Update on the impacts of Covid-19
At the time of the publication of the full-year 2019 results on 27 February 2020, the impacts of the Covid-19 epidemic were mainly being felt at Lagardère Travel Retail, and specifically in the Asia-Pacific zone and international travel hubs. At that time, the Group issued a 2020 recurring EBIT growth target of between 4% and 6% at constant exchange rates, excluding the acquisition of IDF and the effect of the Covid-19 epidemic, estimating the adverse impact on recurring EBIT in the first quarter of 2020 (before the impact of action plans) to be in the region of €20 million.
The effects of the epidemic have since extended to Lagardère Travel Retail’s other operations and, to a lesser extent, to the rest of the Group’s activities, given both the rapid spread of the virus and the government lockdowns and closures that have been ordered in many of the countries in which the Group has operations.
As stated in its initial response, the Group is working tirelessly to protect employees, customers and partners, and is also continuing to implement significant measures to mitigate the financial impacts in the following four areas: adapting sales and prices where possible, reducing overheads, reviewing investments, and reducing working capital.
Suspension of market guidance
In view of the uncertainty over the duration and scale of the epidemic and the government lockdowns and closures, the Group is unable to assess its impacts precisely and reliably. Accordingly, it is suspending the market guidance announced on 27 February 2020, and will provide an update as and when it is able to.
Change in the proposed dividend
In this context, the Managing Partners, after obtaining the favourable opinion of the Supervisory Board, have decided to modify the proposed ordinary dividend to be submitted to shareholders at the General Meeting to be held on 5 May 2020, in order to (i) reduce the amount of the dividend to from €1.30 to €1 per share, and (ii) withdraw the stock dividend option.
Subject to the approval of the shareholders at the General Meeting, the ex-dividend date for the proposed ordinary dividend for 2019 of €1.00 per share will be 7 May 2020, with the payment date set for 11 May 2020.
The Group’s strategy of refocusing around Lagardère Publishing and Lagardère Travel Retail, two divisions that are highly complementary in terms of growth and profitability, produced positive results in 2019 with sharp increases in revenue, recurring EBIT and free cash flow within the Group’s target scope.
While rigorously managing the current situation and its impacts, the Group remains fully engaged on executing its strategic plan, in the interest of all stakeholders, as ever.
In overcoming this crisis, the Group will draw on its historical strengths of boldness, independence and creativity to adapt to a world that is constantly changing, sometimes brutally.