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(Alliance News) - Rotork PLC on Tuesday said it has withdrawn its proposed final dividend of 3.9 pence and has implemented other cost-cutting measures amid Covid-19 uncertainty.
The FTSE 250-listed electric, pneumatic and hydraulic valves manufacturer said that while activity in January and February were in line with expectations, trading in March has been hurt on government-enforced restrictions and site closures.
The initial outbreak in China caused delivery delays and an increase in logistics costs, Rotork said. While the output in the company's factory in China have almost returned to normal, factories in India, Malaysia and Italy have been closed in line with government instructions.
Additionally, factories in the US are open but operating at reduced capacity, with the company recording delays in deliveries from US factories due to component shortages resulting from the cancellation of airfreight from Europe. Factories in the UK have now reopened after been temporarily closed last week.
Rotork said it has implemented measures to conserve cash which include withdrawing its recommendation to pay a 2019 final dividend of 3.9p, resulting in a cash saving of GBP34 million. It also said it has put a freeze on recruitment, postponed salary increases and restricted discretionary spending, adding that it will take advantage of available government wage replacement schemes.
As at Sunday, the company had around GBP110 million of net cash and a GBP60 million undrawn revolving committed facility, scheduled to mature August 26. It said it is currently in discussions with its bank to extend the facility and has applied to the UK Government's Covid Corporate Finance Facility scheme.
"Whilst there is unprecedented uncertainty on how unfurling events will directly impact our markets and our businesses, we enter this period from a position of strength. Rotork has a great workforce, strong market positions and substantial net cash resources," said Chief Executive Kevin Hostetler.
The stock was trading 2.6% lower at 216.90 pence each on Tuesday morning in London.
By Ife Taiwo; ifetaiwo@alliancenews.com
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