May 6, 2020 / 10:13 PM / 2 months ago

Portugal NOS's profit slumps as coronavirus hits economy

LISBON, May 6 (Reuters) - Portugal’s second-largest telecommunications company, NOS, posted a loss of 10.4 million euros ($11.22 million) in the first quarter of 2020 due to the impact of the coronavirus, which shut all of the firm’s cinemas and led to a drop in revenue from TV subscriptions.

NOS, whose businesses also include cable television and other assets, reported a year-ago profit of 42.4 million euros, it said in a statement on Wednesday. The impact of the coronavirus outbreak on the company’s future was still uncertain, it said.

Revenue dropped 3% to 345.4 million euros while earnings before interest, taxes, depreciation and amortization (Ebitda) fell 4.6% to 152.7 million euros.

It said it expected its finances to gradually improve during the third and fourth quarters of the year but said that depended on how long government-imposed containment measures remained in place.

Portugal declared a lockdown on March 18, shutting all non-essential services and leaving many confined to their homes, but the impact of social distancing measures on the economy started to be felt earlier on, NOS said.

Two days before the lockdown was declared, NOS shut its dozens of cinemas, driving a sharp decline in box-office sales, which dropped 17.4% to 1.527 million tickets.

The company’s revenue also declined after it decided to offer free subscriptions to sports channels at a time when sporting events, including football matches, are temporarily suspended.

The drop in international travel also had an impact on NOS’s first-quarter results.

“Wholesale revenues recorded a negative performance in the quarter reflecting the collapse of roaming-in revenues caused by global travel restrictions,” it said.

Portugal, which has so far reported 26,182 cases and 1,089 deaths, downgraded its state of emergency to a category of “calamity” on Sunday, and a three-phase plan began on Monday to open up different sectors every 15 days.

Remote work is still recommended where possible, and gatherings must be limited to 10 people.

The outbreak is set to leave long-lasting scars on the country’s economy, with the International Monetary Fund forecasting Portugal’s gross domestic product to contract by 8% this year. ($1 = 0.9265 euro) (Reporting by Catarina Demony in Lisbon Editing by Matthew Lewis)

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