The Unibail-Rodamco-Westfield (ASX: URW) share price is sinking lower this morning after the company provided a market update, as the coronavirus pandemic takes further hold over much of Europe.
At the time of writing, Unibail-Rodamco-Westfield shares are trading 17.28% lower at $4.93, while the S&P/ASX 200 Index (ASX: XJO) is up 1.20%.
Unibail-Rodamco-Westfield is a listed real estate company in Europe, with a focus on large shopping centres in major European cities and the United States, as well as office buildings, convention and exhibition venues in Paris.
Impact on shopping centres
This morning, Unibail-Rodamco-Westfield announced that its shopping centres across Europe are substantially closed, although supermarkets, other essential food stores, and pharmacies are mainly allowed to open, depending on the current local regulations. The company was forced to make this drastic decision as local authorities mandated that all non-essential stores had to close across a number of countries in central Europe including France, Spain, Poland, Austria, the Czech Republic and Slovakia.
The company pointed out its other shopping centres are still trading as normal for now, however, unsurprisingly, foot traffic within these locations has been reduced substantially as the mass movement of people is being restricted. Its operations in Denmark are still trading as normal for now with some limitations to trading hours.
It seems quite likely that other European countries will tighten their shopping restrictions as Europe now has been declared the current epicentre of the global coronavirus pandemic.
Impact on Convention & Exhibition and Office divisions
Unibail-Rodamco-Westfield stated it is seeing a significant impact to its Convention & Exhibition business, which is located in Paris. Already, the French government has placed a restriction on any event that holds more than 100 people.
However, on a more positive note, the company noted that its Offices division has not been affected at this point. Whether or not it will, and to what extent, we will just have to wait and see. I believe that it is quite possible that many workers will be forced to work from home if the coronavirus outbreak takes further hold across Europe.
Unibail-Rodamco-Westfield stated that at this stage, it is unable to comment about the impact that these events will have on its group earnings. However, the company believes that its geographic diversification will position it relatively well to operate through the tough times that look to be ahead for Europe.
Recap on recent financials
Apart from the unfolding crisis in Europe, the Unibail-Rodamco-Westfield share price has come under extreme pressure after the company recently released its full-year FY19 results on March 13.
For the 12 months ended December 31, the company reported a net profit of €87.8 million, which was down 53% on the prior corresponding period. On the day of the results release, Unibail-Rodamco-Westfield shares closed 14% lower, and its share price has fallen by over 50% since February 20.
