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Atlas Arteria shares plummet 31% following COVID-19 update

The Atlas Arteria Group (ASX: ALX) share price is plummetting today, down 31.56% following a market update on its business performance in light of the impact of the coronavirus outbreak.

Atlas Arteria is a global operator and developer of toll roads, with a portfolio of four toll roads in France, Germany and the United States.

Following a recent announcement in early March, Atlas Arteria now owns a 31% indirect interest in French toll road Autoroutes Paris-Rhin-Rhone (APRR).

Toll road operators will be increasingly impacted over the coming months as the number of cars and other vehicles is reduced for all non-essential travel.

Our largest toll road operator Transurban Group (ASX: TCL) will also be impacted, however, any impact is unlikely to be as severe at this stage as seen in the US and most parts of Europe.

What did Atlas Arteria announce?

This morning, Atlas Arteria emphasised that it believes it remains well-positioned in terms of liquidity and cash flow in light of the increasing global coronavirus crisis. It noted that its total cash on hand stands at $340 million as at March 20, however, the company has decided to defer an H2 2019 distribution for the time being.

Atlas Arteria has also decided to suspend the guidance for its H1 2020 distribution of 18.0 cents per security until there is more market clarity about the scope and severity of the coronavirus crisis.

The company commented that it may consider using the funds that would have been otherwise distributed to shareholders to repay its outstanding debt facilities or it may decide to pay its H2 2019 distribution at a later stage this year.

Traffic performance of toll roads

Atlas Arteria revealed that the performance of its APRR toll road in south-east France had been strong in January and February relative to the prior corresponding period. However, traffic in March has been significantly impacted by the harsh travel restrictions implemented by the French government.

The company noted the slowdown was only moderate in the first half of March, however, due to the French lockdown that came into effect recently, traffic has been sharply reduced since mid-March, especially for light vehicles.

The company’s Dulles Greenway toll road in Virginia US has also been severely impacted in recent days with a 56% reduction for the period between March 16 and March 19, following a 14% reduction between March 1 to March 15. This comes as the US government has ramped up restrictions on travel and people movement.

Atlas Arteria’s Warnow tunnel in Germany has seen a 12% reduction in traffic in the period between March 16 and March 19.

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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 Transurban Group. 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.

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