NoHo Partners publishes additional information on the measures taken by the company in relation to the business impacts of the coronavirus pandemic
NoHo Partners Plc
STOCK EXCHANGE RELEASE 5 MAY 2020 at 17:15
NoHo Partners publishes additional information on the measures taken by the company in relation to the business impacts of the coronavirus pandemic
NoHo Partners announced on 26 March 2020 that the coronavirus pandemic has had a serious impact on the company’s market and restaurant industry and that the sudden change in the market has also considerably affected the company’s operations.
In response to the crisis, the company initiated measures to adapt its business operations and prepare for the impacts of the pandemic. In relation to these measures, the company issued stock exchange releases on the progress of negotiations under the Act on Cooperation within Undertakings on 18 March 2020 and the conclusion of negotiations regarding a financing package on 3 April 2020.
The financial impact of the coronavirus pandemic cannot be fully estimated with any certainty at the present time because the impact depends on the duration and scope of the potential further measures implemented to mitigate the spread of the virus as well as the speed at which the market will recover.
As the exceptional circumstances caused by the coronavirus pandemic have continued for a couple of months in all of the company’s markets, the company now updates the information provided on 3 April 2020 regarding the impacts of the pandemic on its business.
NoHo Partners has prepared a three-stage action plan for managing the impacts of the coronavirus pandemic.
- Stage 1: The operating environment during the emergency (lockdown)
At the beginning of the first stage, the company focused on quickly reducing expenses, laying off personnel and balancing its finances while restrictions on its business are in place. - Stage 2: Restricted operating environment
Business operations will resume in a managed and gradual manner over the next 6–12 months. Decisions on the resumption of business will be made on a weekly basis and separately for each business location. The aim of the company is to ensure a positive operating cash flow, even in the restricted operating environment, as the restaurant industry gradually recovers. - Stage 3: Strengthening competitiveness
During the coming months, the company’s Board of Directors will commence the third stage of the action plan, which is focused on strengthening the company’s competitiveness in the post-pandemic restaurant market in 2021 and strengthening the capital structure.
Stage 1: The operating environment during the emergency (lockdown)
On 13 March 2020, NoHo Partners announced it would start temporary layoffs, of 90 days at most, in order to minimise the negative financial impact of the coronavirus on its business. The layoffs concern all of the Group’s personnel in Finland, totalling approximately 1,300 employees. The full extent and duration of the layoffs will be determined later.
On 3 April 2020, the company announced it had also temporarily laid off seven of the eleven members of NoHo Partners’ Executive Team. The company’s CEO, Deputy CEO, CFO and Director of International Operations form the condensed Group Executive Team, which will be active throughout the the state of emergency.
The company has negotiated rent relief until the end of May for approximately 70% of its leases. Negotiations concerning rent for the month of June will continue when the Finnish Government’s plans concerning the lifting of the restrictions are confirmed.
Until the end of May, NoHo Partners’ turnover consisting primarily of takeaway and delivery sales in the fast casual business. The company estimates that its expenses during the state of emergency will be approximately EUR 2–3 million per month.
The management estimates that the state of emergency will remain in place until the end of May 2020. The action plan does not take into account financial support potentially granted by the Finnish State. The Finnish Government is expected to provide more information on this financial support within this week.
Stage 2: Restricted operating environment
The company is prepared for the coronavirus pandemic to affect its business for at least the next 12 months. The company expects that the recovery of the restaurant industry will happen gradually.
- In Finland, NoHo’s business operations are currently restricted by the Government’s decision to keep restaurants closed until 31 May 2020 and cancel large public events until 31 July 2020. According to the plan announced by the Finnish Government on 4 May 2020, the restrictions on restaurants will be gradually lifted starting from 1 June 2020. The Government also indicated that operational restrictions may be introduced with regard to the number of customers and the alcohol serving hours, for example. The Finnish Government will discuss proposals concerning the relevant legislative amendments on 13 May 2020 at the latest.
- In Denmark, the Government has issued a decision allowing dining-in service at restaurants to resume on 11 May 2020. Large events and gatherings of more than 500 people are banned until 31 August 2020.
- In Norway, the alcohol licences of restaurants in Oslo will be reactivated from 6 May 2020 onwards, but the Government’s policy restricts the number of customers to 50 people at a time in each restaurant until 15 June. Public events of more than 50 people are also cancelled until 15 June.
The company has prepared for the lifting of the restrictions by drafting special safety and hygiene instructions aimed at protecting the personnel and customers in accordance with the national recommendations and guidelines.
