Concrete levelling technology supplier Somero Enterprises (SOM:AIM) has recalled 2019 dividends having put shareholder payouts on hold during the worst of the Covid lockdown.
Somero ‘accelerated’ the reinstatement of its deferred 2019 final dividend of $0.207 per share and declared an interim dividend of $0.04 per share, albeit, down 30% on 2019’s first half payout.
That sent the stock bananas, rallying more than 24% to 257.5p.
CASH STASH NOT NEEDED
‘The board determined that the current level of excess cash, in large part attributable to the deferral of the 2019 dividend payments, is no longer required and therefore the company can resume dividend payments and distribute this cash to shareholders’, said Somero management on Wednesday.
The news came as Somero reported a 29% fall in first-half profit as the obvious impacts of the Covid crisis took their toll. Pre-tax profit for the six months to 30 June dropped to $7.5 million, down from $10.5 million a year ago, as revenue reversed 9% to $35.3 million amid a slowdown in construction activity during the pandemic.
Equally important, the company also reinstated full-year guidance, with revenue expected to be around $75 million and adjusted earnings before interest, tax, depreciation and amortisation around $19 million.
The consensus of analyst 2020 forecasts had been pitched at $90.4 million and $28.1 million, based on Refinitiv data.
COVID CAUTION REMAINS
‘The pandemic has served as an excellent stress test for the business, and while difficult decisions have been made along the way, I am confident we will emerge a better business’, chief executive Jack Cooney said.
‘We begin the second half of the year with confidence in the strength of our financial position, in the flexibility of our operating model, and in the demand seen for our recently launched products.’
But Cooney admitted to staying cautious about the future while the Covid crisis continues.
‘Moving forwards, our focus is sharp and our management team is committed to continuing to deliver healthy profits and cash flows to our shareholders while continuing to make sound strategic investments for long-term growth’, Cooney concluded.
