- Oilfields servicing company, Shawcor Ltd (TSX:SCL), is suspending its dividends until further notice
- This will free up $40 million annually and help the company navigate the effects of COVID-19 and and the recent oil price drop
- The company is also accelerating the planned closures of its plants and attempting to reduce expenditures across its operations
- So far the company has saved $60 million in expenditures and generated $40 per cent in new funds
- Shawcor Ltd (SCL) is down 18.3 per cent, with shares trading for $1.48 and a market cap of $103 million
Oilfields servicing company, Shawcor (TSX:SCL), is suspending its dividend to mitigate COVID-19’s impacts and the recent slash in oil prices.
The regular quarterly dividend will be with be suspended until further notice after March 31. This will save the company more than C$40 million annually.
The company will utilise the previously-allotted dividends to sustain its operations through the coming months. Shawcor also believes its non-oil-and-gas energy assets will also help balance against upcoming losses.
Planned plant closures, announced earlier this year, are now being accelerated to limit ongoing costs as well as the selling of select businesses and company assets.
Shawcor was already planning these reductions before the outbreak began to take hold, due to a difficult 2019 for the company.
In the company’s fourth quarter report, released last month, revenue was down 6 per cent to $334 million. The company also reported a net loss of $81.8 million.
The plan has already reduced expenses by $60 million and generated over $40 million in cash.
At the time, Steve Orr, CEO of Shawcor, stated that 2020 would be a turning point for the company.
“A step-up in the company’s financial performance is expected as our pipe coating business benefits from increased spending in offshore and international markets.
“With orders already under contract combined with those that are expected to be booked in the upcoming quarters, there is increased confidence that 2020 will be an inflection point for the company,” he said.
However, these accelerated reductions and the suspension of dividends suggest the company is not expecting to meet its initial targets.
Shawcor Ltd (SCL) is down 18.3 per cent, with shares trading for $1.48 at 11:27am EST.