Roadside convenience retailer Applegreen (APGN) has suspended its dividend in light of pressures on the business from the impact of Covid-19. The company said that it has seen a decline in footfall and volumes in the past two weeks.
Management has therefore taken measures to cut costs and prioritise liquidity, including delaying capital expenditure and reducing maintenance, temporarily cutting headcount and deferring director bonuses. So it is encouraging then that the group also reduced its pro-forma adjusted leverage to 1.9 times at 31 December 2019 from 2.2 times in the year prior.
Indeed, the retailer produced upbeat results for 2019 as gross profit more than doubled to €572m. Welcome Break, the UK motorway service company it acquired in 2018, experienced some Brexit-related softness in the first quarter, but saw good progress driven by its catering brands. Applegreen said, however, that it expects a material decline in profitability this year due to the virus outbreak.
The group continued to expand its estate over the course of 2019, adding 70 sites in the US as well as 14 sites in the UK and Ireland, to a total of 556 trading at the end of the year. Management noted that it is in negotiations with landlords to secure rent reductions during the wider period of disruption, a good idea given the level of lease liabilities.
Broker Goodbody forecasts cash profits of €153m and adjusted EPS of 38¢ in 2020, compared with €140.4 and 33.8¢ in 2019.
| APPLEGREEN (APGN) | ||||
| ORD PRICE: | 205p | MARKET VALUE: | £247m | |
| TOUCH: | 200-205p | 12-MONTH HIGH: | 522p | LOW: 178.5p |
| DIVIDEND YIELD: | na | PE RATIO: | 13 | |
| NET ASSET VALUE: | 127¢* | NET DEBT: | €1.3bn** | |
| Year to 31 Dec | Turnover (€bn) | Pre-tax profit ( €m) | Earnings per share (¢) | Dividend per share (¢) |
| 2015 | 1.08 | 14.0 | 17.1 | nil |
| 2016 | 1.18 | 20.0 | 21.5 | 1.3 |
| 2017 | 1.43 | 22.0 | 22.5 | 1.4 |
| 2018 | 2.01 | 15.4 | 13.7 | 1.5 |
| 2019 | 3.07 | 37.2 | 17.9 | na |
| % change | +53 | +142 | +31 | |
| Ex-div: | na | |||
| Payment: | na | |||
| *Includes intangible assets of €525.2m, or 435¢ a share. £1=€1.12. **Includes lease liabilities of €707m. | ||||
