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Mirvac share price sinks 8% on earnings guidance withdrawal

The Mirvac Group (ASX: MGR) share price is down by 8.2% at the time of writing, after it announced that it has withdrawn its recent earnings guidance as the coronavirus crisis escalates.

What did Mirvac announce today?

Mirvac has announced that it has withdrawn its FY20 earnings and distribution guidance, due to uncertainty about the extent to which the coronavirus will impact its business and the wider economy, and how long this impact could potentially last.

A number of shares on the S&P/ASX 200 Index (ASX: XJO) over the past week have taken similar steps, as the global pandemic takes hold and the Australian government ramps up measures in an effort to control the virus locally.

Prior to the announcement and this morning’s additional drop, Mirvac had seen a 27% decline in its share price since the market correction began a few weeks ago. Although this fall is quite sharp, it is in line in the wider market correction, with the property market (at this stage at least) less impacted by the immediate effects of the coronavirus compared to industries such as travel and tourism. Shares in companies such as Webjet Limited (ASX: WEB), Flight Centre Travel Group Ltd (ASX: FLT) and Qantas Airways Limited (ASX: QAN) have all taken heavy losses.

Mirvac commented that its balance sheet as well as its overall debt position remains solid and well positioned for any challenges over the duration of the current crisis. The group has $944 million of cash and committed undrawn bank facilities available on its books and its gearing levels stood at 20.8% as at the end of last year.

Mirvac further added that it has only $200 million of debt maturing in the following 12 months and the company is positioned to be able to pay this from its available facilities.

Mirvac’s CEO and managing director Susan Lloyd-Hurwitz said, “[a]s the effects of the COVID-19 outbreak impact Australia and our business, we are taking swift and prudent measures across the business, to not only protect our employees and stakeholders, but also provide transparency in what is an ever-changing environment.”

Recap of recent announcements

In February, Mirvac announced that it entered into an agreement to acquire a landmark site in Sydney, currently occupied by Nine Entertainment Co. Holdings Ltd (ASX: NEC). The acquired site has a concept plan approval for the development of 460 new dwellings and approximately 6,000 square metres of public open space.

Mirvac released its financial results for 1H FY 2020 in early February, reporting strong growth in operating profit after tax of 21%, amounting to $352 million. The group’s earnings before interest also grew strongly 18% to reach $460 million, although statutory profit had declined by 5%.

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Motley Fool contributor Phil Harpur has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of and has recommended Flight Centre Travel Group Limited. The Motley Fool Australia has recommended Nine Entertainment Co. Holdings Limited and Webjet Ltd. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.