Last checked at 
(Alliance News) - Taylor Wimpey PLC on Tuesday cancelled its dividend amid the Covid-19 crisis, a move which will save the housebuilder more than GBP500 million.
The FTSE 100 stock was 4.3% lower on Tuesday morning in London at 109.25 pence each.
Taylor Wimpey reported 2019 results at the end of February, declaring a final dividend of 3.80 pence per share and a special payout of 10.99p. These would have cost around GBP125 million and GBP360 million respectively, Taylor Wimpey said.
The company also has drawn down a previously unused GBP550 million revolving credit facility, giving it a gross cash position of GBP807 million and net cash of GBP165 million, as of Monday.
"We have taken rapid proactive measures to protect the balance sheet in the short term. However, we are likely to face weeks or months of uncertainty, including periods of inactivity which will limit our ability to complete on homes and therefore generate cash," said Taylor Wimpey.
"Until the extent and duration of the disruption is better understood, the board believes conserving cash is in the best interests of the long term sustainability of the business. Whilst our ordinary dividend of at least GBP250 million per annum has been stress tested and is payable through a 'normal' downturn, the global Covid-19 pandemic goes beyond normal and even severe cyclical swings and represents an exceptional case.
"In light of the significantly changed circumstances, we also suspend our previous guidance for 2020. We will assess our medium-term targets when there is greater clarity on the length and impact of the current crisis," the firm continued.
Taylor Wimpey has closed all show homes, sales centres, and construction work except what is needed to make sites secure. Sales offices closed from Monday evening.
Taylor Wimpey stressed it is well capitalised, saying a large order book and "quality" long-term land bank gives it high resilience.
Taylor Wimpey is not the first housebuilder to suspend dividends. FTSE 250-listed Redrow PLC also suspended its dividend planned for the first half of 2020, while last week McCarthy & Stone PLC and Crest Nicholson Holdings PLC made similar moves.
By George Collard; georgecollard@alliancenews.com
Copyright 2020 Alliance News Limited. All Rights Reserved.
