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  • Writer's pictureMark Watson-Mitchell

Covid-19 has reshaped revenue and profit expectations

It is very evident now that as companies battled their way through the first few months of lockdown, it gave the smarter managements the ability to make big cost savings.

With so many companies realising that their employees could 'work at home' operating costs have been eased back, while productivity has not been impaired.

Of course that was for companies that did not need 'footfall' to generate their business. Alas hundreds, nay thousands of retail operations have been annihilated and may never see the light of day again.

After the mid-summer return from 'lockdown' it was pleasing to see scores of corporate statements declaring that Q3 was looking more positive and that order books were building up again.

Over the last seven months or so quoted companies have been cautious about giving brokers and their analysts any guidance as to current year revenue and profit expectations.

Where previously the UK equity markets were trading on a short six months to one year view, that is now changing to one that allows companies to discount this year's returns and instead look forward to trading for 2021 and 2022.

It is upon those estimates that investors will be encouraged into or out of equities.

The UK has a corporate spirit to endure such hassles as the virus and take a view upon future growth.

Obviously the US Election and then Brexit are both important obstacles to smoothness, but that is just what markets are all about.


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