April 28, 2020 / 6:23 PM / a month ago

Italy's Atlantia expects virus to shave 3 billion euros off sales

MILAN (Reuters) - Italian infrastructure group Atlantia (ATL.MI) expects COVID-19 to wipe 3 billion euros from its revenues this year at a time when the health emergency is also slowing talks with the government over its lucrative motorway concession.

FILE PHOTO: An Atlantia Group sign outside its headquarters in Rome, Italy, August 31, 2018. REUTERS/Alessandro Bianchi

The Benetton-led group controls several key assets including ADR, which runs Rome’s airports, and Autostrade per l’Italia, which operates more than 3,000 km (1,860 miles) of roads in Italy.

The group also manages motorways in Spain, France and Latin America and airports in France.

With movement restrictions still in place in Italy and in many other European countries, the group expects traffic on its motorways to fall 30% on average this year compared with 2019.

The number of passengers travelling to and from its airports is seen dropping 50%, it said.

To cope with the situation, Atlantia said it would scrap dividends on 2019 results, postpone non-urgent works and delay new hiring. Asked about future dividends, Chief Executive Carlo Bertazzo said it was too early to set any policy.

Sources previously told Reuters the group was in talks with the government to end a bitter dispute over its motorway concession after a bridge it operated collapsed in 2018, killing 43 people.

On Tuesday Atlantia said the group had filed a settlement proposal to the government at the beginning of March worth a total of 2.9 billion euros ($3 billion).

Bertazzo told analysts Atlantia was still waiting for a formal answer from Rome on the issue.

“They are examining the proposal but we understand they need time,” Bertazzo said, adding the group had booked 1.5 billion euro provision in 2019 to cover part of the potential costs of the settlement.

Reaching an agreement with the government over both the concession and a new method to calculate motorway tariffs would open the way to selling part of Atlantia’s 88% stake in Autostrade, Bertazzo said.

Sources have told Reuters Rome wants Atlantia to reduce its stake in Autostrade to under 50% to make room for other investors - including state lender CDP which would give Rome a bigger say in the motorway network.

“Some investors are looking at Autostrade, but we are at a very very early stage,” Bertazzo said, adding that in a first phase Atlantia would only sell a minority stake.

The process to find co-investors in digital toll payment unit Telepass however was “ready to go”, the CEO said, while opening up the capital of airport operator ADR would only be discussed next year.

Bertazzo said the group, whose credit rating was cut to junk status due to fallout of the dispute with the government, wanted to regain the investment grade as soon as possible.

At the end of last year, Atlantia had a consolidated net debt of nearly 37 billion euros.

Autostrade will tap a new credit line from Italian export credit agency SACE for up to 1.25 billion euros and ADR could also draw 250 million euros from SACE, the group said.

Revenues last year were 11.6 billion euros while net profit fell to 136 million euros from 639 million euros, reflecting increased provisions.

Reporting by Francesca Landini; editing by Giulia Segreti and Jonathan Oatis

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