South Africa’s biggest private hospital group, Mediclinic International, has joined many companies in scrapping its dividend as it seeks to preserve cash amid uncertainty created by the COVID-19 pandemic, reports Business Day. Similar moves have been undertaken by its closest rivals, Netcare and Life Healthcare, and in sectors as wide-ranging as retail and banking.
The report says this is the first time in Mediclinic’s 35-year history that it has withheld a dividend. “We are navigating uncharted waters,” Mediclinic CEO Ronnie van der Merwe said.
Van der Merwe said COVID-19 affected the business only in the last two weeks of March, but this hit earnings as March was traditionally its strongest month. The company’s underlying performance, stripping out COVID-19, was broadly in line with expectations, he said.
The company felt the full force of COVID-19 in April as patient volumes fell on an unprecedented scale in all three of the regions in which it does business. The effects of the pandemic were likely to be felt for at least another year, he said.
As part of its cash-preservation measures, Mediclinic suspended all nonessential capital spending. It also obtained debt-covenant waivers from lenders.
[link url="https://www.businesslive.co.za/bd/companies/healthcare/2020-06-02-mediclinic-scraps-dividend-because-of-pandemic/?utm_source=&utm_medium=email&utm_campaign=Court+finds+lockdown+regulations+invalid+and+unconstitutional+%7C+Banks+face+billions+of+rand+in+potential+fines+%7C+Loan+guarantee+scheme+take-up+has+been+slow+-+Naidoo&utm_term=http%3A%2F%2Fwww.businesslive.co.za%2Fbd%2Fcompanies%2Fhealthcare%2F2020-06-02-mediclinic-scraps-dividend-because-of-pandemic%2F"]Full Business Day report[/link]