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Sprue Aegis alarms investors with dividend cut
Home safety products manufacturer Sprue Aegis warned investors on Tuesday current trading was "significantly below" expectations, leading the AIM-quoted firm to withdraw its final dividend payment.
Sprue Aegis, which delayed the release of its results due to a spat with distributor BRK a subsidiary of Newell Brands, said that as a result of the £3.8m cash settlement agreed earlier this month to resolve this dispute the impact, warned of an interim loss for 2018, with trading for the year as a whole to be heavily weighted towards the second half.
Profits for calendar 2017 went south to the tune of 193% to £545,000, despite seeing an 11% fall in sales costs to £36.3m.
Revenues fell 4.9% to £54.3m in 2017, and so far in 2018, the Coventry-based firm reported a further decline of 20% versus the first four months of the prior year, as sales in Germany continued to decline, while disruptions at its new manufacturing plant over in Poland continued to cause headaches.
As a result, Sprue Aegis Sprue's board chose not to recommend making a final dividend in respect of 2017, meaning the total dividend payable for the year was slashed to 2.5p per share from the 8p returned to investors a year earlier.
Sprue Aegis' executive chairman Graham Whitworth, said: "We worked throughout 2017 to put in place the fundamental building blocks to install an independent supply chain and to position the company as a dynamic, technology-led growth business."
"Whilst the board believes that manufacturing Sprue's products at Flex, Poland, plus the investment into technology building blocks will open up growth opportunities, and is the right move for the group strategically, in the short term, this has impacted the group's trading as management has been focused on the transition plan, and latterly, on settling the dispute with BRK amicably," Whitworth added.
As of 1340 BST, Sprue Aegis shares had tumbled 25.36% to 98.90p.