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Crisis? What crisis? The Qld businesses thriving despite global chaos

Business

The coronavirus has devastated the markets, but some Queensland companies continue to thrive despite the social and economic chaos.

 

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For every tourism and travel company devastated by the impacts, tech companies are seeing better sales as clients opt for cloud-based solutions to allow work from anywhere.

Food retailers are also benefiting from the panic buying, but also dealing with issues that have never occurred before. Small companies selling freezers on the Sunshine Coast are running out of stock.

For the bulk of companies it means implementing procedures devised for the bleakest of outlooks, right down to the sweaty, local gyms that are pleading with customers to minimise contact with each other.

Surprisingly, mining companies are doing reasonably well. The Department of Industry has upgraded its expectations for the mining industry’s economic contribution by more than 6 per cent, helped along by a collapsing Australian dollar.

An extra $18 billion has been added to expectations for commodity exports to almost $300 billion.

Brisbane-based Domino’s operates around the globe and is now opting for a no-touch or zero-contact food delivery to protect staff and customers.

Brisbane based Collins Foods said its sales were in line with expectations but it and its KFC outlets were now taking the proactive step of closing their in-restaurant dining areas in Australia.  Collins Foods’ KFC restaurants will immediately shift their focus to take-away, drive-thru, and delivery. These three channels account for about 80 per cent of sales.

Technology company Megaport “was born in the cloud”, according to chairman Bevan Slattery. Its staff are used to working remotely and in January it looked at what was happening in China and “with an abundance of caution” Megaport stocked up on consumables.

“I am pleased to report that we have not noticed any material change to either our existing business or our sales pipeline for the quarter to date,” Slattery said.

Sales were up for the current quarter and there was a solid pipeline of work to come. The more traditional IT clients are moving to cloud-based processes.

“The business is in great shape. We have over $100 million in cash, with no debt other than vendor finance of approximately $6 million. Forty percent of our revenue is in US dollars and half our cash reserves are also in US dollars, ensuring we have a balanced exposure to major currencies.

“We are fully funded and will continue to drive the global expansion of our platform for our customers and partners. As we continue to sell additional services that have high incremental margin, we are tremendously excited for our long term future, even in these uncertain times.”

Technology One activated its critical response plan a month ago and has scrapped any events where 20 or more people were to attend. Its team is based around the world but it can operate remotely without loss of continuity.

In the property sector, developer Sunland has scrapped its $60 million share buyback because of the collapsing share market and to conserve cash. Real estate is not expected to fare well. Auctions are not expected to attract the normal crowds.

It recent downturns, companies that were considered defensive stocks, like retail and gambling, do well. But this downturn is not typical.

Internet-based retailer Kogan got an endorsement from broking house RBC Capital Markets which said it was well-placed to see out the impacts of the virus.

The Brisbane-based Star Entertainment Group has had to take radical measures apart from opting for social distancing.

These measures include deactivation of every second gaming machine and electronic table game to create additional distance. It will reduce the capacity at table games, including increasing distancing at seated table games between players and restricting the total number of players at each stand-up table game.

The number of patrons in individual food and beverage outlets will be restricted.

Tax consultants H&R Block are doing returns at more than arm’s length by practising distancing and also telling clients they can have appointments on-line.

At Virgin Australia, things could barely be worse. S&P has downgraded the company and put it on a negative outlook. It has cut services and asked staff to take leave.

At Flight Centre, similar actions have been taken. The company has traded its way through the GFC and 9/11 as well as the SARS outbreak and the disruption of the internet. In the current crisis, taff are being asked to take leave and the company is hoping to use marketing to trade its way out of the disaster.

 

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