March 12, 2020 / 7:26 AM / 20 days ago

Go-Ahead warns on virus but says impact minimal so far

LONDON (Reuters) - Train and bus operator Go-Ahead Group (GOG.L) warned its profits could be hurt by coronavirus but said so far it had seen minimal impact on demand.

A Go Ahead bus crosses Westminster Bridge in London, Britain August 29, 2015. Go-Ahead Group Plc announced on September 3, 2015 that profits had risen 11.1%, slightly ahead of the company's expectations as a result of a stronger performance in rail. Photograph taken August 29, 2015. REUTERS/Neil Hall

“At this moment in time it is not affecting us, not in any dramatic way because people haven’t changed their travel patterns yet,” CEO David Brown said in an interview on Thursday.

But over the coming months, that could change.

“If people are told not to travel, that would not be good,” he said.

Go-Ahead operates the GTR rail network in London and south east England, as well as London buses and buses in other parts of the UK.

When ask if coronavirus was a risk to this year’s profit guidance, Brown said it was, although he said Go-Ahead was helped by the fact that three-quarters of its revenue is based on contracts.

Go-Ahead on Thursday downgraded its annual profit outlook “slightly” for the year to 27 June due to higher costs in its regional bus business, and from the impact of storms in recent weeks in the UK.

Adverse weather means people travel less, said Brown, while in its regional bus units, worsening congestion in towns was hurting profitability at the same time as costs rise as it invests in greener vehicles.

Shares in Go-Ahead plunged 19% to 1,347 pence at 0901 GMT, underperforming Britain’s mid-cap market which was down 7%.

Analysts at Peel Hunt said they were downgrading their forecast for Go-Ahead’s full-year operating profit by 5% to 105 million pounds.

Reporting by Sarah Young; editing by Paul Sandle and Jason Neely

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