Stagecoach warns on profit as transport companies take Covid-19 hit
Some of Britain’s biggest transport companies have scrapped dividend payments to investors as they struggle with profits while commuters stay away from buses and trains.
Stagecoach and Go Ahead both warned investors should not expect a payout, while FirstGroup suspended its financial guidance.
Perth-based Stagecoach said it does not expect to meet its earnings expectations for the 2020 financial year as the virus affects operations.
It is still too early to reliably predict the effect the outbreak might have on profit, it said, but warned shareholders any further dividends are unlikely this year.
The company is in talks with Transport for London to change the details of its contract.
The board will take a 50% pay cut and members are forsaking their bonuses, while no new non-essential staff will be hired.
Aberdeen-based FirstGroup said it is no longer able to give guidance for the remainder of its financial year, which ends March 31.
“In recent days the group has seen unprecedented changes in the market environments for all its businesses,” it said in a statement.
“There have been substantial volume reductions in our passenger demand businesses in North America and the UK.”
Newcastle-based Go-Ahead Group said it is slashing its capital spending as people decide to stay away from its buses.
It has also suspended its proposed dividend.
Chief executive David Brown said: “Go-Ahead provides vital services, moving and connecting people to their communities across our networks.
“These services have become increasingly important to those working in essential roles such as NHS workers, emergency services and those in the food supply chain.”
He added the company will use its unwanted buses to transport NHS workers and support supermarkets with food deliveries.
On Monday, the Government announced rail franchise agreements will be suspended for at least six months to ensure train companies do not collapse.
The Department for Transport said operators will be able to transfer all the revenue and cost risks to Government in return for a small management fee.
The proposals were welcomed by industry body the Rail Delivery Group.