.45 (1222GMT).

Games Workshop bounces back with better than expected sales during COVID-19

UK Investor Magazine
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Games Workshop bounces back with better than expected sales during COVID-19
Games Workshop shares (LON:GAW) surged on Friday after the group unveiled robust activity during the coronavirus lockdown. The UK Investor Magazine previously highlighted Games Workshop as one of the hobbyist companies that would benefit from the coronavirus lockdown as model makers took advantage of spending more time indoors. On Friday, this was confirmed when the Games Workshop made a sharp revision to their pretax profit for the year to 31st May 2020. Games Workshop shares were over 10% higher to 7,855p on Friday and are 28% stronger year-to-date.

Profit Jumps

In April, Games Workshop released a trading statement guiding for pre-tax profit of £70 million. Today’s announcement said pretax profit would be no less than £85 million, signalling elevated sales during the coronavirus lockdown. Revenue for the year to 31st May 2020 will be circa £270 million, substantially ahead of 2019’s £256m. Games Workshop said they had opened 306 of their 532 stores across 20 countries whilst adhering to local social distancing. “Following our announcement on 28 April 2020 we have continued to re-open our operations globally, in line with local guidance, whilst ensuring our priority is the health, safety and wellbeing of our staff and customers,” Games Workshop said in a statement. “Our warehouses are now operational and our factory is working in a limited capacity, at all times complying with the social distancing and hygiene requirements in each country. Trade and online sales orders are also being processed as these staff currently work from home.” Games Workshop produces ‘Warhammer’ models that can be used in war games and are commonly referred to as ‘plastic crack’ due to the pull the products have on enthusiasts as they seek to expand their collection and compete in competitions. Many of the products on the Games Workshop were out of stock for a period at the start of the lockdown, and although there were initial concerns over Games Workshop being able keep production facilities open to fulfil demand, this seems to have been navigated with some success. Game Workshop also has a strong digital product that represented roughly 20% of sales in 2019, which is likely to have seen greater activity through lockdown.

Airlines launch legal action over new quarantine rules

Safiya Bashir
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Airlines launch legal action over new quarantine rules
Ryanair (LON: RYA), easyJet (LON: EZJ) and British Airways (LON: IAG) have launched legal action against the UK government’s quarantine laws. The UK’s three biggest airlines are seeking a judicial review of the new rules, which state that travellers arriving in the UK from Monday will have to self-isolate for 14 days. In a joint statement, the airlines said: “This would be the most practical and effective solution, and enables civil servants to focus on other, more significant issues arising from the pandemic while bringing the UK in line with much of Europe which is opening its borders mid-June.” The new rules are set to be reviewed on 29 June and according to the home secretary, Priti Patel, the rules are necessary to prevent a second wave of the Coronavirus. British Airways, easyJet and Ryanair have requested a hearing as soon as possible. They are urging the government to introduce previous rules where only passengers from high-risk countries were asked to isolate on arrival. Earlier this week Ryanair boss, Michael O’Leary, insisted the new government rules were “rubbish”. The budget airline had previously said in a statement: “These measures are disproportionate and unfair on British citizens as well as international visitors arriving in the UK. We urge the government to remove this ineffective visitor quarantine which will have a devastating effect on UK’s tourism industry and will destroy even more thousands of jobs in this unprecedented crisis.” As of 15 Monday, all passengers that will be arriving in the UK by plane, ferry or train will be asked to provide an address where they will self-isolate for the next 14 days. If travellers refuse to provide a form with details, they risk being fined up to £100. In addition, surprise visits could risk travellers being fined £1,000 if it is found they are failing to self-isolate. A list of those exempt from the new rules can be found here.    

IAG British Airways dips 8.8% – sells art collection to stay float

Bronte Carvalho
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5
IAG British Airways dips 8.8% – sells art collection to stay float
British Airways, owned by International Consolidated Airlines Group (LON:IAG), has resorted to selling some of its multi-million pound art collection in order to raise money as airlines continue to struggle against the economic impact of the coronavirus pandemic. Thursday afternoon saw the company’s share price plummet by 8.8%. More than 10 pieces from the collection, boasting works by prominent artists such as Damien Hirst and Peter Doig, are said to be involved in the sale. The art previously resided in a number of executive lounges, but it was suggested by a staff member that selling them off would help boost the company amid reports that as many as 12,000 employees are set to be laid off. At least one of the works is said to be worth an estimated £1 million. Just last week, British Airways CEO Alex Cruz warned of the company’s uncertain future, with £178 million per week draining away and virtually no travel as lockdown restrictions continue. The airline’s survival is not guaranteed, Cruz emphasised, and urged unions to concede with predicted 28% of staff job losses so that the company can protect as many jobs as possible in the future. Most of the lucrative collection was collated with the aid of London-based curators, Artwise, which bought more than 1,500 pieces for the airline between 1995 and 2012. The company commented on BA’s plans, “We are of course very sad to see some of the key treasures from the BA art collection being put up for auction – a collection which, in its day, was so admired and was the first of its kind within the airline industry. However, we do understand that these are unprecedented times”.

