High impact EURO 2020: Is it coming home?

2 min read 5 Jul 21

Summary: With kick-off for the Euro semi-finals underway, Portfolio manager, Randeep Somel, analyses the nation that has come out on top so far this year – from economic data, vaccine roll-outs and the leading ‘sustainable impact players’, to Randeep’s two-cents on the tournament so far and who will be crowned European football champions. Here’s how the final stage of the European Championships could unfold…

The team sheets
 

Denmark

Denmark’s sustainability impact player: Ørsted 

Ørsted is a leader in offshore wind power, having built more offshore wind farms than any company worldwide. By replacing fossil fuels with electricity harnessed from the wind, the Danish company aims to be carbon neutral by 2025.

Ørsted has a very strong land bank which forms the basis of its growth platform going forward.  It’s installed capacity is set to double in the next five years.

GDP Growth:  2020: -2.7%; 2021e: +2.9%; 2022e: +3.5%

Unemployment rate 2021: 5.5%

Debt/GDP: 42.2%

Covid-19 vaccination doses administered per 100 of the population: 85.36

GHG emissions per capita: 8.2t

Sustainability impact player: Orsted

CO2 saved/avoided per year by Orsted:
11.2mt (equal to taking 2.4m petrol cars of the road per year).

Goals Scored: 11

Goals Conceded: 5

Possession: 54.2%

Clean Sheets: 1

 

Italy

Italy’s sustainability impact player:  Enel

Enel is an Italian listed utility with global assets and scale. It has been shifting away from fossil fuel power generation towards renewable assets.  It’s power generation portfolio is now 54% renewable and continues to increase as its grow renewables and phases out legacy assets. 

Enel is also investing in charging points for electric vehicles, fibre deployment, sustainable street lighting and energy storage,

GDP Growth:  2020: -8.9%; 2021e: +4.5%; 2022e: +4.4%

Unemployment rate 2021: 10.2%

Debt/GDP: 158%

Covid-19 vaccination doses administered per 100 of the population: 86.19

GHG emissions per capita: 7.3t

Sustainability impact player: Enel

CO2 saved/avoided per year by Enel:
74.8mt per year (three times the emissions of London per year).

*Enel also has significant negative emissions from fossil fuel power generation.

Goals Scored: 11

Goals Conceded: 2

Possession: 55.8%

Clean Sheets: 3

 

Spain

Spain’s sustainability impact player, Acciona Energias

Acciona Energias recently listed (late entry!) in Spain as a 100% renewable energy utility.  It has exposure to both solar and wind power generation.  With assets in Southern Europe and the Americas.

Installed capacity of 11GW in 2020, rising rapidly to 10GW by 2025 and 30GW by 2030.  Acciona is also investing in green hydrogen for hard to electrify activities in order to help reach net zero emission targets.

GDP Growth:  2020: - 10.8%; 2021e: +5.9% 2022e: +6.8%

Unemployment rate 2021: 15.7%

Debt/GDP: 120%

Covid-19 vaccination doses administered per 100 of the population: 89.89

GHG emissions per capita: 7.5t

Sustainability impact player: Acciona Energias

CO2 saved/avoided per year by Acciona Energias: 13.1mt

(equal to 4.4mt of waste recycled instead of landfilled).

Goals Scored: 12

Goals Conceded: 5

Possession: 67.2%

Clean Sheets: 2

 

England (UK)

England’s sustainability impact player, DS Smith

DS Smith is a leader in sustainable packaging, demonstrating the potential of closed-loop recycling – a process whereby waste is collected, recycled, then re-used to make the same product. By using recycled materials in its corrugated boxes, M&G estimates that the UK company saves 55 million trees a year from being cut down.

Their main customer is internet retail giant Amazon, which gives DS Smith’s operations huge scale and impact.

GDP Growth:  2020: -9.9%; 2021e: +6.8%; 2022e: +5.1%

Unemployment rate 2021: 4.7%

Debt/GDP: 112%

Covid-19 vaccination doses administered per 100 of the population: 114.76

GHG emissions per capita: 7.5t

Sustainability impact player: DS Smith

CO2 saved/avoided per year by DS Smith:
3mt per year (equal to half a million homes electricity in one year).

