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Europe Emerging From Lockdown Supports B2B Service Providers but Pre-COVID Performance Will Have to Wait

DBRS Morningstar published a commentary assessing and comparing the performance of European business-to-business (B2B) companies that are active in the food services and catering, workwear and linen washing, pest control, hygiene and cleaning, and facility management sectors since the beginning of the Coronavirus Disease (COVID-19) pandemic. The commentary also gives a forward-looking view of the performance of these companies as the pandemic subsides and a “new normal” emerges. With international and leisure travel almost completely curtailed, companies reliant on the tourism and hospitality sectors have had to deal with an extraordinary drop in demand for their services. Those reliant on occupancy levels at their customers’ offices and premises have also been affected as remote working has become the norm in the last year and a half. Conversely, companies that supply cleaning, hygiene, and disinfection services as well as services to the healthcare sector have performed better and will continue to do so, benefitting from strong tailwinds and a shift in focus brought on by the pandemic.

Summary highlights include:
-- Companies reliant on office occupancy saw the most impact on their revenues while companies with exposure to hospitality, travel, and the general trade and retail sectors have had varying degrees of success in managing the impact of the pandemic on their businesses.
-- A number of very positive statistics have been released for the months of April and May 2021 and all point to a very strong, but temporary, recovery from last year’s trough levels.
-- The stringency of most European governments’ responses to the pandemic is still high and passenger counts at the largest European airports are still depressed, pointing to a mixed outlook in 2021 for B2B service providers.

“While the easing of restrictions and the reopening of international travel are largely expected to support the ailing hospitality sector, and by extension part of the B2B service sector, there remains considerable uncertainty about the extent and timing of recovery for the sector in 2021 and beyond. New habits, the generalisation of remote work, and the massive adoption of digital tools for business will also mean different paths out of the pandemic for the broader B2B service sector, ” said Amaury Baudouin, Vice President, European Corporate Credits.