Airlines Struggle Between Saving Money and Saving Staff

British Airways is just one airline struggling to make ends meet as the travel industry continues to suffer. More than 12,000 jobs are at risk, as well as more than 1,000 pilot roles apparently on the line. Following suggestions this week that the company is planning to lay off its entire pilot workforce, on the condition they would later be rehired on different contracts, the Scottish Parliament proposed a bill to make the move illegal. The British Airline Pilots Association backed the decision, stating, “It is absolutely right that this practice of essentially legalised blackmail should be outlawed in the UK”.

Investor Insight

As of BST 16:35 11/06/2020, IAG’s share price has plummeted 8.8% or 25.40 GBX to 262.90. The company’s P/E ratio sits at 2.68 and its dividend yield stands at 10.43%.

JLEN offers attractive income despite Coronavirus crunch

Jamie Gordon
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JLEN offers attractive income despite Coronavirus crunch
Despite the rough end to the year caused by Coronavirus, renewables asset management company JLEN (LON:JLEN) reported on its ability to remain a dependable source of income for its investors, and on recent additions to its portfolio, in its full-year results published on Thursday. The company reported that power price forecasts had driven down its NAV per share from 104.7p on 31 March 2019, to 97.5p a share on the 31 March 2020. However, it managed to achieve its impressive dividend target of 6.66p per ordinary share for the year ended March 31 – up from 6.51p the previous year, and with a target of 6.76p per share for the year ended 31 March 2021. It added that it had a 54.6% share price total return for the period since its IPO, or 7.5% annualised. The JLEN portfolio looked similarly healthy as the year ended, with its overall valuation increasing from £523.6 million to £537.1 million for the full year.

This increase includes three new acquisitions and its first entries into the hydro, battery and food waste sectors, as well as a €25m commitment to FEIP, which JLEN described as a ‘ limited partnership investing in predominantly greenfield European energy infrastructure assets’.

The company noted that its overall portfolio performance was slightly above expectations, with its anaerobic digestion assets outperforming during the year and its wind portfolio generation above budget as a result of ‘particularly good’ wind resource in the last quarter. On the contrary, its solar assets were slightly below budget for the year, due to grid outages and repair works, and its food waste project was negatively impacted by Coronavirus.

Outside of these considerations, the company said its other projects were displaying resilience. Its portfolio is now comprised of 36% wind, 25% AD, 23% Solar, 15% waste and wastewater and 1% Hydro and battery by value.

Responding to the results, JLEN Chairman Richard Morse, commented,

“In an extraordinary year featuring falling power prices and the onset of the Covid-19 pandemic, JLEN has provided reliable income for investors while continuing to diversify its portfolio.”

JLEN moving past Coronavirus and onto future green opportunities

Noting that the renewables sector remains comparatively robust versus other sectors, the JLEN statement read:

“While the Covid-19 pandemic has introduced a significant level of uncertainty into the global economy, established environmental infrastructure assets such as those favoured by the Company have generally performed resiliently and continued to generate cash even as other asset classes and market sectors have struggled. Investors have noted this, and the listed renewables sector is expected to continue to see investor support.”

Remaining confident in the good sentiment for expansion of green initiatives and carbon neutral projects, it continued:

“In the UK, there were also positive signs that the government was becoming increasingly committed to tackling climate change. The UK became the first major economy to make a legally binding commitment to reaching “net zero” carbon emissions (compared to 1990 levels) during the period, and there have also been positive signals regarding the inclusion of onshore wind and solar in future government subsidy rounds.”

