Transfield Services (TSE) shareholders got a pleasant surprise yesterday – the hint of a dividend after a two year drought and the shares resisted the gravity of the selling wave on the ASX (a slide of 2.3%) and ended up 1.6% at $1.58.
The shares had earlier dipped in the early morning sell down.
Directors told an investment conference and the ASX in an update yesterday that Transfield would consider re-introducing dividends as it confirmed its full-year profits guidance, despite a warning that “challenging macroeconomic conditions” will continue.
"With leverage less than 2 times, the board is in a position to consider re-introduction of dividends going forward," the company said in a presentation to the Macquarie Australia Conference in Sydney.
And dividends could return sooner than expected with the company’s previous advice on the timing looking more achieveable.
Transfield has previously indicated it would consider restarting dividends once its net debt to earnings before interest, tax, depreciation and amortisation ratio fell to less than 2 times. It now expects to reach this goal by the end of the 2015 financial year.
That seems to indicate a dividend could be possible for the current half year, or the first half of 2015-16.
The company has not paid any dividends since giving shareholders an unfranked 3c dividend in the first half of 2012-13, citing the need to strengthen its balance sheet, cut costs and restructure operations.
TSE 1Y – Transfield to ‘consider re-introduction of dividends’
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Transfield said its fiscal 2015 underlying EBITDA would be within the previously forecast range of between $260 million and $280 million.
But it warned that “challenging” macroeconomic conditions would continue into fiscal 2016 in key markets, including energy markets, and that “timing delays" would affect infrastructure construction. It’s not alone in experiencing those conditions. It is a familiar message form many interim reports and updates in many industries (perhaps not property).
