Ray-Ban maker EssilorLuxottica is suspending its dividend due to the coronavirus pandemic. Companies in France and elsewhere have come under pressure from unions and governments to forego shareholder payouts to save up cash to weather the crisis, particularly when they are considering taking some form of state aid.
In the last week of March, EssilorLuxottica scrapped its financial guidance and warned of a hit to second-quarter profit due to the outbreak, adding it was putting some investments on hold as it halted production at selected sites.
A previously decided dividend distribution, which was announced on March 6, will be re-evaluated at a later date, the company added, noting the board will decide whether to “confirm, reduce or cancel” the dividends depending on the situation.
In the beginning of March, the company withdrew full-year guidance and warned that disruption from COVID-19 will likely intensify and affect profitability over the second quarter.
In early March, the company had said its projected synergies and financial targets, which included 3 to 5 percent sales growth, were based on the assumption that the COVID-19 outbreak would be curtailed over the next months. Local officials instructed closure of stores across Europe and the North America & also suspended activities at production sites in France and Italy.
Production continues globally thanks to its vast network of plants and laboratories around the world, and production facilities in China are fully operational with spare capacity while e-commerce is operating globally and is on the rise, with no back orders, EssilorLuxottica has said.