COVID-19 Uncertainty forces Companies to Withdraw Guidance and Dividend

  • Mar 25, 2020 AEDT
  • Team Kalkine
COVID-19 Uncertainty forces Companies to Withdraw Guidance and Dividend

Due to the coronavirus outbreak, the businesses of most of the companies listed on ASX have been impacted. As on 25 March 2020, AEDT 6:00 am, the Australian Government, Department of Health reported 2,252 confirmed cases of COVID-19. Of these 2,252 confirmed cases, 8 people have died because of this disease.

In order to prevent the further spread of this disease, the Australian government has restricted the visitors travelling from high-risk countries. Also, as per the Department of Health since 9:00 PM AEDT, 20 March, only natives of Australia, locals and members of the family are allowed to travel to the Australian region.  Further, people who had travelled to Australia continues to go through the screening procedure. The government has boosted border measures at the international air & seaports, which includes announcements as well as signs. Moreover, people are advised to stay at home and do their office related work from home.

As a result of uncertainty surrounding the extent and duration of COVID-19, the companies have either withdrawn their guidance, or announced dividend cuts.

In this article, we would be looking at such companies- RFG, BWP, EQT, URW, SWM, PRN, GWA, CDD, WPP

Retail Food Group Limited

Retail Food Group Limited (ASX: RFG), a global food and beverage company after closely assessing the rising COVID-19 cases has withdrawn its FY2020 guidance.

The company in its release on 11 October 2019 expected its EBITDA guidance to range from $42 million to $46 million, with an assumption of full-year contribution from all continuing operations and eliminating the impact of AASB15 and AASB16.

After monitoring the evolving COVID-19 situation, the Company noted significant measures taken by the government in each market, where the company operates to reduce the spread of the deadly disease. It includes the implementation of stage 1 restriction on social gathering. This has resulted in restaurants and cafés to takeaway and or home delivery operations and also impacted the Group’s coffee and donut-based brand systems together with Di Bella Coffee’s retail customer network.

BWP Trust

BWP Trust (ASX: BWP), a real estate company into a business of warehouse retaining properties on 23 March 2020 announced to withdraw its distribution guidance for FY2020 due to the uncertainty related to the COVID-19 pandemic. The company also decided to withdraw any forward-looking statements in the present scenario.

BWP confirmed that the Company’s balance sheet and debt position are strong, and the trust is placed well with the net cash and cash equivalent of $129 million. Further, BWP has no such debt which will mature in the next 12 months.

The Company’s Managing Director, Michael Wedgwood stated that the impact of the coronavirus is seen to escalate across the community as well as the economy On this front the Company has been acting swiftly to protect not only the stakeholders and its employees but also to confirm that the business was financially strong.

EQT Holdings Limited

EQT Holdings Limited (ASX: EQT) in its market update released on 24 March 2020 updated on the impact of COVID-19 on its business and earnings.

The Company has long-term revenue streams along with a robust balance sheet with low debt and high liquidity. Because of the situation of coronavirus spread, the employees of EQT are working both on-site and majorly from their home.

Earlier the company informed that the revenue in the second half period would improve from new business growth. However, now it mentioned that the market volatility would impact the outcomes.

Additionally, most of the Company’s revenue is associated with the level of funds under management, administration and supervision. In this present market downturn, there would be an impact on the Company’s earnings. Thus, the previous guidance in the current phase is not appropriate. Also, EQT is not in a position to quantify the impact on the earnings as the markets are highly volatile.

Unibail-Rodamco-Westfield

Unibail-Rodamco-Westfield (ASX: URW) on 23 March 2020, confirmed that because of the increasing COVID-19 cases, it has decided to withdraw its guidance and also provided an update on planned dividends for FY2019.

On 12 February 2020, URW announced a dividend of €10.80 per stapled share. At that time, the number of COVID-19 cases was few outside China. At present, the disease has spread on a broader scale, and the government is taking measures to reduce the risk.

On this front, the Company has decided to withdraw its 2020 AREPS guidance and anticipates providing an update on its guidance once it can reliably assess the extent, severity, & outcomes of the present situation.

In order to satisfy the REIT dividend distribution obligations, it has decided to pay an interim cash dividend of €5.40 per share.

Seven West Media Limited

Seven West Media Limited (ASX: SWM) also decided to withdraw its FY2020 guidance because of the uncertainty related to the COVID-19.

Because of the material drop in the advertising market activity along with the suspension or postponement of productions and events, the outlook of the future advertising bookings at present is insufficient to provide meaningful earnings guidance for the remaining FY2020.

Also, AFL has cancelled all the games until the end of May 2020. The suspension of the events is expected to have a consequence in rights payments by South West Media being driven behind to show the amended scheduling. Though, the suspensions might also suffer the cancellation expenses from the suppliers (underlying).

Also, due to the travel restrictions, the local productions are also facing difficulties and, on this front, SWM’s team is working to deliver on already committed works. SWM has a contingency plan to respond to such exigent scenarios.

Perenti Global Limited

Perenti Global Limited (ASX: PRN) has also withdrawn its FY2020 guidance, as per its announcement on 24 March 2020.

The Company has no impact on its financial performance. However, because of the ongoing increasing cases of virus spread, PRN feels that there is substantial ambiguity as to the possible impact on Perenti’s operations during the remainder of the FY2020. Thus, in the present situation, it has confirmed that it is not in a position to provide earnings guidance and decided to withdraw its earlier provided FY2020 guidance ranging in between $115 million to $120 million NPAT(A) (underlying).

On 25 March 2020, PRN notified the market that as part of a range of capital management plans being commenced to make sure PRN is in the greatest economical position in answer to the coronavirus outbreak and consequent fiscal impact around the world, it has chosen to postpone payment of its half year 2020 dividend of 3.5 cps (totalling $24 mn) to 20th October this year.        

GWA Group Limited

GWA Group Limited (ASX: GWA) has also decided to withdraw its FY2020 earnings guidance due to increasing levels of economic uncertainty driven by Covid-19.

The Company had taken this decision despite the fact that it's trading to date for 2H FY20 is in line with its expectation and better than 1H FY2020. Further, GWA has not seen anything as of now that states that the guidance cannot be achieved. However, due to the looming ambiguity, the Board of Directors chose to withdraw the guidance.

Cardno Limited

Cardno Limited (ASX: CDD) also opted to withdraw its earnings guidance for FY2020 because of the unpredictable situation arising out of the coronavirus outbreak. After eight and a half months, the trading results of CDD is in line with the previously provided earnings guidance. However, as the as client sites, client staff & CDD’s staff either self-isolated or quarantined globally, there is a chance that the project delivery would be impacted in short to medium term. 

WPP AUNZ Limited

WPP AUNZ Limited (ASX: WPP), Australasia’s leading creative transformation company has cancelled its final and special dividend due to the unprecedented uncertainty related to COVID-19. The company on 24 March 2020, decided to cancel the ordinary dividend payment of 2.9 cents per share and special dividend payment of 1.5 cents per share which it declared on 24 February 2020.


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