Stuart Cox, Fund Manager at Jupiter Global Managed, examines a number of companies which have tried to help during the pandemic.
Great companies “doing the right thing”
Some companies that the Jupiter Global Managed Fund invests in (income & accumulation) are going out of their way to improve outcomes that are arising from the Covid‐19 pandemic. In some cases, the companies will bear extra costs in the pursuit of helping to improve aspects of the virus problem for employees, customers and members of society.
Whilst such altruistic actions are commendable and could raise costs in the short‐term, we can assume that many company CEOs will also recognise the longer‐term commercial opportunity this offers. Such action also shows that within these very successful corporate models is the ability to adapt quickly and decisively to a challenge or opportunity.
Procter & Gamble (P&G) is a case in point. The company was able to draw on its experience of the virus in China early in the year and be prepared to manage risks and swiftly commercialise opportunities arising around the world. “We cannot predict how and when this crisis will end, but we’re committed to be part of the solution,” David Taylor, P&G’s chair/CEO is quoted in a marketing publication last March.
Many P&G products are key to helping prevent the spread of Covid‐19 around the world, particularly those that are used daily for cleaning and sanitizing homes, businesses and places like healthcare and assisted‐living facilities. To that end, in January 2020, the Cincinnati, Ohio‐based consumer packaged goods manufacturer began to mobilize its resources and personnel to produce and distribute WHO‐approved hand sanitizer from five plants around the globe. The first bottle was produced within 24 hours.
Observed Taylor, “This seems simple, but scaled production requires expertise and rigorous safety protocols throughout the process, including establishing a product supply chain for raw materials, leading product development, inventing process engineering, securing clearances from governmental bodies, creating safe packaging, and delivering the product reliably.” Millions of P&G products are being donated from 30 brands in more than 20 countries – with more to follow, the company reports. “These donations ensure that families who do not have basic access to the everyday essentials many of us take for granted can have the cleaning, health and hygiene benefits P&G brands can provide,” Taylor explained.
L’Oreal is a recent addition to the portfolio. L’Oreal is a world leader within the prestige beauty product market but a recent engagement with its CEO, Jean‐Paul Agon, at a conference convinced us that this was the right type of holding for the portfolio. He presented a good balance of combining “doing the right thing” by protecting employees, supporting caregivers and supporting corporate partners. The company also showed agility in reacting to the fast‐expanding opportunity in e-commerce and online sales, achieving as much growth in its e‐commerce in 10 weeks than it did in the previous 10 years.
In addition, I highlight a few examples below of companies held in the portfolio that I believe are excelling in doing the right thing:
- Abbott Labs is currently the only large pharmaceutical company with Emergency Authorisation Approval for its Point of Care Testing kit, ramping production to 1m units a month.
- PepsiCo announced plans to hire 6,000 new full‐time workers and provide them with enhanced employee benefits.
- Cigna (a health insurance provider) is waiving cost‐sharing for Covid‐19 treatments and use of its hospitals and staff.
- Roche is working with the US Food and Drug Administration on a Phase III trial to evaluate its “Actemra” drug in hospitalised patients with severe Covid‐19 pneumonia.
- Comcast has committed $500m to support its workers during the virus crises, and the company’s top executives will donate their salaries to charities supporting the Covid‐19 relief efforts.
- Disney’s senior management are reportedly donating 50% of their salaries to charities.
As investors, we need to reconcile the desire to have a positive impact on the world with the goal of making money through our investments. Yet the above examples show it doesn’t have to be an either/or proposition, and I believe they illustrate the interconnected nature of being great companies, great corporate citizens and hopefully great investments.
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