Leading shipbroker Clarksons has joined the rush to halt dividend payments as the coronavirus lays waste to the global economy.
The London-listed group said it needs more clarity as to the effects of the pandemic, bringing a potential halt to 16 years of rising payouts to investors.
"In light of the current increased uncertainty caused by the Covid-19 outbreak, the board has decided to withdraw the resolution regarding the final dividend from the annual general meeting," the company added.
London-headquartered Clarksons will defer the decision on the amount and timing of the dividend until later in the year once the impact of the virus on maritime markets and the shipbroking giant's business becomes clearer.
This is a "conservative and prudent" move enabling the company to conserve current cash reserves, address any potential short-term disruptions in the maritime industry and protect shareholder value, the outfit said.
Commitment to payouts remains
Clarksons reiterated its belief in a progressive dividend policy, which remains intact despite the temporary halt in what it called "these quite exceptional times".
In its annual statement two weeks ago, the broker said it was increasing the 2019 dividend 4% to £0.78 per share.
Based on the 30.37 million shares in issue, the payout was due to be £23.68m ($28.95m).
It was due to be paid on 29 May following shareholder approval.
The company said on Friday it entered 2020 with a robust balance sheet and an improved forward orderbook from 2019.
"We believe that the medium-term outlook for the shipping markets remains favourable, driven by improving supply/demand dynamics and regulatory changes, albeit that the outbreak of the Covid-19 virus will inevitably impact the company's performance in the first half of 2020," Clarksons added.
Brokers trading effectively
The broking division continues to trade effectively across all markets, with Clarksons Research providing "valuable insights and much needed data and analytics to clients".
The financial business is "experiencing challenges from a lack of primary activity due to the extensive impact on financial markets", Clarksons added.
Shipowners like Pangaea, DFDS, Viking Line and Stolt-Nielsen have ditched dividend plans in recent days, while Ocean Yield has warned of lower payouts.
Some, like Danish giant AP Moller-Maersk, remain committed to returning cash so far.
Clarksons' net loss for 2019 was £10.9m, compared to a profit of £32.7m in 2018, due to a non-cash goodwill impairment of $47.5m arising from its 2015 takeover of RS Platou.
But underlying profit before tax was £49.3m, better than the £45.3m the company logged in 2018.
Revenue grew to £363m from £337.6m.
Health is number one priority
The broker said that its number one priority is the health and well-being of its employees around the world. Most are working from home.
Its annual general meeting on 6 May has been moved online due to the virus.
The meeting will feature a crucial vote on executive pay.
Clarksons directors have been meeting shareholders in a bid to head off any potential revolt over the policy.
The company wants to ensure it is not forced to break the contracts of chief executive Andi Case and finance chief Jeff Woyda.
Vital pay issue
Chairman Sir Bill Thomas said earlier this month he considered the issue so important that he and remuneration chair committee chairman Tim Miller and director Peter Backhouse have started a "major engagement process" with holders of 49% of Clarksons' stock.
He said the pay structure does not conform to current market norms, but the executives each have binding contracts of employment.
Case and Woyda signed contracts 14 years ago.
The company is not typical in that Case is still a deal-making broker as well as CEO.
There is not thought to be an imminent risk of revolt, but last May, investors voted through the closely-watched pay packets of the company’s top executives by the narrowest of margins.
