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ABF - Associated British Foods News Story

1715p -36.5  -2.1%

Last Trade - 4:38pm

Consumer Defensives
Large Cap
Market Cap £13.87bn
Enterprise Value £16.71bn
Revenue £15.94bn
Position in Universe 73rd / 1806

BREAKINGVIEWS-Corona Capital: Office return, Primark, FirstGroup

Mon 7th September, 2020 11:10am
(The authors are Reuters Breakingviews columnists.  The
opinions expressed are their own.)
    By Breakingviews columnists
    MUMBAI/LONDON, Sept 7 (Reuters Breakingviews) - Corona
Capital is a daily column updated throughout the day by
Breakingviews columnists around the world with short, sharp
pandemic-related insights.
    - Office return
    - UK shoppers
    - School bus sale
    FOOTING THE BILL. The great migration of workers back to
their offices will be expensive. Companies will spend on
widening the gaps between desks and additional sanitation
services. To avoid contagion, some are even subsidising private
transport; Blackstone  BX.N  will pay for workers to commute
 by taxi, according to the Financial Times. Bloomberg, a
competitor of Breakingviews’ parent Reuters News, will allow
20,000 employees to claim up to $75 a day for travel costs, per
The Times
    Paying employees to avoid crowded buses on their way back to
work makes for sound prophylaxis, and reuniting teams should
help with morale. For commercial real estate investors like
Blackstone, the portfolio looks better if its own offices are
not standing empty. But many companies can’t afford such sops
and, if they force staff back to their workstations, they may
reimport infections via public transit. As always, more wealth
makes for better health. (By Una Galani)
    PRIMARK BOUNCE. A deadly virus is no match for the might of
the British consumer. At least that’s what Primark owner
Associated British Foods’  ABF.L  latest trading update suggests
 In the past four weeks, its retail unit set a record by
expanding its share of the UK market. ABF now expects Primark to
“at least” hit the upper end of its 300-350 million pound
adjusted operating profit guidance target for the full year.
    The results are surprising. Unlike peers such as H&M
 HMb.ST , Primark has no online business so was unable to reach
customers during lockdown. It is therefore dependent on punters
braving potentially crowded shopping malls. But pent-up demand
for cheap dresses and shoes drove a loyal army of young
customers to its stores, and is expected to deliver 1.3 billion
pounds of net cash this year. ABF repaid its 1.1 billion pound
revolving credit facility in August. Fast fashion looks set to
live another day. (By Aimee Donnellan)
    BETTER LATE THAN NEVER. FirstGroup  FGP.L , the 550 million
pound London-listed bus-to-train operator, may finally be
heading in the right direction. Shares in the company run by
Matthew Gregory rose 13% on Monday after the Telegraph
 reported that Brookfield Asset Management  BAMa.TO , Apollo
Global Management  APO.N  and KKR  KKR.N  are among the bidders
circling its U.S. units FirstTransit and FirstStudent.
    Yet Gregory would deserve only limited plaudits if he
manages to sell the operations, which include the iconic yellow
school bus business. Activist investor Coast Capital Management
was pushing for a sale before the pandemic, and reckoned it
could net more than 3 billion pounds
 – close to FirstGroup’s enterprise value. That now looks
ambitious, since the virus has raised
 bus-cleaning costs and caused many students to stay at home.
Meanwhile, Coast is planning to vote against the board’s
re-election at a shareholder meeting next week. FirstGroup can
expect a bumpy ride ahead. (By Karen Kwok)    
    On Twitter

 (Editing by Liam Proud and Karen Kwok)
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