France to urge state-backed firms to scrap dividends amid coronavirus crisis

French Labour Minister Muriel Penicaud arrives at the presidential Élysée Palace to attend a meeting on the situation regarding COVID-19 on February 26, 2020 in Paris.
French Labour Minister Muriel Penicaud arrives at the presidential Élysée Palace to attend a meeting on the situation regarding COVID-19 on February 26, 2020 in Paris. AFP - LUDOVIC MARIN

The French government will ask companies in which the state has a stake not to pay dividends, Employment Minister Muriel Penicaud said on Friday, upping pressure on firms across France to forego payouts as they deal with the coronavirus crisis.

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Unions have already called for all French companies to scrap payments to shareholders to preserve cash.

“For companies in which the state has a stake and including a minority one, we will ask them not to pay out dividends, at least to individuals,” Penicaud told CNews TV.

This would have major ramifications for a range of companies, from energy groups like EDF, which is just over 80% owned by the government, to the likes of carmaker Renault, which is 15% backed by the state.

France also has holdings in flagship airline Air France-KLM , lottery group FDJ, which went public last year, telecoms group Orange, and defence firm Thales, among others.

A small handful of state-backed companies had already scrapped their dividend in recent days as they grapple with the coronavirus outbreak that has caused halts in production and disrupted demand.

These include Airbus and aerospace supplier and engine maker Safran.

Others have yet to budge, however. The chairman of utility Engie, which came under pressure from several unions this week to scrap its planned payout on 2019 earnings, said on Friday the firm and its board needed more time to decide on how to deal with its dividend.

Scrapping dividends altogether would also deprive the government of income. In Engie for example, it has a 23.6% stake, and foregoing the 2019 payout would represent a shortfall of approximately 461 million euros ($508 million) for the state.

Non-state backed companies are also dithering over dividends. Ray-Ban maker EssilorLuxottica said on Friday it had yet to decide what to do about payouts even as it scrapped its financial targets for 2020, while advertising group Publicis has also dropped its financial guidance but has maintained its dividend so far. 

(REUTERS)

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