TI Fluid shareholders hits the brakes on final dividend

TI Fluid shareholders hits the brakes on final dividend

At its 2020 AGM, held on 14 May 2020, TI Fluid Systems plc (TI Fluid) experienced significant shareholder dissent, as 57.30% voted against the proposed final dividend, consequently causing the resolution to fail.

On 11 May 2020, TI Fluid confirmed its intention to pay a final dividend of 5.20 pence per ordinary share. The board expressed their confidence in the group to ‘recover’ and ‘effectively manage the impact of COVID-19 pandemic’ due to its ‘strong customer relationships and efficient global footprint’.

This comes despite the company reporting a ‘significantly lowered global light vehicle production environment due to the impact of the COVID-19 pandemic’, as well as revenue loss of 16% year on year. In response to the pandemic, the company has taken several steps to mitigate the impact and conserve cash. This includes furloughing workers, and salary reductions for the board, senior management as well as for many employees.

The US private equity firm Bain Capital, which owns 54% of TI Fluid, was a significant opposer of the proposed dividend, but has since reiterated its confidence in the company’s management team and board.

Due to the global uncertainty caused by COVID-19, many companies have decided to cancel dividends in a bid to conserve cash. According to investment company, AJ Bell, dividend cancellations by UK companies have now exceeded £30bn. This includes BT Group plc which has suspended the 2019/2020 and 2020/21 dividends, and Melrose Industries plc, which cancelled its final dividend. Alongside this, major banks including Barclays, RBS and HSBC have also suspended dividends after the recommendation to do so by the Prudential Regulation Authority in March 2020.

 

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