SAPTCO expects 50% decline in 2020 revenues amid COVID-19 crisis

Saudi Public Transport Company (SAPTCO) expects a negative financial impact on the company’s results during the fiscal year 2020, with an estimated decrease in revenues by 50% year-on-year (YoY), due to the COVID-19 pandemic.

The company affirmed in a bourse filing the readiness of its operational and human resources capabilities, maintenance facilities, as well as advanced electronic operating systems that represent strengths to achieve the Kingdom’s Vision 2030 in the field of passenger transportation through the services currently provided by it or through services planned in the coming period along with strategic partners.

The planned services include operating the King Abdulaziz Project for Public Transportation in Riyadh for buses for Riyadh, as well as operating the metro network via the first (blue) and second (red) lines of the Riyadh Metro project.

These projects will have a positive impact on financial results once they are operational, the statement noted.

The nature of the passenger transportation business requires huge investments in fixed assets, which leads to increased fixed costs, in addition to the need to invest in qualified human resources to operate and maintain these assets periodically, in addition to retaining operational and competitive capabilities.

Thus, the company works to reduce variable costs that do not affect its operational and competitive capabilities, it noted, highlighted that it is ready to start full operation whenever required.

To soften the COVID-19 impact, SAPTCO included a slew of employees in SANED program, granted some employees unpaid leaves, and even cut salaries by 25-35%. The company also canceled and reduced the number of services agreements and secured loans to support the working capital, as part of its continuous efforts to cut expenditures.

According to data compiled by Argaam, SAPTCO resumed on May 31, 2020, intercity services except for Makkah, in line with the government’s decision to ease the COVID-19 precautionary measures.

On March 1, SAPTCO expected the coronavirus precautionary measures related to Umrah visa issuance to affect revenues and profits in 2020.

Additionally, the company temporarily suspended inter-cities and in-city services for 14 days starting from May 31, 2020, in line with the precautionary measures to limit the spread of coronavirus as directed by the Public Transport Authority.