Yesterday the group announced a fall in pre-tax profits from pounds 65.3m to pounds 51.7m in the six months to 30 June and said it was cutting its interim dividend by 25 per cent from 4p to 3p. By forecasting a final dividend of 3p against last year's 8p, it expects to halve the total payment to 6p.
Although the stock market had been preparing itself for bad news, the size of the dividend cut came as a surprise and Sedgwick shares plunged by 34p to 110p compared with a high point for the year of 237p in mid-May.
Sedgwick had held its dividend unchanged at 12p since 1986 when it was making pre-tax profits of pounds 136m. But in the past four years the pounds 51m payment has either been uncovered or barely covered by earnings while cash outflows have been mounting.
Analysts drastically reduced their profit forecasts after Sedgwick's statement. Simon Willis of County NatWest is now expecting pounds 60m pre-tax against an earlier forecast of pounds 75m and a 1991 outcome of pounds 82.4m.
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