Molson Coors Beverage is suspending its dividend payments for the rest of fiscal year 2020 as one of several steps it’s taking to preserve capital during the pandemic’s fallout, the company reported last Friday in a filing with the United States Securities and Exchange Commission.
The company had been paying a quarterly dividend of USD 0.57 a share, most recently in March. It joins other brewers that have cut or suspended their investor payouts during the COVID-19 crisis.
The board’s decision to suspend the dividend follows a number of other steps the company has taken in recent weeks with the aim of “protecting and bolstering the company’s liquidity position in response to the global economic uncertainty created by the Coronavirus pandemic”. According to the filing, those steps include:
- “reducing planned 2020 capital expenditures by approximately $200 million; “
- “reducing discretionary spending, limiting new hiring and decreasing marketing spend corresponding to the current environment;”
- “furloughing certain employees in the company’s Europe business and North America hospitality businesses;”
- “shifting marketing investments to focus on key media platforms that the Company’s consumers are at and eliminating spend that the Company believes will not deliver value in the current environment;”
- “using savings from the revitalization plan it announced in October 2019 aiming to protect the Company’s liquidity position;“
- “prudently utilizing the Company’s $1.5 billion credit facility as necessary; and”
- “actively evaluating various European government liquidity programs potentially available to the Company and its subsidiaries.”
One month ago when releasing its first quarter results for 2020, Molson Coors already said its board was “actively evaluating various capital allocation options, including a suspension, reduction or temporary elimination of our dividend.”
AB InBev already announced in mid-April to cut its proposed dividend of EUR 1.00 per share in half to EUR 0.50 per share. The move will save the company more than USD 1 billion (inside.beer, 14.4.2020).
Heineken followed one week later with an announcement to suspend its payout as net profit at the Dutch group fell by more than two-thirds in the first quarter.
Carlsberg Group which still paid mid of March an increased yearly dividend to its shareholders suspended on April 2 its outlook for 2020 “due to the significantly increased uncertainty concerning the impact of the COVID-19 pandemic on business performance”. One of its subsidiaries in Asia, Carlsberg Malaysia said today that “its board of directors has decided to suspend the quarterly dividend payments for the financial year ending Dec 31, 2020 to ensure a more prudent focus on preserving cash and liquidity,”
Only Corona brewer Constellation Brands, which offloaded last December its ailing craft brewer Ballast Point (inside.beer, 4.12.2019), has maintained its dividend throughout the crisis.
Shares of Molson Coors are down by more than one third since the S&P 500 index peaked on Feb. 19, compared with a 11% loss for the broader market.