Videndum scraps dividend and targets as writers' strike clouds outlook

(Sharecast News) - Videndum lost a third of its market value on Tuesday after the film and audio production equipment company scrapped its interim dividend following a tough first half, which have been hit by ongoing writers' and actors' strikes in the US. The company, which makes things like camera supports, video monitors and live streaming solutions for the film and content creator market, said it had experiencing a significantly worse-than-expected impact from the ongoing union action, while an ongoing challenging macro environment is hitting other departments.

While recent days of negotiations between Hollywood studios, streaming services and writers/actors unions have showed promise, as all sides work on a deal to end the strikes, Videndum has chosen not to provide financial guidance for the full year.

"The group is also experiencing significantly more impact from the strikes in H2 2023 than anticipated at the time of our May update," said chief executive Stephen Bird. "This is due to the prolonged writers' strike, the additional impact of the actors' strike, and the fact that there is less time for a recovery in the current year."

Bird said the company was also not seeing a recovery in the consumer and independent content creator markets, which together account for 45% of group revenue, with retailers destocking due to weakened demand.

"Although there is encouraging news about the strikes, it is not clear when productions will restart. Therefore, there is a wide range of potential outcomes for the full year, and it is difficult to provide financial guidance," Bird said.

Sales from continuing operations during the six months to 30 June were down 25% year-on-year at £165m, while adjusted pre-tax profit slumped 65% to £10.1m. The company ended the period with negative free cash flow of £4.4m, compared with positive FCF of £23.4m the year before.

Videndum said it has decided to not give out an interim dividend "given the current circumstances", but will resume payouts "when appropriate to do so".

In a separate statement, the company announced that chair Ian McHoul has decided not to seek re-election due to personal reasons. He has served as chair since May 2019, and will step down at Videndum's 2024 AGM.

The stock was down 33% at 370p by 1105 BST, a new 52-week low.