Twenty UK listed companies have now issued profit warnings that attempt to quantify the financial impact that the Coronavirus outbreak will have on their business, says UHY Hacker Young, the national accountancy group.
However, these 20 companies represent only 1% of the 2,000 UK companies listed on the Main Market and AIM so the number of companies quantifying the impact is likely to rise further in the coming weeks as Coronavirus spreads further.
A total of 350 UK listed companies have made statements warning that the Coronavirus could affect their business this year – but very few have been able to actually quantify the financial impact.
UHY Hacker Young says that listed companies have an unenviable task in trying to pin down the financial impact of Coronavirus in such a rapidly changing situation.
Martin Jones, Partner at UHY Hacker Young says: “Obviously the numbers that businesses publish are going to change dramatically as the outbreak carries on. However, that shouldn’t put companies off from doing their best to provide numbers to investors.”
“Every time companies do provide numbers to shareholders it adds another piece to the puzzle that allows the stock market to know what is going on.”
“These numbers are going to be imperfect but they will improve visibility of earnings.”
Five of the 20 companies issuing statements quantifying the financial impact of Coronavirus on their business are in the entertainment sector and four in the transport sector. Both of these sectors have been hit particularly hard by new social distancing measures, along with the retail and hospitality industries.
Some examples of listed companies stating the financial impact of coronavirus are shown in the table below.
Examples of listed companies quantifying the impact of Coronavirus
|Compass Group PLC||“We are implementing significant mitigation plans to manage our costs, and at this stage expect the drop-through impact of the lost revenue to be between 25%-30% across the business. As a result, our operating profit for Half Year 2020 will be £125 million – £225 million lower than expected.”|
|Flutter Entertainment||“In order to assist in the quantification of the impact on the Group at this point, we estimate that in a scenario where restrictions remain in place until the end of August (including full suspension of Australian sports and the cancellation of Euro 2020), EBITDA for the Group would be reduced by approximately £90-110m.”|
|WH SMITH PLC||“While the Group is currently not seeing a significant impact on its High Street business, it recognises that Covid-19 could result in reduce high street footfall. As a result, the Group currently estimates an adverse impact in the financial year ending 31 August 2020 of between £100m and £130m on the Group’s revenue and between £30m and £40m on underlying Group profit before tax.”|
|Diageo PLC||“….we estimate the negative impact in fiscal 2020, on the group’s organic net sales and organic operating profit, to be in a range of|