INVESTORS have been surprised by a decision by wood panel distributor KayDav to cut its dividend, after it had moved to diversify operations by acquiring a small plastics packaging company.In the year to end-December KayDav cut its dividend from 7.5c per share to 5c per share despite headline earnings increasing a solid 19% to 16.3c per share.The decision to cut back the dividend has raised questions in the investment community around the change of strategic tack by the company. In recent years a number of small-cap companies have managed to swing market sentiment by considerably broadening their operational profile through acquisitions. These include Torre Industries, EnX Group, Consolidated Infrastructure and, more recently, ConvergeNet.Last year KayDav spent R15m to acquire plastics packaging specialist Packit Packaging. The acquisition was financed with debt, which KayDav hopes to settle quickly, with directors confident the packaging venture can be grown organically and through...
Would you like to comment on this article?
Sign up (it's quick and free) or sign in now.
Please read our Comment Policy before commenting.
Subscribe now to unlock this article.
Support BusinessLIVE’s award-winning journalism for R129 per month (digital access only).
There’s never been a more important time to support independent journalism in SA. Our subscription packages now offer an ad-free experience for readers.
Cancel anytime.
Questions? Email helpdesk@businesslive.co.za or call 0860 52 52 00. Got a subscription voucher? Redeem it now.