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Rotork joins growing list of firms to pull dividend
31st Mar 2020 09:59
(Sharecast News) - Rotork has pulled its dividend and suspended pay rises after the coronavirus outbreak forced the engineering firm to shut factories worldwide.
The London-listed firm, which specialises in flow controls and instruments, said its factories in India, Malaysia, the UK and Italy, one of its biggest manufacturing centres, were now shut.
It conceded: "The situation in Italy is now impacting the group. Rotork has three manufacturing sites in Italy, and a significant valve-making customer base in the country."
Italy has been particularly badly hit by the pandemic. It remains in lockdown and was the first country to impose quarantine restrictions, in early March.
Rotork's factories in the US are deemed essential facilities and remain open, but are operating at a reduced capacity.
The company said it had taken a number of actions to mitigate the impact of Covid-19. These include a recruitment freeze, postponing salary increases - including those for the board - and restricted discretionary spending.
It has also withdrawn its recommendation to pay a final dividend of 3.9p per share, which is expected to save ?34m.
The FTSE 250 company said: "In light of uncertainty relating to Covid-19, and the near term requirement to conserve cash, customers in several of our end markets have announced high level plans to revisit their capital and operational expenditure commitments, It is too early to fully asset the impact of these.
"While the activity level for level for the group in January and February was in-line with our expectations, we began to see an impact on both orders and delivers in March. Asia Pacific order intake, however, was broadly in line with expectations, despite softness early in the period.
"Given the unprecedented level of uncertainty, it is not currently possible for the group to provide guidance for 2020."
Chief executive Kevin Hostetler added: "While 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."
As at 1000 BST, shares in Rotork were down 2% at 219.9p.
The London-listed firm, which specialises in flow controls and instruments, said its factories in India, Malaysia, the UK and Italy, one of its biggest manufacturing centres, were now shut.
It conceded: "The situation in Italy is now impacting the group. Rotork has three manufacturing sites in Italy, and a significant valve-making customer base in the country."
Italy has been particularly badly hit by the pandemic. It remains in lockdown and was the first country to impose quarantine restrictions, in early March.
Rotork's factories in the US are deemed essential facilities and remain open, but are operating at a reduced capacity.
The company said it had taken a number of actions to mitigate the impact of Covid-19. These include a recruitment freeze, postponing salary increases - including those for the board - and restricted discretionary spending.
It has also withdrawn its recommendation to pay a final dividend of 3.9p per share, which is expected to save ?34m.
The FTSE 250 company said: "In light of uncertainty relating to Covid-19, and the near term requirement to conserve cash, customers in several of our end markets have announced high level plans to revisit their capital and operational expenditure commitments, It is too early to fully asset the impact of these.
"While the activity level for level for the group in January and February was in-line with our expectations, we began to see an impact on both orders and delivers in March. Asia Pacific order intake, however, was broadly in line with expectations, despite softness early in the period.
"Given the unprecedented level of uncertainty, it is not currently possible for the group to provide guidance for 2020."
Chief executive Kevin Hostetler added: "While 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."
As at 1000 BST, shares in Rotork were down 2% at 219.9p.