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Small businesses set to benefit from government stimulus package

Coronavirus

Small business owners and bar operators are likely to be one of the groups targeted for help by the Federal Government, when Prime Minister Scott Morrison unveils the financial package to help the economy through the impact of the coronavirus, according to The Australian.

Investors wiped $150bn off Australian shares yesterday, but the government believes it is small business that will help the economy to recover and recover strongly on the other side.

Morrison is set to call on big business to do its bit as well by paying suppliers promptly, which is also some good news in the face of so much panic.

“Whatever you thought 2020 was going to be about, think again,” the Prime Minister said.

“We now have one goal together this year – to protect the health, the wellbeing, and livelihoods of Australians through this global crisis, and to ensure that when the recovery comes – and it will – we are well-positioned to bounce back strongly on the other side.”

“We need your perseverance, your planning, your enterprise. We need your common sense. We need your calm. We need your commitment. But we need your patriotism as well.

“We need you to support your workers by keeping them employed. Hold on to your people, because you will need them on the bounce back on the other side.”

“Pay your suppliers not just in time, but ahead of time, especially now.

“You want to know what you can do to keep Australians in jobs? Keep businesses in business? And support Australia through this crisis? If you’re a large business, go back to your office today, pay your supplier invoices, and commit to pay them even faster for the next six months.

“That is what sticking together looks like.

“How you support your customers, your suppliers, your employees during the next six months and potentially beyond will say more about your company, your corporate values, and the integrity of your brand than anything else you’ve likely done as an organisation.”

COVID-19 has caused uncertainty across the industry with Pernod Ricard expecting that its long term growth goals will remain intact, however Chairman and CEO Alexandre Ricard said the short term impacts are hard to quantify.

“The environment remains particularly uncertain from a geopolitical standpoint, with the additional pressure related to the COVID-19 outbreak. While we cannot currently predict the duration and extent of the impact, we remain confident in our strategy,” Ricard said in shareholder communications about half year results.

“Assuming a severe impact of COVID-19, mainly on Q3 FY20, we are at this stage providing a guidance of organic growth in Profit from Recurring Operations for full-year FY20 of +2 per cent to +4 per cent and will continue to closely monitor our environment. We will stay the strategic course and maintain priority investments in order to continue maximising long-term value creation.”

Diageo meanwhile, said that COVID-19 will impact its performance, and in a recent statement said this will be due to anti-spread measures in China and the Asia Pacific causing a drop in consumer demand, and reduction in international travel retail.

However, Diageo has said that the geopolitical uncertainty means it will continue to monitor the situation for exact results. Per their last update, the negative impact on 2020 to the group’s organic net sales and organic operating profit, was predicted to be in a range of £225m to £325m and £140m to £200m, respectively.

In a shareholder call, Kathryn Mikells, Diageo CFO, said: “If you look at what we’re seeing in the first half, I would say we’re seeing more volatility across the world and that’s impacting our results, and we’re not expecting that situation to necessarily improve in the second half.”

The Chief Executive of Suntory Takeshi Niinami said the outbreak will hit alcohol consumption, but expects it may also see some production move away from China.

“When I look around hotels, a lot of space is available. At restaurants, very few tables are occupied, and at bars, there’s almost nobody. This will impact our bottom line sooner or later.

“The trend to shift production lines will be enhanced globally, China will still be the centre, but production will go back to mother countries to some extent.” 

Treasury Wine Estates (TWE) also predict impacts, however said: “The full operating and financial impacts of the outbreak are yet to be fully determined.”

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