Corona Capital: Exxon’s new hot commodity, Clorox cleans up. Read the latest insights on the pandemic’s corporate and financial fallout:
Corona Capital is a daily column updated throughout the day by Breakingviews columnists around the world with short, sharp pandemic-related insights.Exxon Mobil has a new hot commodity: hand sanitizer. The $200 billion oil giant said it’s reconfiguring manufacturing facilities in Louisiana to produce highly sought after medical-grade alcohol-based liquid cleaner for donation. At one point it was selling for as much as $138 a bottle on eBay, according to The Atlantic.
That is the type of scarcity the oil company run by Darren Woods could only dream of. Last week, regional oil benchmark West Texas Intermediate went negative for the first time in history as Covid-19 punctured demand and stockpile storage filled up. Exxon has high hopes that demand for the commodity will return. With renewable energy and other supply shocks also part of the equation, Woods might consider keeping those assembly lines flexible. Clorox is cleaning up.
It’s an about-turn for the 70 billion euro insurer. Allianz had been fairly optimistic in the face of the coronavirus pandemic, standing by its dividend and share buyback scheme. Its shares trade at nearly 10 times forward earnings, compared with less than 7 times for France’s AXA. The dividend is still intact, but the sheen may come off when Baete gives a more detailed outlook for 2020 in less than two weeks. Shares fell 3% on Friday. Germany’s insurance giant may be succumbing to gravity. .
Such projections should be taken with an in-flight sachet of salt. Neither airline is offering guidance for this year, let alone the ones after that. The doom and gloom probably has a more immediate function. Spohr is trying to convince Berlin of the need for a 9 billion euro bailout. O’Leary, who likens state aid to “doping”, needs to justify massive job cuts. Royal Bank of Scotland is having a much better crisis than last time.
But Chief Executive Alison Rose’s 2020 outlook is disconcerting for UK economy-watchers. Bad-debt charges spiked to 0.9% of loans in the first quarter. They’ll be “meaningfully higher” over the full year than previous expectations of up to 0.4% of loans, but Rose can’t say by how much. The statement notes that the efficacy of government support programmes is “yet to be proven”. Gulp.
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