French defence contractor Thales has suspended its annual dividend, keeping €430m in the company to help maintain cash flow throughout the Covid-19 coronavirus pandemic.

The company has also withdrawn its 2020 financial outlook delivered earlier this year, and extended its credit line to help see its way through the crisis. Since early March the company has seen its share value plummet by just over 16%.

Thales chair and chief executive officer Patrice Caine said: “Today we are announcing a series of exceptional measures to deal with the scale of the Covid-19 crisis.

“Our first priority is and will remain the implementation of all the measures necessary to preserve the health of our employees, their relatives, our customers and the population at large, in all the countries where we operate.”

The Thales business with the most exposure to the effects of the outbreak is its civil aeronautics business, which makes up about 12% of Thales annual turnover. Thales Civil Aeronautics division brought in €2.15bn of sales for the group in 2019. Caine added that the virus was “currently seriously disrupting production chains and project execution.”

Thales detailed a three-point ‘adaption’ plan to “maintain its productive capacities at the service of its customers, limit the financial impact of this crisis and strengthen its funding capacity in the event that the crisis persists or worsens.”

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The company said this plan would be enacted with the ‘health and safety of its employees’ as the group’s number one priority.

Caine added: “This is why we are implementing a global adaptation plan in order to limit the impacts of this crisis and strengthen our resilience.

“The remarkable mobilisation of our teams, combined with our unique positioning, built on a portfolio of key technologies in critical domains, a diversified customer base and a strengthened balance sheet, will be structural assets to mitigate the effects of this unprecedented crisis.”

Thales’ board agreed on 6 April to suspend the annual dividend ‘in order to preserve funding capacity if the crisis were to last’. The group had already paid shareholders interim dividend of €0.60 per share in December, however, no further payments will be made, keeping €430m in the group.

Thales said that its annual general meeting would still go ahead in May, however, it will be held behind closed doors at the company’s headquarters.

On withdrawing its financial outlook, Thales said: “The scale of the Covid-19 outbreak invalidates the financial outlook that was announced when the Full Year 2019 results were disclosed on 26 February 2020, which was assuming a limited impact of the Covid-19 crisis based on the situation to date.”

The group added that in the current situation it is “impossible to quantify the financial impact” that Covid-19 will have on the company’s finances in this future. Thales added that it would issue a new financial outlook ‘as soon as it is able to do so’.

The group’s ability to weather the current crisis is also boosted by it securing a $2bn credit facility to cover the next 12 months, with the possibility of a six-month extension if it is needed.

As of December last year, the group held €2.9bn in cash and cash equivalents and an undrawn credit facility of €1.5bn, on top of the newly-agreed credit facility.

Thales announced a raft of measures including the deferral of non-critical investments, a significant reduction in discretionary spending, and the implementation of sanitary guidelines to enhance cleaning procedures, organise workers into separate shifts, and adapting workspaces to increase the physical distance between staff.