Libstar had been due to pay 170.5 million rand ($9.21 million) in final dividends on April 14 to shareholders. That has been postponed until the release of the firm's first-half results on Sept. 2, Libstar, which also produces certain food items for Woolworths Holdings Ltd , said in a statement.
It added that the decision remains subject to further review and it will pay dividends earlier if possible.
"In light of the uncertainty as to the duration and extent of the impact that COVID-19 may have on the operations within the markets in which Libstar operates, the board considers it prudent... to preserve the company's financial liquidity to the fullest extent possible," it said.
At 1456 GMT, shares fell 6.43% to 6.26 rand.
Libstar said the group remains solvent, liquid and operates well within the facility covenants established by its lenders, noting its leverage ratio of 1.25x at end-2019 was against a covenant of no more than 2.5x.
The food producer has been operating since the lockdown last Thursday midnight but has not been servicing the restaurant industry as all restaurants, quick-service restaurants, cafes, bars and coffee shops were required to close during the 21-day lockdown period, including all prepared food delivery services.
Food service channel revenue, which includes restaurants, constituted about 18% of group revenue for the year ended Dec. 31.
Libstar said since the week preceding the lockdown announcement on March 23, the food producer has experienced a decline in demand for food-service products which has worsened further since the implementation of the lockdown.
While its retail channel has experienced increased demand from its customers like supermarkets, especially in the week before the lockdown. However, it expects demand to reduce as government's preventative measures take effect in the coming weeks.
Revenue from its retail sales channel constituted about 60% of group revenue at end-2019.
($1 = 18.5165 rand)
(Reporting by Nqobile Dludla; Editing by Susan Fenton and Lisa Shumaker)
