Hudaco prepares investors for no dividend


Hudaco prepares investors for no dividend

Published Date: 2020-05-22 | Source: Stephen Gunnion | Author: Stephen Gunnion

Hudaco prepares investors for no dividend

The group says it is preserving cash due to the impact of the lockdown on its businesses and uncertainty over when demand will return.

Hudaco says it is highly unlikely that it will pay an interim dividend this year as it preserves cash due to the impact of the lockdown on its operations. It has also warned shareholders to expect a decline in headline earnings of more than 20% for the first half of its financial year to end-May.

In a trading statement, the automotive and industrial parts distributor said most of its businesses were closed for five weeks in March and April and trading remained restricted this month. The group specialises in the importation and distribution of high-quality branded automotive, industrial and electrical consumable products. Brands include Bearings International, Bauer, Partquip, Deltic Energy Solutions and Elvey Security Technologies, amongst others.

While a few of its consumer-related businesses were classified as essential services, and many of its engineering consumables businesses were also able to operate to a limited extent, the majority of its customers weren't classified as essential services. That meant that it operated at a significantly lower level than usual during the level 5 lockdown. Although most of its operations were now open for business, it said it remained to be seen how many of its customers would be operating and what levels of activity would be achieved.

Hudaco said its businesses had stocked up ahead of the Chinese New Year in January and had adequate inventory as SA went into lockout. With international supply chains now recovering, it said the biggest question now facing the group was how quickly demand would follow.

Hudaco's shares closed unchanged at R57 yesterday.

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