Goals Scored: 8

Goals Conceded: 0

Possession: 53.4%

Clean Sheets: 5

 

Analysis

Spain has scored the most goals and enjoyed the highest levels of possession but face an in-form Italy in the semi-finals. Italy’s front four have been a handful up to this point, so I back them to progress to the final.

England are yet to concede, but can they handle the expectations of the entire nation on Wednesday?

Denmark are the outsiders, just as they were in 1992 when they went on to win. Peter Schmeichel was goalkeeper then, his son Kaspar is the Danish No.1 currently.

Spain have the pedigree having won the Euros on three occasions (1964, 2008, 2012), Italy have won it once (1968), and Denmark have won it once (1992).  England are the only semi-finalists never to have previously won the competition or ever having made it to a final.

England have an advantage as both the semi-finals and final will be played at Wembley Stadium, London. England to scrape a late win, setting up an England v Italy final at the home of football.

The verdict

Economic winner: Denmark

Denmark has weathered the economic impact of the Covid-19 pandemic the best of the semi-finalists. Its average growth rate (2020-2022) is the highest, also coming in second on unemployment rates after the UK.

These two countries are also first and second when it comes to debt/GDP ratios.  While the Spanish and Italian debt rates look very high.

The UK has the lowest unemployment rate of the four countries and also the most flexible economy.

Post the economic crises (2008-2009), the UK economy recovered the fastest in Europe.

Brexit uncertainty has also had a negative impact on the UK economy for the past 5 years.  With a trade deal in place, businesses should gain more confidence to invest going forward and help the economic resurgence.

Vaccination winner: England (UK)

The UK, Italian and Spanish populations will particularly hard hit from coronavirus, in turn these economies had to bring in the most stringent lock down rules.  Denmark adopted a lighter touch approach.

The UK has administered the most vaccines of the four countries. It means it should be in better shape going into the autumn/winter period and take the plaudits here for a commendable vaccine performance. 

Decarbonisation winner:  Italy

Italy is the semi-finalist that takes the gong for ‘most improved’ in its attempt to lower its carbon emissions. Italy plans to cut emissions by ca 60% by 2030, compared to a target of 33% back in December 2019.

Denmark has the highest share of renewables in the energy mix of the four semi-finalists, at 30%, the UK has the lowest at 15%.

Plug-in electric vehicles sales made up 16.4% share in 2020 for Denmark, followed by UK (10.7%); Spain (4.8%); Italy (4.3%).

The Euros

Tournament winner: England

Golden boot: Harry Kane (who else?) 

Company Name Country Market Capitalisation 12-month return
Ørsted Denmark 385bn DKK 15.7%
Enel Italy 80bn EUR 3.9%
Acciona Energias Spain 9.5bn EUR *listed 30 June 2021
DS Smith United Kingdom 6bn GBP 51.2%

Source: M&G Investments, Bloomberg, July 2021

Data Sources:

UK growth rates – British Chambers of Commerce https://www.britishchambers.org.uk/news/2021/06/bcc-forecast-uk-set-for-an-uneven-economic-recovery-despite-record-gdp-growth-2

UK Unemployment – ONS https://www.ons.gov.uk/employmentandlabourmarket/peoplenotinwork/unemployment#:~:text=Labour%20market%20overview%2C%20UK%3A%20June%202021&text=There%20was%20a%20quarterly%20increase,0.3%20percentage%20points%20to%204.7%25

COVID-19 vaccination rates – Statista https://www.statista.com/statistics/1196071/covid-19-vaccination-rate-in-europe-by-country/

EV plug-in adoption rates and renewable energy in the EU – Wikipedia https://en.wikipedia.org/wiki/Electric_car_use_by_country

https://en.wikipedia.org/wiki/Renewable_energy_in_the_European_Union

European growth and unemployment rates – European Commission https://ec.europa.eu/info/business-economy-euro/economic-performance-and-forecasts/economic-forecasts/spring-2021-economic-forecast-rolling-sleeves_en

Italy carbon reduction plans https://www.reuters.com/article/us-italy-climate-minister-idUSKBN2B31ML

Football statistics: UEFA https://www.uefa.com/uefaeuro-2020/news/0259-0e8ef42865e4-5c7f552e7662-1000--lowdown-euro-2020-final/
 

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