Rational has slashed the dividend it intended to pay shareholders for fiscal year 2019 by almost 50% in response to the coronavirus crisis.
The combi oven maker – which recently announced profits of €172m ($188m) on sales of €844m ($922m) for 2019 – said it was reducing the dividend to €5.70 ($6.22) per share having originally proposed a payout of €10.70 ($11.68) per share two weeks ago.
“Since then, the negative impact of coronavirus on the general public and economy has worsened dramatically,” the company said in a statement. “That is hitting some of Rational’s customers hard. The further course of the coronavirus pandemic and its effects on Rational’s business performance cannot be foreseen at the moment.”
Rational’s executive board warned it could be reduced even further should the situation escalate, but said it could grant “special dividends” once the course of business normalizes and if it has sufficient capital resources.
That approach was also practised in 2009 and 2010, after the dividend for fiscal year 2008 was reduced in the wake of the financial crisis.
Rational said some chain customers have suspended planned purchases of its products until further notice as a commercial precaution, while in contrast other segments, including hospitals and public safety authorities, are under heavy strain and have to feed and care for more people for a longer time than in normal circumstances.
In order to safeguard its financial situation, Rational has implemented a strict cost-cutting program throughout the group and no vacant posts will be filled.
It aims to keep personnel costs down by reducing overtime and asking employees to use up their remaining leave. The option of short-time working will be used where possible.
Rational’s AGM on May 6 in Augsburg is also under threat because of the virus, with the company warning shareholders to think carefully about whether they really wish to attend this year.
The company’s annual shareholder meeting has become renowned for its excellent standard of catering. However, this year it will not offer participants a breakfast and lunchtime buffet.
Instead, only a much reduced range of cold food will be offered for reasons of hygiene, the company said.