Economic cost of Covid-19 mounts as Chinese factory profits slump – business live

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Rolling coverage of the latest economic and financial news, as China’s manufacturing sector and UK car makers are hit by the coronavirus

11.23am GMT

Just in: The prime minister has contracted the coronavirus.

Related: UK coronavirus live: Boris Johnson tests positive for Covid-19

11.16am GMT

Royal Bank of Scotland is turning the conference centre at its Gogarburn headquarters in Edinburgh into a foodbank distribution centre, to help people in difficulties during the current crisis.
The high street lender is asking businesses to bring in any perishable food and hygiene products they can spare to the Gogarburn site, where RBS staff will be running an “drive-in” donation system to ensure donors and volunteers can keep their distance. The bank’s volunteers, which will also be kitted out with personal protective gear, will distribute the donations to charities including Trussell Trust food banks and Social Bite, a charity supporting vulnerable people in Scotland. RBS’ catering contractors – Baxter Storey and Benugo – have also pledged to donate food from the bank’s kitchens.

“This is a challenging time for everyone in Scotland and it is important that everyone looks out for one another. This is a time when we can work together to make a positive difference and we are calling on the public and companies who have the time or the resource and to get involved in our appeal.”

10.37am GMT

Aviation services giant John Menzies says it has cut more than half its staff, due to the coronavirus crisis.

Older readers (or indeed bloggers!) may associate the Menzies name with newspaper distribution. But these days, the firm is actually focused on airports — handling cargo on the ground, managing luggage at several UK airports, and even operating plane fuelling services.

In the period since 10 March 2020, we have seen our international and domestic airline customers ground passenger flights on an unprecedented scale.

As part of our cost reduction initiatives, we have reduced global headcount by over 17,500 in response to the dramatic fall in volume. Reductions are being supported in some countries by governmental schemes and we hope that in the fullness of time a high number of these employees can return to the business.

We are engaged with the UK Government as we attempt to secure some of the emergency funding announced by the Chancellor of the Exchequer and await the refinement of the eligibility criteria for the COVID Corporate Financing Facility (CCFF) which we currently do not currently qualify for.

9.59am GMT

Outsourcing group Capita has just withdrawn its financial guidance for the year, due to the “unpredictable level of disruption caused by COVID-19”.

While Capita’s essential workers in the public sector are busy, the rest of its business has been hit by self-isolation rules. That includes work training programmes, back office functions, contact centres for retail and leisure clients, consulting and its corporate travel agency.

9.49am GMT

The slump in housing activity has forced online estate agent Rightmove to cancel its 2019 dividend, and to suspend all financial guidance for 2020. More here

9.32am GMT

European stock markets are all in the red today, after their best three day rally ever.

The Stoxx 600 index has dropped around 2.4%, having surged by 15% between Tuesday morning and Thursday evening.

Rallies don’t last forever and clearly investors are happy to call time on this one as we head into another uncertain weekend.

The last three Monday’s have all been relatively heavy down days, producing an average decline of 5.16% in the FTSE 100. We may have had a good run this week but the weekend can feel like a long time at moments like this and the numbers were getting from the US, which now has more cases than China or Italy, are getting uglier by the day.

9.28am GMT

Domino’s Pizza has also suspended its dividend today, despite seeing a pick-up in demand from people ordering home deliveries.

In the last week, UK trading has accelerated, with the growth in delivery more than offsetting the lack of collection sales, it told the City.

The safety of our colleagues and customers is always our top priority, so we’ve strengthened our already high hygiene standards, rolled out contact free delivery and switched to delivery only to ensure we can confidently serve the public. We are also looking to recruit additional store colleagues and delivery drivers.

9.08am GMT

Getting back to the slump in Chinese factory profits….economist Shane Oliver of AMP Capital has spotted signs that China’s economy may now be recovering:

Huge decline in Chinese profits reflecting shutdowns
(Goldman Sachs data)

….but while #China profits collapsed into Jan/Feb…daily/weekly activity data continues to point to a recovery through March. Property sales and steel demand is back to around normal levels
(Goldman Sachs charts)

8.56am GMT

Here’s our news story on Mike Ashley’s apology for mishandling the Covid-19 crisis, and his efforts to make amends….

Related: Sports Direct’s Mike Ashley apologises for poor Covid-19 actions

8.48am GMT

Speaking of dividends… betting firm Flutter has suspended its 2020 payment to shareholders this morning.