Restaurant sales are expected to start up again in June, driven by outdoor terraces and takeaway sales. The cancellation of summer events, the anticipated growth of domestic travel in Finland and the company’s extensive outdoor terrace capacity are expected to boost restaurant sales during the summer season.
The entertainment business, and night clubs in particular, are expected to only recover later. The company also estimates it will lose catering and beverage sales of approximately EUR 10 million due to the cancellation of large summer events.
The coronavirus crisis has expedited changes in consumers’ buying behaviour and the growth of digital channels. During the crisis, NoHo Partners has invested in the marketing of the new ravintola.fi online service and acquired approximately 15,000 new customers through this platform over a period of three weeks. The company currently reaches 130,000 customers in Finland through the service.
During the period 1 October–31 December 2019, the distribution of turnover between the different segments of the restaurant business was as follows:
- Restaurants 37.7%
- Entertainment venues 31.2%
- International restaurants 20.1%
- Fast casual restaurants 11.1%
Comments from the CEO
“Our industry and company have been hit hard by the coronavirus. When the coronavirus crisis began, we quickly took adaptive measures. I am very grateful for the positive spirit in which the negotiations were held, and I am satisfied with how quickly we agreed on the necessary measures with our personnel, financing partners, suppliers and lessors.
Our priority during these exceptional circumstances has been to look after the well-being of employees and minimise the impacts of the crisis on customers and suppliers. We are actively managing the situation using a very flat organisation. The speed of decision-making and reaction that this structure provides helps the company adapt quickly to changing market conditions in spite of its size.
We have made plans to prepare for the possibility that the restrictions imposed by the authorities and the changes in customer behaviour will continue to affect our business well into next year. Profitable restaurant operations are based on a flexible cost structure, as demand varies substantially during the year and even during individual months and weeks. One of the core competencies of our company is the operational management of this operating model, which is now more crucial than ever in the present circumstances,” says NoHo Partners CEO Aku Vikström.
Update on turnover and operating expenses during the exceptional circumstances
NoHo Partners specifies the estimates issued on 3 April 2020 regarding turnover and costs during the state of emergency (stage 1). The company estimates that its monthly turnover during the state of emergency will be approximately EUR 1.5 million and monthly expenses will be approximately EUR 2–3 million, depending on the ongoing lease negotiations.
Update on the financial situation
On 3 April 2020, NoHo Partners announced it is assessing several sources of funding to ensure the refinancing of the EUR 22 million of debt associated with the commercial paper programme maturing in May. The financing negotiations are progressing on schedule and in a constructive spirit.
Profit guidance and financial objectives
On 13 March 2020, NoHo Partners cancelled its previous profit guidance for 2020 (issued on 5 March 2020). At this time, the company is not specifying its turnover and profitability forecast for this year in more detail due to the uncertain market situation. The company will issue a statement on its market outlook and profit guidance when the overall impact of the coronavirus pandemic on its business is determined in more detail. The company is currently evaluating the financial targets for 2021, issued on 5 March 2020, and statements on these targets will also be issued when the longer-term outlook becomes clearer.
As previously announced, the company is not changing its long-term financial objectives at this stage.
Investor Q&A page and calls with analysts
The company will publish the most recent information about the impacts of the coronavirus on its business and its measures to respond to them centrally on its Q&A page aimed especially at investors. The Q&A is available on the company’s website at https://www.noho.fi/en/investors/investor-qa/. The pages will be updated continuously, and the date of the most recent update is indicated in the answers.
NoHo Partners will be in touch with the analysts who follow the company’s within the day.
More information is available from:
Aku Vikström, CEO, NoHo Partners Plc, tel. +358 50 524 9445
Jarno Suominen, Deputy CEO, NoHo Partners Plc, tel. +358 40 721 5655
Distribution:
Nasdaq Helsinki
Major media
www.noho.fi
NoHo Partners Plc is a Finnish group established in 1996, specialising in restaurant services. The company, which was listed on NASDAQ Helsinki in 2013 and became the first Finnish listed restaurant company, has continued to grow strongly throughout its history. The Group companies include some 250 restaurants in Finland, Denmark and Norway. Well-known restaurant concepts of the company include Elite, Savoy, Teatteri, Yes Yes Yes, Stefan’s Steakhouse, Palace, Löyly, Hanko Sushi and Cock’s & Cows. In 2019, NoHo Partners Plc’s turnover was MEUR 272.8 and EBIT MEUR 30.6. Depending on the season, the Group employs approximately 2,100 people converted into full-time workers.
NoHo Partners corporate website: www.noho.fi
NoHo Partners consumer website: www.ravintola.fi