Investor insights

Following the update, the company’s share price rallied modestly by 0.43% or 0.50p to 115.50p per share 11/06/20 16:35 BST. Its dividend yield stands at a generous 5.77%

Trump claims Fed “wrong so often” in the face of dire 2020 forecast

Bronte Carvalho
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2
Trump claims Fed “wrong so often” in the face of dire 2020 forecast
On Thursday, American President Donald Trump characteristically took to Twitter to express his rejection of the Federal Reserve’s grim economic forecast, as the FTSE 100 sank 3% to 6,132 during afternoon trade amid concerns over the longer-term impact of the coronavirus pandemic. Claiming that the Federal Reserve is “wrong so often”, Trump’s tweet comes a day after the Fed concluded its June meeting with a disappointing projected 6.5% GDP decline for 2020 and zero interest rates for the next two years as the global economy staggers to recover from recession. Director of the White House National Economic Council, Larry Kudlow, also took issue with the tone of the Fed’s report, alleging that the pandemic has already “completely flattened out”.

Anxiety Mounts Across the Pond

However, fears continue to rise in the US that a second wave of coronavirus infections is imminent, following the relaxation of lockdown measures in a number of states. In response, Treasury Secretary Steven Mnuchin dismissed the possibility of closing businesses to keep virus cases under control, stating simply, “We can’t shut down the economy again. I think we’ve learned that if you shut down the economy, you’re going to create more damage.” Although the Federal Reserve initially resisted Trump’s calls to drastically slash rates, since March it has cut its short-term interest rates to nearly zero and has launched a number of initiatives – including a $2.3 trillion stimulus package – to prop up the economy. The Fed analysis published on Wednesday corroborates reports that the funds rate would stagnate near zero for some time, even as Trump maintains his stance that the economy will bounce back. Meanwhile, Chair of the Federal Reserve Jerome Powell remains cautious. He explains, “I think what you see is a very weak second quarter, historically weak, and an expansion that builds momentum over time”. According to the John Hopkins University tracker, coronavirus cases in the US have reached 2 million and a number of states, including Texas and Florida, have reported a rise in cases following relaxed lockdown measures.

Greatland Gold shares bounce 8.70% on ‘outstanding’ drill results

Jamie Gordon
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Greatland Gold shares bounce 8.70% on ‘outstanding’ drill results
Precious metals exploration and development company Greatland Gold plc (AIM:GGP) published what it described as ‘outstanding’ drill results from Newcrest Mining‘s (ASX:NCM) drilling campaign at Greatland’s Havieron deposit in the Paterson region of Western Australia.

On the agreement between the two companies, Greatland’s statement read:

“Greatland and Newcrest have a Farm-in Agreement at Havieron, whereby Newcrest has the right to earn up to a 70% interest in Havieron by spending up to US$65m. The commencement of a decline at Havieron is targeted for by end of calendar year 2020 or early 2021 and the potential to achieve commercial production within two to three years from commencement of decline is also being investigated.” The results published on Thursday included ‘exceptional’ finds from infill drilling, with a 109m intersection at 6.3g/t of gold and 0.71% copper from 668 metres. Additionally, the company reported step out drilling intersects mineralisation 220m Northwest of previous intersections, with 82.1 m at 2.4g/t of gold and 0.08% copper from 557.6m. The company said that these results evidence the Havieron project’s position as a ‘game-changer’ in the Paterson region. Going forwards, Greatland said that its drilling activity continues towards its objective of delivering a maiden resource in the second half of the calendar year 2020. It added that it was continuing its step out drilling programme to test depth and lateral extent of mineralisation, and that Newcrest was planning approximately 80,000 metres of drilling at Havieron over the next 12 months. It continued, saying that, “environmental and baseline studies [were] progressing to support fast tracking of decline commencement at Havieron by end of calendar year 2020 or early 2021″, and that it was investigating the potemtial to achieve commercial production within two to three years from the commencement of decline.

Greatland Gold celebrates its results

Gervaise Heddle, Chief Executive Officer of of the company, commented,

“We are delighted to report the eighth consecutive set of excellent results from Newcrest’s drilling campaign at Havieron, including some of the best results to date.”

“The crescent zone of high-grade mineralisation has been extended and its continuity once again improved by outstanding infill results. Meanwhile, the extension drilling programme has now commenced and early results are very promising, with step out drill hole (HAD066) intersecting significant mineralisation 220 metres north west of previous high-grade results, and mineralisation remaining open to the north west and at depth.”

“These latest results, some of which are truly spectacular, sharpen our collective focus on the near-term objective of a maiden resource at Havieron, and further reinforce the potential to accelerate the timetable for commercial production.”

Investor insights

Following the update, the Greatland Gold share price rallied 8.70% or 1.00p to 12.50p per share 11/06/20 16:35 GMT. Newcrest followed suit, rallying 5.70% or 1.62 AUD to 30.04 AUD per share – UBS upgraded its guidance to a ‘Buy’ stance at the beginning of June.
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