24th Mar 2020 15:38
(Alliance News) - Building materials firm Grafton Group PLC suspended its dividend on Tuesday amid the Covid-19 outbreak.
At the end of February, Grafton declared a final dividend of 12.5 pence per share for 2019, on top of the 6.5p already paid.
Grafton said on Tuesday it is "very strong" financially with a robust balance sheet and excellent liquidity. As of Monday, it had unrestricted cash of GBP303 million and undrawn bank facilities of GBP275 million. No debt needs to be refinanced until March 2023.
However, Grafton said: "Grafton is well placed to withstand a period of uncertainty and its current priority is to implement a range of precautionary measures that will preserve its liquidity and ensure it comes through the current period well-positioned for growth.
"These measures include a decision to suspend the payment of the second interim dividend for 2019 which was due to be paid on April 6. This prudent course of action, which the board believes is in the best interests of the company and its shareholders, will preserve GBP30 million of cash in the business."
"The board recognises the importance of dividends to shareholders and intends to resume payment as soon as it has greater clarity about the impact of Covid-19 on the performance of the group," it continued.
Grafton has now decided to shut all distribution branches and manufacturing plants in the UK following government advice.
Trading so far in 2020 has broadly been in line with expectations, and in the past week, there has been some higher demand due to forward buying.
"The Covid-19 virus will inevitably lead to a material decline in revenue and profitability over the coming months," said Grafton.
"There is no previous experience of a similar pandemic and its likely extent and duration is unclear at this stage. In view of this uncertainty, it is no longer possible to provide financial guidance for the remainder of 2020."
Grafton shares climbed 8.9% higher on Tuesday in London to 430.00p each.
By George Collard; [email protected]
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