Published on March 23rd, 2020 | by The GC Team0
Electrolux cancels dividend due to coronavirus impact
Electrolux today said it will cancel its shareholder dividend for the fiscal year 2019 due to the impact of the coronavirus and the subsequent need to take mitigating actions to protect earnings and cash flow.
The Swedish appliance maker provided an update on developments related to the virus on 15th March, in which it stated that there was a considerable risk of a material financial impact during the first half of 2020 related to supply chain disruptions, government countermeasures and changing consumer behaviour.
Since then, several authorities globally have imposed strict countermeasures, including the closure of industrial activities, retail shops and cross-border transit – a development which has caused a sharp decrease in demand and the possibility to produce goods, the company said.
A statement from the firm today said: “Electrolux is continuously adjusting production across all regions to be in line with expected sales volumes and will temporarily close impacted factories as necessary or mandated. Electrolux generally has good product availability, considering the anticipated lower near-term consumer demand.
“Given the severity of the situation, including large order revisions from retailers in recent days, Electrolux expects a material financial impact in 2020, starting in the first quarter.”
The manufacturer said it is not at this point possible to quantify or predict the full impact of the virus and it is now implementing aggressive mitigation actions to reduce the risk to earnings and cash flow.
In addition to furloughs for employees affected by reduced activity, these actions include significantly reduced discretionary spending and reprioritising capital expenditure.
“Electrolux has a solid balance sheet, but this is an extraordinary situation and the Board believes it is appropriate to take a prudent approach at this point in order to ensure the company continues to be well-positioned for the future,” said Staffan Bohman, Chairman of the Board of Directors of AB Electrolux.