Dewhurst maintains interim dividend with sales relatively stable

Electrical and control components company Dewhurst reported a “similar level” of sales and profits in its first half report on Thursday, despite the ongoing difficult circumstances in world markets resulting from the Covid-19 coronavirus pandemic.

The AIM-traded firm said that overall, group revenue on continuing operations increased 1% year-on-year for the six months ended 31 March to £28.2m.

Adjusted operating profit, before acquired intangible amortisation, was down 2% at £3.4m, and profit before tax decreased 3% to £2.5m, although earnings per share improved slightly to 20.8p from 20.4p a year earlier.

Dewhurst said there was “good growth” in sales in its lift and transportation divisions, offset by a “significant reduction” in keypad demand.

A proportion of the fall in keypad demand was predicted as a result of the model changeover at a key customer, although the downturn was more severe than it had expected.

The growth in lift division sales was split around 40% in the UK and 60% overseas, with its A&A division leading the growth in the UK, and the ERM and P&R operations doing so overseas.

In transportation, Dewhurst said TMP had a “strong” first half, continuing the progress it made in last year's second half.

First half currency movements reduced group revenue by around £0.4m, primarily as a result of the weakening of the Australian dollar.

Dewhurst said its balance sheet remained “strong”, with cash at period end totalling £15.1m, up from £6.2m year-on-year.

Since 31 March 2019, the group said it had received £7.5m on the divestment of TVC, but spent £1m towards developing Dupar's new property.

“The Covid-19 pandemic only had a minor impact on our results in the first half, but the board expects there to be a significant impact on the second half,” the company’s directors said in its statement.

“The UK has probably been our most seriously impacted market to date and the only country in which we were temporarily forced to close a factory.

“This is now operational again, but we have furloughed or laid-off staff in a number of locations and this will continue while demand is lower than normal.”

The board said it was difficult to predict the path of the recovery, as it was affected by many factors outside of the firm’s control.

“Australia has been our most resilient market to date and we expect Australian demand to bounce back reasonably quickly, although there will likely be longer term impacts.

“Elsewhere the recovery is likely to be more gradual.

“However, the group has a strong financial base to absorb the level of short-term difficulty we are currently experiencing and will look to take advantage of any appropriate opportunities that arise.”

Dewhurst’s board declared an interim dividend of 3.75p per ordinary share, in line with the half-year distribution last year, totalling £0.32m.

The interim dividend would be payable on 18 August, and would be posted on 13 August to shareholders appearing in the register on 10 July, with the ex-dividend date being 9 July.

“The directors have given due consideration to what might be an appropriate level of dividend in these exceptional circumstances,” the board explained.

“Given the current outlook and the relatively modest cash impact of our interim dividend compared to our cash balances we have decided to proceed with that dividend at the same level as last year.

“However … the main impact of the Covid-19 pandemic is expected to be felt in the second half and it may not be sustainable to maintain Dewhurst's dividend policy for the year ending 30 September.”

Dewhurst’s board said it would make a decision on that at the usual time, on the announcement of its full-year results.