Persimmon: Covid-19 variant could slow housebuilding
Julia Kollewe
Photograph: Bloomberg/Bloomberg via Getty Images
The boss of housebuilder Persimmon, Dean Finch, has warned that the new, more contagious Covid-19 strain is “particularly bad” and that “it could well affect output in the spring of this year”.
At the moment, the number of workers who are off sick or self-isolating at Persimmon is only up slightly, but Mike Killoran, the finance director, said: “If we see a substantial increase in absenteeism, then it becomes more difficult to marshal resources” needed to be able to build houses.
Persimmon insisted that its building sites were safe, with strict physical distancing rules in place. It has issued a rule that only one person can work on each floor at any one time, and 500 “contravention officers” are making sure that workers stick to the rules. Persimmon tends to build two-to to three-bedroom houses.
The UK housing ministry said yesterday that while the housing market remained open for now, “it may become necessary to pause all home moves locally or nationally for a short period of time to manage the spread of coronavirus”.
Housebuilder shares fell yesterday and are down again today, with Persimmon dropping as much as 5%.
The property market ground to a halt during the first Covid-19 lockdown last spring when house moves were banned and building sites shut for several weeks, but reopened in June, and Persimmon’s weekly sales per site in the second half were 39% than a year earlier. Sales have been boosted by a stamp duty cut (but this expires at the end of March), as well as people moving to bigger homes in greener surroundings.
Finch, a former National Express chief executive who took the helm in June, said:
“We are clearly seeing customers look at how they want to live, where they want to live and whether they want to live in bigger houses as a result of the pandemic, and Persimmon is a beneficiary of that.”
Persimmon said forward sales were up 25% despite some delays to reservations as first-time buyers awaited the opening of the new help to buy scheme on 16 December. The company completed 13,575 homes in 2020, down from 15,855 in 2019, and revenues also fell, to £3.33bn from £3.65bn, although the average selling price was up 7% to £230,500.
It said in a statement:
“While the Group has achieved pre-Covid build rates since the end of June 2020, including during all subsequent lockdowns imposed in England, Scotland and Wales, we recognise the elevated risk to the Group’s planned build programmes presented by the higher transmission rates of the new variant of the Covid-19 virus.”
The Living Wage Foundation, which sets the voluntary measure based on everyday living costs in the UK, welcomed the move by Morrisons, which also has a London weighting.
But Laura Gardiner, Director of the Living Wage Foundation, would also like to see the supermarket go further, adding:
“We’d love to see Morrisons accredit with the Living Wage Foundation to ensure that all staff earn a wage that covers the true cost of living, including outsourced cleaners, security guards and trolley collectors.”
Highlighting the low pay faced by many shop workers, the Foundation notes that 45% of all supermarket workers earn below the real Living Wage and are struggling to keep their heads above water, according to new figures from Citizens UK.
The real living wage is £10.85 an hour in London and £9.50 an hour across the rest of Britain.
“Every worker should be paid a fair wage they can live on. It’s just wrong that so many of our key workers, including in sectors like supermarkets and care, are being asked to survive on low pay.
Ricardo Evangelista, senior analyst at ActivTrades says the UK’s Covid-19 vaccination programme will help the economy recover this year.
An ambitious, and so far reasonably well deployed, vaccination plan is placing the UK in a privileged position in relation to the EU and the United States in bringing the coronavirus under control and in pole position for the expected post-pandemic economic recovery.
In addition to vaccine hopes, the pound is also being supported by the words of Andrew Bailey, as the Bank of England governor talked down the case for further interest rate cuts during a speech made on Tuesday, also highlighting the dangers of adopting negative rates.
Fawad Razaqzada, market analyst at Think Markets, predicts the pound could hit $1.40 as the Covid-19 pandemic eases.
With the pound starting to look strong at the start of this year, I reckon it could be among the best-performing major currencies in the months ahead now that a no-deal Brexit has been avoided.
With the UK also being among the first countries to roll out the Covid vaccines, this could see the economy rebound sharply once lockdowns end, providing sterling an additional boost.
The pound/US dollar exchange rate Photograph: Refinitiv
Sterling has also hit a seven-week high against the euro at €1.1232, meaning one euro is worth 89p.
Europe’s winter lockdown has created a surge in takeaway orders, as people were again barred from visiting the pubs and restaurants.
Takeaway group Just Eat Takeaway.com reported strong sales over the last quarter, notable in the UK where delivery orders were nearly five times higher than in 2019.
My colleague Joanna Partridge explains:
Locked-down consumers across Europe ordered 57% more takeaways from the continent’s biggest delivery group in the final three months of 2020 than a year earlier.
The huge leap in trade reported by Just Eat Takeaway.com was a further acceleration in growth from the 46% jump in the third quarter, as surging coronavirus cases resulted in countries across Europe reintroducing strict restrictions, keeping people at home.
In the UK, delivery orders surged by almost 400% in the fourth quarter of 2020 compared with the same period of 2019, as many consumers were once again asked by the government to stay at home.
Shares in the group have dropped by 4.5% this morning, though, as Just Eat is pledging to “invest heavily and prioritise market share over adjusted EBITDA” (ie, profits).
