May 22, 2020 / 6:32 AM / 13 days ago

Go-Ahead Group warns coronavirus will hit profit, shares slump

FILE PHOTO: A Go Ahead bus crosses Westminster Bridge in London, Britain August 29, 2015. REUTERS/Neil Hall

LONDON (Reuters) - Britain’s Go-Ahead Group (GOG.L) warned that the impact of the novel coronavirus would hit profits this year, and uncertainty around the use of public transport once lockdown eases means it cannot provide guidance on its new financial year.

The group’s shares fell 16% in early trading to 1,012 pence.

In Britain, Go-Ahead’s main market, the government is providing financial support to companies who operate public transport so they keep services running despite lower use during the coronavirus pandemic.

Even with that help, the company said profits would drop compared to last year, and it was working to try to cut costs. A rail contract in Germany was challenging and would also drag on profit, hampered by driver shortages and reliability issues.

Go-Ahead forecast that group operating profit for the year ended 27 June would be in the range of 63 million pounds ($76.91 million) to 75 million pounds. That would represent at least a 38% fall compared to the 121 million pounds it made in the 12 months to 29 June 2019.

Financially, the group said it was well-placed to withstand the crisis, and had confirmed that it could access a government COVID Corporate Finance Facility if it needed.

The group’s UK activities, regional buses, the GTR rail network in London and south east England and London buses, were benefiting from government support, it said, but said there was uncertainty in the future.

As such, it said it could not provide guidance for the financial year which starts at the end of June.

“In all of our geographies material uncertainties remain around the easing of restrictions and the implications this will have on public transport usage. The quantum and duration of government support measures, particularly in our regional bus business, also remains uncertain,” the company said.

Reporting by Sarah Young; editing by Kate Holton

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