The company, which owns Paddy Power and Betfair, blamed the cancellation of sports events around the globe.

8.42am GMT

Royal Mail has warned that it could be forced to reduce postal services, due to the impact of the coronavirus.

It told shareholders this morning:

In recent weeks, we have seen rising levels of sick absence as colleagues self-isolate or care for family members. W e cannot rule out reductions to services as COVID-19 develops.

8.29am GMT

Apology of the morning goes to Mike Ashley, for admitting that his Sports Direct chain (now called Frasers) made some serious blunders this week.

In a large helping of humble pie, Ashley has written an open letter, admitting that he should never have tried to keep Sports Direct shops open – or pestered ministers to be treated as an essential service.

In hindsight, our emails to the Government were ill-judged and poorly timed, when they clearly had much greater pressures than ours to deal with. On top of this, our communications to our employees and the public on this was poor.

Outside of Frasers Group, I have offered our support to the NHS and we are poised and ready for when that offer is accepted, with our entire fleet of lorries at their disposal – to help deliver medical equipment and supplies. This offer is not limited to the NHS but all key workforces across the Government. We will help wherever possible.

Finally, to reiterate, I am deeply apologetic about the misunderstandings of the last few days. We will learn from this and will try not to make the same mistakes in the future.

An open apology from our CEO Mike Ashley

8.21am GMT

UK retailer Next is also among the top fallers in London, down 7.9%, after it halted online shopping last night.

NEXT has listened very carefully to its colleagues working in Warehousing and Distribution Operations to fulfil Online orders. It is clear that many increasingly feel they should be at home in the current climate.

Related: Next stops online shopping amid UK coronavirus restrictions

Well, the shock news that Next has had to temporarily close down its Online business because of warehouse staffing problems is a big blow to the company and may cause a domino effect on other Online fashion operators, including ASOS and Boohoo

8.14am GMT

Shares in UK housebuilders are among the top fallers, with Berkeley Group down 8% and Barratt Development losing 8.5%.

Last night, the government effectively put the UK housing market into deep freeze, telling buyers to delay their home moves if possible, and instructing sellers not to allow new viewings.

Related: Housing market frozen by government during coronavirus lockdown

Related: Halifax withdraws majority of mortgages

8.11am GMT

The slump in Chinese factory profits may have reminded investors that the world economy isn’t in great shape.

For whatever reason, stocks have fallen sharply at the start of trading in Europe.

7.51am GMT

Britain’s car industry is also being hit hard by the coronavirus, with output likely to tumble this year.

My colleague Jasper Jolly explains:

British car production will slump to its lowest level since the financial crisis this year, the industry has warned, after the coronavirus pandemic forced the closure of every large factory in the UK.

Passenger car output will fall by 18% to only 1.1m in 2020, down from 1.3m last year, according to forecasts for the Society of Motor Manufacturers and Traders (SMMT) carried out by AutoAnalysis. It would be the lowest number since the depths of the financial crisis in 2009, when 999,460 cars were made in the UK.

Related: UK car production to hit lowest level since financial crisis

7.46am GMT

Good morning, and welcome to our rolling coverage of the world economy, the financial markets, the eurozone and business.

#China‘s industrial profits fell by a whopping 38.3% year-on-year in February, the biggest decline on record. This warrants some cautiousness as Europe and the US have yet to disclose the impact of the #coronavirus on #earnings.

The decline in profits points to lingering trouble for the manufacturing sector, which is wrestling with fallout from the health crisis that has severely hurt output. Most analysts now expect a contraction in gross domestic product in the first quarter.

Industrial production and sales fell sharply amid epidemic control efforts, while the costs of labor and depreciation continued to put pressure on companies, a statistics bureau official said in a statement published alongside the data.

China’s industrial firms post steepest fall in profits in a decade

Related: Will the coronavirus crisis spell triumph or disaster for Donald Trump?

European Opening Calls:#FTSE 5716 -1.71%#DAX 9930 -0.71%#CAC 4501 -0.93%#AEX 478 -1.11%#MIB 17347 -0.13%#IBEX 6999 -0.48%#OMX 1465 -0.42%#STOXX 2821 -0.94%#IGOpeningCall

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Source: china
Link : Economic cost of Covid-19 mounts as Chinese factory profits slump – business live



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