Budget Saudi CEO expects deeper COVID-19 impact in Q2, better performance in H2 2020

Fawaz Danish, CEO of United International Transportation Co. (Budget Saudi), said that the COVID-19 impact started mid-March, expecting a deeper impact on all market sectors in the Q2 2020.

Long-term rental customers, which account for 70% of the company’s fleet, were not hit by the pandemic, as most of them are still operating, such as the commercial and petrochemical firms, Danish told CNBC Arabia.

The fallout in the second quarter will affect short-term car rentals - the retail segment - at a maximum of 30% of the company’s fleet amid the closure of airports and branches, as well as the curfew.

There could be a balance between the long and short-term rentals, Danish noted, expecting better performance in Q3 and Q4 2020, on lifting travel bans.

On the increase of the value-added tax (VAT), Danish said the company does not expect a direct impact on its operations, however, indirect impacts will be seen on the retail business in the first three months of application, as was the case when VAT was first implemented.

Danish added that demand for transportation in Saudi Arabia is very essential due to its wide area and lack of transport infrastructure.

Budget Saudi reported net profit after Zakat and tax of SAR 45.5 million for the first quarter of 2020, a 9.26% year-on-year (YoY) increase, compared to SAR 41.6 million in the year-earlier period.