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SAO PAULO – One of the companies most affected by the coronavirus, which is reflected in the performance of its actions in the year with a drop of around 70%, Gol (GOLL4) postponed the disclosure of its figures for the first quarter of 2020 , but revealed no figures – He audited who gave very important signals about how the company is being affected and how it is facing the pandemic.
The airline had a strong net loss of R $ 2,261 billion compared to a net profit of R $ 35.2 million in the same period of 2019, both in the criterion before Smiles minority interest. Excluding the negative change and currency variations of R $ 2,531 billion, net income was R $ 173.2 million in the first quarter, an increase of 76% compared to R $ 98.4 million for the same period in 2019.
The company’s financial result was negative by R $ 3,243 billion in the first quarter of this year, which strongly affected its balance sheet. The company pointed out that financial expenses in the period shot up due to the variation in the exchange rate: the reference dollar used by the company went from R $ 4.03 at the end of 2019 to R $ 5.20 at the end of March. (It is worth noting that 96, 6% of the airline’s gross debt is denominated in the US currency.)
The company decided to disclose unaudited figures on Monday, as independent auditors hired to assess the balance sheet requested more time, and the expectation is that the audited data, according to Gol, will be released on the 15th.
Despite the terrifying loss, analysts considered the result slightly above expectations if they took into account operating performance; however, it is worth mentioning that the focus of investors remains on liquidity and monitoring the impact of the coronavirus on operations.
The company’s earnings before interest, taxes, depreciation and amortization (Ebitda) totaled R $ 1,439 billion in the quarter, an increase of 51.3% compared to the same period of the previous year and above consensus estimates. 37% and 4% compared to Bradesco BBI estimates. The Ebitda margin was 29.8% compared to 17% in the first quarter of 2019.
Ebit in the quarter was R $ 937.9 million, an increase of 71.7% compared to the first three months of 2019. The company noted that, for every kilometer of seat available, the recurring Ebit was 7, 53 cents in the quarter, an increase of 79.7% compared to the same period in 2019. The company’s revenue was R $ 3,147 billion, a decrease of 2% in the annual comparison.
Bruna Pezzin, analyst at XP Investimentos, noted that the company reported slightly higher than expected results mainly due to (i) higher-than-expected growth in the line of other income (16% above the XP estimate) and (ii ) unit costs (CASK) lower than expected (6% lower than expected).
Furthermore, the results were positively impacted by a profit of R $ 595 million in sale and lease operations (which XP predicted in R $ 500 million) and there was also a non-recurring refund of R $ 193 million due to the closure of the aircraft. MAX.
Furthermore, it is worth noting that Gol ended the quarter with a good position of cash and cash equivalents. As the XP analyst points out, although guidance remains suspended, management provided an indication of the expected reduction in cash burn during the second quarter (to R $ 9 million per day through June, compared to R $ 22 million per current day)
“In general, the results for the first quarter already partially reflect the impacts related to the reduction in demand and the more restrictive policies of social distance, as well as a devalued exchange rate. We believe that the focus from now on will be on managing the liquidity of the company, as well as on the flow of news related to the BNDES line of credit and on the evolution of social distance policies in Brazil, ”says Bruna.
Looking forward
For Bradesco BBI, the most important fact in relation to the results of the first quarter lies in the company’s cash position of R $ 4.2 billion, of which R $ 3.4 billion in cash and cash equivalents of cash, in addition to R $ 800 million in accounts receivable.
“We estimate that the need for a revolving credit GOL for 2020 is minimized due to its cash position combined with initiatives to reduce cash outflows, such as: 1) deferment of aircraft lease payments; 2) without payment prior to delivery in 2020; 3) reductions in wages and unpaid vacations and 4) cuts in other expenses, such as marketing ”, they evaluate.
The airline also showed signs of next steps, noting that total revenues are expected to reach R $ 900 million in the second quarter compared to R $ 3.1 billion, 70% less. The company expects a recurring Ebitda margin of approximately 6% versus 25.9% in the second quarter of 2019. Total expenses are expected to decrease approximately 50%.
The company estimates a net debt / Ebitda ratio of 2.9 times at the end of the second quarter. The average operating fleet of 27 aircraft is expected to have an occupancy rate of approximately 80%.
Gol says it is “maintaining a minimum use of cash” and estimates that its cash preservation measures implemented during March will retain approximately R $ 2.4 billion during 2020. The airline had approximately R $ 7 billion in liquidity sources on December 31, March. The company said it reduced capacity by approximately 80% in the second quarter of 2020 (75% domestic and 100% international) with the expectation of a sequential contraction of Brazilian GDP by at least 5% in the quarter.
Amid the complex scenario for airlines that is expected to last in the coming quarters, the message of importance for the search for liquidity was reinforced this Monday by Paulo Kakinoff, CEO of the airline. He noted that Gol has enough working capital to maintain its operations consistently.
“Even with the assets we have and with all the measures already in place, we are working hard, every day, to always seek maximum efficiency and intelligence in the use of our liquidity,” said the CEO.
During a conference call with investors this Monday, news of federal aid to airlines, through BNDES, was also on the agenda, which would allow each company to access an amount close to R $ 3 billion. However, Kakinoff noted that the terms have yet to be presented: the development bank has reportedly released the final terms on May 15.
Despite signs of a good cash position and relatively good operating numbers, the scenario remains very cautious with the company in the midst of the still negative scenario about the impact of the coronavirus on the airline’s operations.
Therefore, UBS, XP and Morgan Stanley have a neutral equivalent recommendation for stocks. On the other hand, Bradesco BBI continues with a recommendation of superior performance (performance above the market average), noting that Gol has liquidity to overcome the COVID-19 crisis, greater exposure to internal demand that should recover first and 3) tax savings related to the possible incorporation of Smiles.
In general, the recommendation is to be cautious with the company’s shares, as can be seen in the performance of the shares in this Monday’s session, as they fell 10.08%, to R $ 11.15, and Azul’s shares were withdrawn (AZUL4, R $ 15.16, -12.87%) decrease. On May 14, it will be Azul’s turn to reveal his numbers, which the market (as well as Gol’s audited balance) are also expected to understand the direction of the companies in the midst of the coronavirus crisis.
(with information from Agência Estado)
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