Huawei removal
By 2027
The UK government has ordered telecoms companies to remove Chinese firm Huawei’s equipment from their 5G networks by 2027. They are also banned from buying Huawei 5G equipment from the end of the year. This move follows on from new advice given by the National Cyber Security Centre (NCSC) on the effects of US sanctions against Huawei. The NCSC found that Huawei would no longer have access to the tech on which it currently relies. Westminster did not “have sufficient confidence” in any alternatives.
See Taking Stock
Apple wins tax appeal
€13bn figure
Apple (US:AAPL) will no longer be forced to pay €13bn (£11.8bn) in taxes to Ireland, after winning an appeal at the General Court of the European Union (EU). The European Commission (EC) had ruled in 2016 that Ireland granted illegal state aid to Apple through selective tax breaks. Following the latest court judgment, EC executive vice-president Margrethe Vestager said the organisation would now “carefully study the judgment and reflect on possible next steps”. Her statement added that “the Commission stands fully behind the objective that all companies should pay their fair share of tax”.
Vaccines fast tracked
FDA permission
Healthcare giants Pfizer (US:PFE) and BioNTech (US:BNTX) have received “fast track” designation from the US Food and Drug Administration for two of their Covid-19 vaccine candidates. The ‘Project Lightspeed’ vaccine development programme shared by the two groups is based on BioNTech’s proprietary mRNA-based technology platforms, and supported by Pfizer’s worldwide vaccine development capabilities. If the vaccine proves successful – and is authorised – the companies aim to manufacture 100m doses by the end of 2020, and more than 1.2bn doses by the end of 2021.
Recruiter updates
Job market turmoil
The turmoil in the global jobs market was reflected in the latest updates from the UK-listed recruiters. Robert Walters (RWA) warned back in April that its second quarter would be challenging as more countries went into lockdown. Sure enough, the three months to 30 June saw gross profit plunge by just over a third year on year at constant currencies, to £71m – an acceleration from the 11 per cent slump seen in the first quarter. Second-quarter gross profit for PageGroup (PAGE) dropped by 48 per cent to £118m, versus a 12 per cent first-quarter decline.
Focusrite upbeat
Tuneful statement
Focusrite (TUNE) looks set to beat market expectations for revenues and profits in FY2020. Demand for Focusrite Audio Engineering and ADAM Audio Products was resilient during lockdown – supported by their availability on e-commerce platforms. Management noted signs of growing consumer demand, with a rise in registrations of products that are primarily focused on home recording. Reseller demand also improved – albeit levels are expected to return to normal as movement restrictions lift. Cancelled live music events hit demand for Focusrite’s Martin Audio products, but there are signs of recovery within the installed sound segment.
BP's billion-dollar bet
Reliance investment
BP (BP.) has made a $1bn bet that petrol stations will stay relevant for a long time to come, announcing the start of a new joint venture with Indian company Reliance in which BP has taken a 49 per cent stake. The deal has been in the making since last year, while BP has had an upstream partnership with Reliance since 2011. This is the supermajor’s second big portfolio change in recent weeks, with BP opting to dispose of its petrochemicals business to Ineos for $5bn at the end of June.
Virgin Atlantic: rescue deal
£1.2bn deal
Virgin Atlantic has agreed a rescue package worth £1.2bn, including a £200m investment from Virgin Group and £170m of secured financing from Davidson Kempner Capital Management, which is now a new partner at the airline. Creditors will support Virgin Atlantic with more than £450m of deferrals. The coronavirus pandemic has dealt the travel and aviation industries a devastating blow. Chief executive Shai Weiss noted that “the last six months have been the toughest we have faced in our 36-year history”.
The UK inflation rate was 0.6 per cent in June – reflecting a slight uptick from 0.5 per cent in May and the first improvement since January 2020, according to the Office for National Statistics (ONS).
As government restrictions were gradually lifted, the biggest contribution to inflation came from rising prices for games and clothing – albeit this was partially tempered by falling food prices.
The ONS has also revealed that gross domestic product (GDP) fell by 19.1 per cent in the three months to May, with estimated growth of just 1.8 per cent in the final month of that period.