"Asos faces £15m in Brexit tariff costs following booming sales in pandemic"
That's because the tariff-free aspect of the deal doesn't apply to goods imported then exported again - and, like many large firms, ASOS centralises some of its distribution... https://t.co/0q7G1toyax
Photograph: Kay Roxby/Alamy Stock Photo/Alamy Stock Photo
Online fashion chain ASOS has raised its profit guidance after posting strong sales during the pandemic.
UK sales surged by 36% over the last four months of 2020, as ASOS benefitted from the lockdown which forced high street rivals to shut non-essential retail stores.
ASOS says its “exceptional UK growth reflected strength of market position as well as restrictions on non-essential retail stores through the peak period”.
Total retail sales worldwide grew 23% including 18% in the EU and 13% in the US.
ASOS now expects profits to hit the top end of current market expectations (which currently range from £115m to £170m)
But CEO Nick Beighton also flags up that the pandemic is still creating economic uncertainty:
Looking forward, given the uncertainty associated with the virus and the impact on customers’ lives, our cautious outlook for the second half of the year remains unchanged.
However, the strength of our performance gives us confidence in our continued progress towards capturing the global opportunity ahead.”
Pink prosecco helps Lidl post record Christmas sales
A flurry of UK companies are reporting Christmas trading figures this morning.
Discount supermarket Lidl is toasting a “record” festive period. Total sales surged 17.9% in the four weeks to December 27, with the average basket up almost 25%.
Popular items included pink prosecco - with one million bottles sold, along with traditional favourites such as panettone and mince pies.
Bubbly: Lidl says more than six million glasses of Pink Prosecco were enjoyed by their customers over the festive period. Cheers! pic.twitter.com/HZsg23S5PO
Lidl says Christmas sales up 17.9% based on same 4 week period year before. Basket size up 24.8%. Pink Prosecco did well with one million bottles sold. Premium range sales up 22%, too.
Lidl’s deluxe range also proved popular, with customers treating themselves to higher-end food and drink (goodness knows they deserve it, after 2020).
Christian Hartnagel, chief executive of Lidl GB, said:
“Despite this Christmas being a difficult time for many across the country, we are pleased to have been able to help our customers enjoy themselves by offering high quality food at the lowest prices on the market.”
Lidl is also continuing its store expansion plans, and aiming for 1,000 UK stores by 2023.
Traffic on the Nanpu Bridge in Shanghai. Photograph: Johannes Eisele/AFP/Getty Images
China’s car sector has continued to recover from the shock of the Covid-19 pandemic.
Auto sales jumped by 6.4% in December, compared to a year earlier, the China Association of Automobile Manufacturers (CAAM) reported, with 2.83 million sold during the month.
That’s the 9th month of gains in a row, as sales picked up from the lockdowns earlier last year.
CAAM also reported that sales for 2020 as a whole were 1.9% lower than in 2019, with 25.31m new vehicles sold.
China's #auto sales in Dec 2020 hit 2.83 million units, up 6.4% y-o-y, but the country's annual auto sales last year were down 1.9% y-o-y to 25.31 million units: China Association of Automobile Manufacturers pic.twitter.com/h09Wi6iSPC
The data showed passenger vehicle sales fell 6% for the full year of 2020.
The sales of commercial vehicles, which constitute around a quarter of the overall market, surged 19% thanks to government investment in infrastructure and as buyers upgraded to comply with tougher emissions rules.
Sales of new energy vehicles (NEVs), including battery-powered electric vehicles, plug-in petrol-electric hybrids and hydrogen fuel-cell vehicles, increased 11% in 2020 to 1.37 million units.
#China SUV annual sales surpass sedan sales for the 1st time. PV started to grow in May, in Sep passed CVs to become major contributor to auto 2020 sales. Trucks major contributor to CV sales.with heavy and light trucks as leading segments. The growth was policy driven. (CAAM) pic.twitter.com/mfMHArkhaR
Good morning, and welcome to our rolling coverage of the world economy, the financial markets, the eurozone and business.
Oil is continuing its new year rally, with prices hitting their highest level since last February as the reflation trade gathers pace.
Brent crude, the benchmark, has jumped by another 1% overnight, back over the $57 per barrel mark, amid expectations for a pick-up in demand this year as (hopefully) the global economy emerges from the pandemic.
This latest surge comes after the American Petroleum Institute reported that US stockpiles dropped more sharply than expected last week, down 5.8 million barrels.
“Crude oil prices also continued to rally ... on economic optimism in China after President’s Xi comments and an inventory report from API showed that crude oil inventories fell more than expected.”
Today’s rally also follows reports that Saudi Arabia has cut supplies to some refiners, as it delivers on its pledge to rein in production.
Bloomberg has the details:
Saudi Arabia slashed crude oil supplies to at least nine refiners in Asia and Europe after the kingdom volunteered to cut its production by 1 million barrels a day for February and March.
Aramco will supply less crude as part of long-term contracts next month, giving some Asian processors as much as 20%-30% less than they had sought, according to company officials who received the notices but asked not to be identified as the information is private. A European refiner that typically buys small volumes from Saudi Arabia will not get any cargoes for February.
Brent crude oil has surged above $57 a barrel today (up ~10% year-to-date), while WTI is nearing $54 a barrel | #OOTT
Corn prices surged yesterday, as traders continue to anticipate a massive new US stimulus programme once the Democrats have taken control of the White House.
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