Report: Q1 2022 Covid-19 Revenue Forecast Updates

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Report: Q1 2022 Covid-19 Revenue Forecast Updates

2 minutes
April 20, 2022 12:00 pm

Report: Q1 2022 Covid-19 Revenue Forecast Updates

The Q1 2022 release of the EDHECinfra indices incorporates the views and asset-level revenue forecasts of our team of financial analysts. This report updates the Q4 2021 report and is presented following the TICCS® taxonomy of infrastructure companies. Each quarter, the team reviews the revenue forecasts of 700+ companies that are currently live in the EDHECinfra universe, based on the latest reports, historical data, sector knowledge and contributed data.

By Jack Lee and the team

Cash flow projection downgrades gradual recoveries from the continued impact of Covid-19

We observed that many countries have started to ease the lockdown restrictions gradually. On this basis, we expected the future revenues to see gradual recoveries from the covid impact in the next 12 months.

In the previous quarter, rising inflation was widespread globally and we have adjusted the forecast to consider this inflationary spike. We are awaiting central bank intervention to determine the longevity of this spike.

That said, the majority of the forecasts due to covid we made in Q4 2021 remain applicable, with the exception of those for sectors highlighted below.

IC6010 Airport Companies

International air-travel is expected to gradually recover in 2022 as more countries lifting their travel restrictions. In February 2022, Australia with one of the world’s strictest travel bans after shutting itself off since March 2020 has finally reopened their international borders (BBC, 2022). Airlines are optimistic that the industry will improve over the coming months as countries lifting travel restrictions and hence boosting passenger demands (IATA, 2022a).

Industry-wide revenue passenger-kilometres (RPKs) in January 2022 were down 45.1% from their January 2019 values (IATA, 2022b) which is an improvement from last quarter. We expect a gradual recovery in travel demand, but with numbers not returning to pre-Covid level until 2023.

Our Q1 2022 revenue projections for other sectors are unchanged from our Q4 2021 assessment.

As before, the most impacted segments are merchant (BR-20) and regulated (BR-30) companies. In the absence of long-term revenue contracts, these investments are susceptible to the impact of external events. By contrast, contracted business models (BR-10), have been far more robust in the face of the impact of Covid-19 on cash flows.

As of this quarter, companies in all geo-economic segments (TICCS Pillar 4) are included in our revision of the revenue forecast due to Covid-19, as the pandemic has spread.

The following table lists those industrial sectors that we consider to be experiencing the most material impact:

TICCS® industrial superclasses most affected by Covid
Code Name
IC10 Power Generation x-Renewables
IC40 Energy and Water Resources
IC60 Transport
IC70 Renewable Power
IC80 Network utilities