(Alliance News) - Inchcape PLC on Tuesday said it has turned to cutting costs and will not recommend its proposed final dividend in a bid save cash due to the Covid-19 outbreak.
The automotive retailer had proposed a payout of 17.9 pence per share.
Inchape said: "Given the high level of uncertainty around the duration and impact of Covid-19, we are exploring other debt options to further increase our liquidity and flexibility, including the coronavirus corporate financing facility launched by the UK government. In this context the board has decided to preserve cash and no longer recommends the payment of the previously announced final dividend."
The company has added that it has "taken swift action" to reduce spending and capital expenditure. It added its senior management and board are taking a 20% cut in salaries and fees.
On trading, Inchcape said a large number of its markets have been hurt by closures as national governments implement lockdowns in a bid to stop the spread of the deadly virus.
"Inchcape's global diversification is supporting our performance, with 14 markets still operational (albeit at much reduced levels), including Australia, Ethiopia and Hong Kong. While Singapore was operational throughout the first quarter, a one month lockdown commenced on April 7. The situation is clearly very dynamic," the company said.
The company added that it has GBP600 million of liquidity at its disposal, through cash of GBP140 million and GBP460 million available as part of a revolving credit facility.
Inchape said: "We have stress-tested the impact of various conservative scenarios - including a prolonged period of global shutdowns followed by materially reduced activity throughout the second half of 2020 - and are comfortable that we have sufficient financial resources to navigate an extended period of disruption."
Shares in the company were 8.7% higher at 474.00 pence each in London on Tuesday morning.
By Eric Cunha; ericcunha@alliancenews.com
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Inchcape (INCH)