(Alliance News) - Applegreen PLC on Friday said it swung to a loss in the first half of 2020 as Covid-19 containment measures severely hurt footfall and volumes.
The Dublin, Ireland-headquartered petrol filling station operator said it swung to a EUR29.7 million pretax loss in the six months ended June 30 from a EUR10.2 million profit the year before.
This resulted in large part from a 37% drop in revenue to EUR1.08 billion from EUR1.48 million the year before.
Applegreen explained that while it "traded strongly and in line with management expectations for the first 10 weeks of 2020", "footfall and volumes were severely impacted from mid-March as governments and customers took measures to contain the spread of the Covid-19 virus."
Most of Applegreen's core estate is located in towns and suburbs with limited city centre location exposure. This was beneficial, as footfall reduction was most pronounced in city centres.
However, its Welcome Break estate was far more heavily hit due to falling motorway traffic and the closure of most of its branded food offers from March 23, with a phased re-opening starting mid-May and causing interim pre-IFRS 16 adjusted earnings before interest, tax, depreciation, and amortisation to fall sharply to EUR25.3 million from EUR58.9 million.
Adjusted Ebitda excluding Welcome Break, pre-IFRS 16, grew 11% year-on-year to EUR29.4 million. Pre-IFRS 16 adjusted Ebitda figures are adjusted for share based payments and non-recurring items as well as for the the impact of IFRS 16 and acquisition related rent adjustments arising from business combinations.
Applegreen said positive momentum has continued into its third quarter and the business is now trading ahead of management expectations with a strong recovery supported by "staycations" as well as government stimulus and listing restrictions.
The fourth quarter outlook, however, is clouded by possible additional public health measures. For example, residents of Northumberland, North Tyneside, South Tyneside, Newcastle-upon-Tyne, Gateshead, Sunderland and County Durham have been banned from socialising outside their households or support bubble starting Friday due to rising rates of infection.
No interim dividend was proposed, though the firm expects to reinstate dividends in 2021 provided trading activity normalises.
Chief Executive Bob Etchingham said: "Applegreen carried good momentum from last year and traded strongly for the first ten weeks of the year, however, we saw a sudden and significant impact on the business from mid-March, particularly in our motorway service areas. This was most pronounced in April and May, but volumes recovered well by the end of the second quarter. To help mitigate some of this impact, the group took swift and decisive action in managing our cost base and tailoring our retail offer for changing consumer needs.
"Encouragingly, this recovery has continued over the summer months with the further lifting of restrictions, government stimulus packages and the staycation trend, all of which has improved traffic volumes. This performance further demonstrates the resilience of our business model and of our sector. We have learnt a lot during this crisis and are confident that we will emerge as a stronger organisation that is well positioned to benefit from future opportunities across all of our markets."
Shares in Applegreen were up 1.9% at 331.00 pence in London on Friday morning.
By Anna Farley; annafarley@alliancenews.com
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