(Alliance News) - Packaging firm Smurfit Kappa Group PLC on Wednesday said it will no longer recommend paying its final dividend for 2019 as it looks to save cash due to the Covid-19 outbreak.
Smurfit Kappa had proposed a final dividend of 80.9 euro cents when it reported its annual results back in February. It would have taken its total 2019 payout to 108.8 cents, a 21% increase from 2018.
On future payouts, Smurfit Kappa said: "Beyond the current uncertainty that Covid-19 brings, the board remains committed to providing shareholders with an attractive and progressive dividend stream. The board will make an assessment of the quantum and timing of a dividend later in the year when the effects of the current Covid-19 pandemic are better understood."
The FTSE 100 firm estimated that capital expenditure for 2020 will be in the range of EUR500 and EUR550 million, below previous guidance of EUR615 million and a third lower than the EUR730 million in 2019.
The Dublin-based company also reported on its first quarter trading. Revenue came in at EUR2.19 billion, a 5.3% fall from the EUR2.32 billion it reported from the first quarter of 2019.
Earnings before interest, tax, depreciation and amortisation slipped 10% year-on-year to EUR380 million from EUR424 million.
EBITDA margin nudged lower to 17.3% from 18.3% in th first quarter of 2019.
Chief Executive Officer Tony Smurfit said: "In an obviously challenging operating environment I am very proud of the dedication shown by all of my Smurfit Kappa colleagues in delivering an EBITDA result of EUR380 million, with a group margin of 17.3%. Volumes in Europe increased by 3% or approximately 2% on an organic basis, while demand in the Americas grew by 3.5% year-on-year.
"During these uncertain times, we have a heightened focus on cost reduction while maintaining our market-leading innovation and sustainability offering. While the full extent and effects of the macro and economic risks brought on by Covid-19 are unclear, Smurfit Kappa remains very well positioned both financially and operationally."
At the end of the quarter, the company had liquidity of over EUR1.5 billion, with average debt maturities of over five years. It has no bond maturity until 2024, Smurfit added.
Shares in the company were 1.9% lower at 2,217.50 pence each in London on Wednesday morning.
By Eric Cunha; ericcunha@alliancenews.com
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Smurfit Kappa (SKG)