Morgan Advanced Materials withdraws guidance, suspends dividend
By Michele Maatouk
Date: Tuesday 31 Mar 2020
(Sharecast News) - Morgan Advanced Materials suspended its dividend and withdrew its 2020 guidance on Tuesday due to the coronavirus outbreak.
The specialist products manufacturer, which has wound down some operations and closed sites in geographies where it is required, continues to service customers in key industries such as healthcare, food production, energy and critical infrastructure.
The group said sales for the 12 weeks to 21 March were down 3.2% on an organic constant currency basis, compared to the same period a year ago. Excluding China, sales were 0.2% lower.
Within the carbon and technical ceramics division, sales were down 0.6% on the year, with growth in seals & bearings partially offsetting a decline in electrical carbon, and with technical ceramics broadly flat. Sales for the thermal products division were 6.7% lower on the year.
"While we are currently seeing the position improve in China, with all of our factories there reopened, the Covid-19 outbreak has escalated globally. At this point we have six businesses closed across Italy, India and South Africa.
"The situation remains highly uncertain and it is therefore impossible to predict with any degree of certainty the impact this will have. We are consequently withdrawing our previous guidance for 2020."
Morgan Advanced said it has taken immediate action to reduce costs and improve cash flow and liquidity. These include reductions to capital expenditure other than for vital health, safety and environmental matters, a temporary hiring freeze for all but the most critical roles, and a curtailment of discretionary expenditure. In addition, board members have agreed to take a 30% salary cut from 1 April.
The company also said it has decided to withdraw the proposed 2019 final dividend "given the rising level of uncertainty" about how the pandemic will develop.
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