RHI Magnesita pulls dividend as tough conditions persist
Refractory products company RHI Magnesita pulled its dividend and said difficult market conditions in the second half of 2019 had continued in the first quarter of 2020.
The company, which makes heat-resistant linings for furnaces and kilns, said that while the coronavirus pandemic had not had a had a material financial impact to date, it had seen a slowdown in customer activity particularly in its Steel Division, adding that the future demand environment was “very uncertain”.
Full revenue fell 6.5% to €2.92bn due to lower volumes from the steel division, as a result of inventory destocking at customers' sites in a weak steel production market environment.
Pre-tax profit slipped 19% to €200m, as restructuring and write-down expenses also took their toll.
The final dividend was cancelled to save cash and the company said it would reviewed later in the year once the outlook became clearer.
“The board believes this is an appropriate and prudent measure to take as it seeks to preserve RHI's strong liquidity, cash flow and financial position through these uncertain times," the company said.
“We have undertaken extensive scenario testing, factoring in a range of potential outcomes, which indicate that the company has sufficient liquidity to withstand an extended period of uncertainty.”