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- Industrial company Schaffer Corporation (SFC) now expects its net profit for the 2020 financial year to be similar to 2019’s
- The company’s operations have been significantly impacted by market volatility resulting from the COVID-19 pandemic
- While market conditions remain uncertain, Schaffer is now starting to see some encouraging improvements
- The company expects that its final dividend for the 2020 financial year will be $0.35
- Schaffer Corporation shares are in the grey today, trading for just under $13 per share
Industrial company, Schaffer Corporation (SFC) now expects its net profit for the 2020 financial year to be similar to 2019’s.
The company originally withdrew its earnings guidance for the 2020 financial year on March 20, 2020. This was in response to significant widespread uncertainty caused by the COVID-19 pandemic.
Schaffer believed that virus-related uncertainty was affecting the trading performance of its manufacturing divisions, and the value of its investments.
The company now believes that its net profit after tax (NPAT) for this period will resemble the NPAT of the 2019 financial year. This will be subject to the finalisation of the FY20 financial statements and audit.
Schaffer’s operations have been significantly impacted by market volatility resulting from the ongoing COVID-19 pandemic. In particular, the company’s Delta division has shown a poor performance that will likely reflect an operating loss for the 2020 financial year.
Schaffer’s Automotive Leather division has also had reduced sales because of the virus. The division generates approximately 75 per cent of its revenues from European customers.
During late March, all of April, and most of May, vehicle production in Europe ground to a halt. Operations throughout Asia, and especially China, were impacted during late January, and for most of February.
As such, Automotive Leather’s profits for the 2020 financial year will be approximately 25 per cent lower than last year.
While the market is still volatile and uncertain, the company has started to see an improvement in conditions. Much of Asia still remains a challenge, but China has reopened its automotive manufacturers, with sales returning to some normality.
Automotive manufacturers in Europe started reopening production plants in late May, with further improvement in June. This has improved sales for Automotive Leather, and is likely to continue through July.
Schaffer expects that its fully franked final dividend for the 2020 financial year will be $0.35, in comparison to $0.40 in 2019. The total fully franked dividends for this year will be $0.80, in comparison to a total $0.70 in 2019.
The company has noted that a material portion of profits from the 2020 financial year are non-cash investment gains. The year’s final dividend will be confirmed along with Schaffer’s annual results on August 19, 2020.
Schaffer Corporation shares are in the grey today, trading for just under $13 per share at 10:38 am AEST.
