Farsons dismisses redundancy claims, full staff kept on despite COVID losses

Farsons Group CEO insists the Board and management had taken extraordinary measures to ensure no jobs were lost despite revenue and profit taking a huge hit amid the pandemic


No employees of Farsons Group have been laid off during the COVID-19 pandemic despite the business suffering heavy losses due to the nearly complete slowdown in the tourism, catering and entertainment sectors, BusinessToday has learned.

Numerous messages on social media groups claimed that a number of Farsons staff had been laid off as the group struggles to come to terms with business dropping drastically following the onset of COVID-19.

But Farsons Group CEO Norman Aquilina vehemently denied these claims, insisting no employees had lost their jobs because of the pandemic.

“This information is totally untrue. Farsons Group is committed to safeguard all employment and has not made any employees redundant,” he told BusinessToday. “We also remain totally committed to meet customer expectations during these challenging times.”

Aquilina acknowledged that COVID-19 had left the group struggling to introduce measures in a bid to mitigate the crippling effects of the pandemic on the company’s core business groups.

“Turnover fell precipitously across all business lines as consumer demand for food and beverage products declined. This decline was particularly acute in the bars and restaurant sectors when these were ordered to close by government regulation,” Aquilina said. “The almost total wipe-out of tourism between mid-March and June greatly impacted our business in this segment and, despite the reopening of the airport in July, tourist numbers, and our business in this area, continue to remain very low.”

He said that April 2020, the first full month impacted by COVID-19, saw Group turnover fall by 55%. At that time, all mass events were cancelled and the airport was closed down, effectively also shutting down the tourist sector over that period, badly impacting the hotels sector.

Competitive market pressures also became more pronounced as all businesses strived to retain their market positions and manage inventory levels. Inevitably, these increased market pressures resulted in a further compression in gross margins across the Group. That said, sales within the retail segment are holding on, even if consumers are generally being selectively cautious in their purchasing requirements.

Turnover for the six-month period to 31 July 2020 amounted to €36.8 million compared with €53.3 million for the same period last year – a decrease of 31%. This result is of course a significant reduction from the profit after tax registered in July 2019 of €6.4 million.  The reduction of 75% in the Group’s profits was experienced across all business lines.

Aquilina said Farsons Group is taking the opportunity to revisit its business model in line with changing purchasing patterns and customer expectations. Furthermore, it is remaining vigilant for any arising opportunities that may evolve within the marketplace to be able to ensure its continued growth and success once the pandemic is over.

But safeguarding jobs was a priority of Farsons Group at a time when many companies were laying off employees or shutting down their doors.

“The Group categorically denies that any employee has been made redundant during this period. The Board and Management immediately undertook painful but required measures to curtail expenditure in view of reduced demand for our products in order to safeguard employment of all employees,” Aquilina said.

“These measures together with the wage supplement provided by Government continue to ensure that no employee is made redundant.”

The Board and management’s immediate focus was to curtail certain operational and administrative costs, re-visit ways of working, whilst at the same time re-evaluating planned capital investment programmes. These were, and continue to be, critical measures for the protection of employment, commercial viability and safeguarding the financial integrity of the Group.

Farsons Group CEO Norman Aquilina
Farsons Group CEO Norman Aquilina

A new normal

Consumer behaviour seems to have settled into a new normal as more and more people are learning to live with the reality of COVID-19. Consumer sentiment however does continue to reflect the uncertainty of this pandemic, with confidence remaining muted and spending intent still below pre-crisis levels.

“Consumers remain worried about spending and safety, with a steady shift to value and essentials,” Aquilina said. “In fact, people seem to generally be expecting COVID-19 to negatively affect their finances as well as their daily routines, with consumers being mindful about their spending and generally trading down to less expensive products.”

He said the Group had realised Q3 and Q4 would be particularly challenging, especially following the closure of bars and pubs throughout November and December.

“As we now move towards the end of the year, the merriment and cheer normally associated with this time of year is undoubtedly going to be significantly muted. Uncertainty will continue to influence behaviour and we are likely to witness a continued reduction in consumer demand and therefore the propensity to spend, which unfortunately will continue to impact the profitability of the Group,” Aquilina said.

On a more positive note, he said that recent announcements regarding the success in the development of a safe vaccine and its possible deployment before the end of the year, augur well and have lifted spirits and expectations somewhat.

“Together with the rest of the world, we look forward to a rapid rollout of a safe vaccine here in Malta,” he said.

A cautious approach

And what of the months ahead? Aquilina said the high level of dislocation and disruption brought about by the unprecedented COVID-19 pandemic was expected to persist over the coming months, even with the introduction of a vaccine.

“The uncertainty will likely persist for some time longer. The immediate future is far from clear and forward visibility for business planning purposes remains subdued. Agility in responding to fast-moving events will be key,” he said. “We remain vigilant and are committed to continuing to implement such further measures as are necessary to safeguard the Group’s presence in the market, to protect the work force and to secure the financial viability and integrity of the business.”

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