The Reliance Worldwide Corporation Ltd (ASX: RWC) share price will be on watch this morning following the release of a trading, operations, and COVID-19 update.
What did Reliance announce?
According to the release, the company revealed that sales for January and February were in line with management's expectations. Positively, customer orders in March have so far been strong.
As a result, management is monitoring demand closely in order to ensure that manufacturing volumes remain appropriate to meet sales demand.
For now, its manufacturing facilities and distribution centres in Australia, USA, and the UK remain fully staffed and operational. Its channel partners in Australia and USA are also continuing to trade and serve end‐use customers.
Though, it does note that government restrictions in the UK and New Zealand appear to be limiting sales to products used for essential repair and maintenance works and for critical infrastructure. Similar restrictions that were in place in parts of Canada have now been relaxed.
Nevertheless, due to its in‐house manufacturing capabilities, global supply chain and robust inventory positions, management remains confident in its ability to service customer needs.
Funding update.
The company advised that it continues to have significant funding lines available to assist with working capital and cash flow requirements.
As of the end of December, the company had a $750 million syndicated facility agreement which is available for drawing by way of cash advances. This facility is structured into three tranches of $250 million each, with maturity dates of September 30 2021, September 30 2022, and September 30 2023, respectively. The facility was drawn to $410.1 million at December 31.
Despite this, the company has decided that it needs to prudently manage cash resources in this current period of uncertainty. As a result, it will defer the payment of the FY 2020 interim dividend until October.
Earnings guidance.
Although the company's performance has been strong so far in FY 2020, it acknowledges that these are uncertain times.
As a result, it has become the latest company to withdraw its guidance for FY 2020. Reliance was aiming for an adjusted net profit after tax in the range of $140 million to $150 million in FY 2020.
