Marketing materials firm 4imprint (FOUR) ticks up 0.7% to £18.42 as it produces an update on the impact the coronavirus is having on the business.
Like many other firms it has moved to withdraw its dividend but its latest announcement on trading is interesting in a wider sense given how closely tied its fortunes have historically been to the US economy.
The fact daily order counts are now running at about 20% of the 2019 comparative, offers an insight into just how dramatic the impact of lockdown measures across the US are.
The company’s facilities are currently all shut down but it is fulfilling orders through an expanded work from home capability.
‘We anticipate that this limited level of activity is likely to continue until these restrictions begin to be lifted and economic activity starts to improve,’ it added.
‘Given the inherent uncertainty as to how quickly markets might recover, and in order to maintain maximum flexibility, the board has taken the prudent step of withdrawing its recommendation to pay a final dividend in May 2020.’
At the end of the first quarter the company had $50m of cash balances and the cancelling of the dividend will result in extra cash of $16m being available.
FinnCap analyst Guy Hewett says: ‘In previous downturns, 4imprint’s financial strength and marketing skills have enabled the group to take share and exit in a stronger position.
‘The competition is largely significantly smaller, more local operators that do not have the same financial reserves or marketing expertise. The speed and scale of the COVID-19 downturn is likely to see this trend to an even greater degree.’
