2GO Group, Inc. incurred a net loss of P111 million in the first quarter of 2020, an improvement from the net loss of P368 million posted during the same period in 2019.
Group revenue declined 6% in the first quarter of 2020 to P5.161 billion compared with the P5.486 earned in the same period last year primarily due to reduced economic activity brought about by the coronavirus (COVID-19) pandemic, 2GO said in a disclosure to the Philippine Stock Exchange.
Shipping revenue grew by 0.3% to P1.750 billion from P1.745 billion. While freight revenue increased, it was weighed down by reduced travel revenues especially during the last two weeks of March. The government in mid-March has started implementing travel restrictions as part of quarantine measures to prevent the spread of COVID-19.
Revenues from the non-shipping businesses (logistics and distribution) also decreased by 9% to P1.251 billion from P1.855 billion as a result of reduced transport/delivery volumes for several of the group’s logistics services, which in turn offset growth in the distribution business.
2GO said it experienced a slowdown in e-commerce inbound transactions from other countries and their related local deliveries due to decreased output from China, the Association of Southeast Asian Nations, and the rest of the world.
For the first quarter of the year, the shipping business accounted for 34% of the group’s total revenues while non-shipping businesses contributed 66%, compared to the contribution of 32% and 68%, respectively, during the same period in 2019.
The group’s costs and expenses were 5% lower in the first quarter despite rising transport costs for the logistics business and increased sales of inventory from the distribution business. Fuel prices decreased by 32% during the first quarter while all other costs and expenses were generally maintained or reduced due to improvements in efficiencies and focus on controlling costs.
During the first quarter of 2020, 2GO noted that “the reduction in sales has not been very significant thus far and the management continues to evaluate and forecast the potential adverse impact of the Covid19 outbreak in future reporting quarters in 2020 and beyond.”
For the duration of the community quarantine period and beyond the lifting of such, however, 2GO said it expects a decline in sales and revenues “given the restricted mobility in and out of the country and the curtailed economic activities affecting demand not only in the Philippines but in other countries.”
The group has already activated its business continuity implementation plan and has taken steps “to manage the risk of disruption in the value chain both inbound and outbound, including the potential overall economic impact and the effects of the business disruptions in other business entities, some of which are integral to the value-chain of the group.”
2GO said it continuously monitors developments in the domestic and international markets for any further slowdown in economic activities and the drastic shift in customer or market behaviors or preferences that may eventually depress sales, place pressure on the deployment of certain assets, and impair the realizability of trade receivables and other similar working capital items.
The group has also implemented stringent safety and precautionary measures, including disinfecting and sanitizing facilities, implementation of work-from-home schemes for its employees, and imposing social-distancing in the work places, in order to mitigate the risk and ensure continuity of business operations.
