As infections soar yet again and Europe suffers a new wave of lock-downs, we gradually start to accept the seemingly inevitable. While it looked like a lot of bad luck to fall ill with the disease initially, we are now increasingly surrounded by it.
People who are part of my life fall ill, infect friends and family, in two cases already fatally. Statistics look grim. Most countries register more infections than during the original outbreak in spring. Hospital beds are filling up again and governments are struggling how to avoid their health systems being overwhelmed.
In different countries, different rules apply, often confusingly so. What is a safe distance: one metre, two, or more? Why is eating out at 10pm more dangerous than at 5pm? How many people of how many households can meet and where, if at all? What exactly qualifies as a ‘support bubble’? What is the difference between a snack bar, a bar and a ‘fully licensed’ restaurant? Why do theatres and museums in most European cities have to close, even when applying all known rules of social distancing, while businesses outside the culture sector may stay open?
Puzzled by the intricacies of widely differing national lock- down rules, apparently all based on scientific advice, we learn to take responsibility ourselves, to wear masks with equanimity, to call up doctors we know to secure test kits which the public hand does not provide in sufficient numbers, and, not waiting for official trackers, call up friends who perhaps met with friends who we learned to be corona-positive.
After eight months living with lockdowns, we know how to handle things. Those who can, continue working from home. Businesses which had to close down again look less on the inevitable financial fallout but more on the upside of government-imposed, leisure time. People who belittled the disease are disabused. Health services have improved their routines and are better stocked and prepared. As a result, despite soaring infection rates, fewer people die in medical care.
Our social life has fragmented beyond recognition and our homes became hermit’s cells again, enlivened by video games, social media, streaming and online shopping. You may have noticed that jokes about our desiccated lives, once so ubiquitous, have disappeared altogether, as we have grown used to our new normal. Presidential elections in the US, Islamist terror in Paris and Vienna, war in the Caucasus, corrupt politicians at home and abroad: somewhere out there. We stay at home, mend things DIY, wash, polish, bleach and clean as never before, vigorously excising the virus from surfaces and appliances until our skin cracks.
Our strange indoor lives, which have boosted delivery companies, online entertainment and internet services, has also lifted the most pedestrian of all companies, all those corporations which have for two centuries produced such mundane stuff as soaps, surface disinfectants and washing powder. We may spend less money on grooming and cosmetics these days, as only our beloved ones have to put up with our appearances, we may refrain from dressing up, but we clean as clean as we can.
Century-old household names are filling our cupboards like never before
Century-old household names like Dettol, Lysol, Ajax, Dove or Tide are filling our cupboards like never before, even in societies much less concerned with domestic tidiness than the Maltese, like the Brits, who traditionally do not care that much about hygiene. At least their own hygiene: lesser people all over the world were benevolently blessed with detergents and bleaches made in Britain since the early 19th century. The soap boiler William Lever comes to mind, forefather of Unilever.
Since its beginnings 206 years ago, Reckitt Benckiser, producer of Durex condoms, Strepsils lozenges, Dettol, Lysol and Air Wick, has disinfected our lives inside and out. Worth 50 billion pounds at the time of writing, its shares have gained more than 20 per cent since 2019. Its share price of 6,920.00 pence is down from the July peak of 8,020.00 though, but certainly much higher than in March (5,130.00). The negative profit margin of 28.67 per cent was caused by the five-billion-pound write-down of an ill-fated baby food acquisition - disinfectants do not protect against stupidity.
Colgate-Palmolive from the US, manufacturer of the eponymous toothpastes and soaps, and producer of Ajax bleach, is, with a market value of USD 71 billion, currently at peak valuations. Its shares, trading for USD 84 apiece, gained 30 per cent within the last year, boosted by our COVID-induced obsession with cleanliness. The company has a healthy profit margin of almost 17 per cent and is worth 27 times earnings, reflecting its 2.12 per cent dividend yield.
Unilever, producer of Dove soap, Coral washing powder and Domestos bleach is not a pure play on a germ-free lockdown. The Anglo-Dutch €120 billion behemoth is the purveyor of Cornetto and Ben & Jerry’s ice creams too, of Knorr soups and Lipton tea – more similar to food conglomerates like Nestle. It is therefore, despite a healthy business with profit margins of 11 per cent and a dividend of 3.29 per cent, modestly priced; at 22 times earnings it has not gained much from the lockdown, boosted perhaps by increasing home deliveries, yet held back by perilously aging food brands. Its shares have gained a mere 3.5 per cent over the last year, unspectacular, yet better than most hedge funds have fared, or Big Oil.
Henkel AG from Germany, producer of Persil washing powder, Fewa wool wash and Pril dishwasher liquid has similar, sound financial parameters as Unilever, but is, with a market value of a mere €36 billion, below the radar of most retail investors. It shares have slightly lost year to date, and are following a long-term decline.
The elephant in our soap closet is Procter & Gamble Co of the US, worth USD 350 billion, more than all the others combined. The supplier of Pampers, Always, Ariel, Tide and Master Proper, P&G it is vastly more profitable than its competitors, with a profit margin in excess of 22 per cent. It pays a dividend of 2.24 per cent and its share price of USD 141.22 is close to its all time high, having gained 22 per cent since 2019. The company produces shampoos, toothpaste and shavers too – the Gillette brand.
As a retail investor and bored stay-at-home professional, I wonder if our new-found obsession with cleanliness will fade away eventually, in the same way as our lazily-grown beards will hopefully disappear. I’d hope that in a better future, free of pandemics and killer-germs, investors will again favour a world of full of colour and nonchalant messiness over our germ-free subsistence, bleached and sterile.
The purpose of this column is to broaden readers’ general financial knowledge and it should not be interpreted as presenting investment advice, or advice on the buying and selling of financial products.
andreas.weitzer@timesofmalta.com
Andreas Weitzer, independent journalist based in Malta