Coronavirus: Taylor Wimpey cancels dividend and draws down £550m
Taylor Wimpey has cancelled its dividends for the year and drawn down £550m in credit facilities to protect its balance sheet against the impact of Covid-19.
The housebuilder said it had felt the effect of government shutdowns in its UK and Spanish businesses over the past few days.
Taylor Wimpey said it had put contingency plans in place to respond to the potential changes in consumer behaviour and reduced productivity.
It has drawn down its previously unutilised revolving credit facility of £550m, resulting in a gross cash position of £807m and net cash of £165m as at 23 March 2020. It has also stopped all discretionary land spending.
The board has taken the decision to cancel the 2020 final dividend of 3.8p per share (c. £125m) that was due to be paid in May and the planned special dividend payment of 10.99p per share (c.£360m) that was due to be paid in July.
“Until the extent and duration of the disruption is better understood, the board believes conserving cash is in the best interests of the long term sustainability of the business.”
The housebuilder also suspends previous guidance for 2020 and will assess medium term targets “when there is greater clarity on the length and impact of the current crisis.”
This morning Michael Gove confirmed that construction sites can remain open after the industry was plunged into confusion when housing minister Robert Jenrick said construction sites would remain open despite a nationwide “lockdown”.
Despite this Taylor Wimpey said it would close all its construction sites for all work except that needed to make the sites safe and secure. The housebuilder will also close all of its show homes and sales centres.
Russ Mould, investment director at AJ Bell said: “If the builders feel the need to scale back shareholder distributions, then many more sectors and firms are likely to feel the need to do the same, the longer the lockdown lasts and the greater the potential hit to economic output becomes.”
Shares in Taylor Wimpey are down 2.1 per cent.