DS Smith, the UK’s biggest box maker, has cancelled its final dividend despite its business benefiting from increased online shopping during the coronavirus lockdown.
The British company, which manufactures cardboard boxes for customers including Amazon, reported an annual pre-tax profit of £368m in the year to April 30, up from £350m over the same previous period.
But the group, which called off its interim dividend payment in April, has now cancelled its final dividend because of what it called “macroeconomic uncertainty” and said it did not know when payouts would resume.
“The board considers it premature to resume dividend payments at this stage,” DS Smith said.
Shares in DS Smith fell 8 per cent to 294p in early London trading on Thursday.
UK companies are likely to cancel more than £52bn worth of shareholder payouts this year, either because coronavirus has hurt their profits or they fear a public relations backlash from rewarding investors while taking state employment support, Link Group forecast in April.
Companies such as Shell and BT are among those that have cut their payouts for the first time in decades. On a global basis, according to fund manager Janus Henderson, up to $500bn of cuts to dividends could take place this year, depriving pension funds and private investors of valuable income streams.
DS Smith said on Thursday that its northern European business was boosted by additional demand from food businesses and ecommerce during March and April. But its industrial business was weaker and “infrastructure constraints”, caused by coronavirus, had increased its costs, despite its earnings having risen on both a statutory and an adjusted basis.
“Recognising the importance of dividends to all shareholders, the board will actively consider the resumption of dividend payment, when we have greater clarity over outlook,” it said.