Poland Takes Bigger Than Planned Div from KGHM

Industry News 09:53:43AM Jun 29, 2012 Source:SMM

LUBIN, Poland, June 28 (Reuters) - Poland squeezed a much bigger dividend out of KGHM than the state-controlled copper miner wanted to pay as the government chased down funds to ease its budget deficit.

Poland has already pushed through higher payouts at top utility PGE, insurer PZU and the Warsaw Stock Exchange to help bring the deficit below the 3 percent of GDP mandated by the European Union.

Shareholders at Europe's No.2 copper producer on Thursday approved a government motion to pay out more than half last year's record profit, well above the company's 30-percent offer.

The dividend of 28.34 zlotys ($8.3) per share, compared with management's proposal for 17 zlotys, will yield a payout of almost 5.7 billion zlotys.

The treasury, which oversees state assets and controls KGHM via a 32-percent stake, will take 1.8 billion zlotys from the payout, closing in on its 8.2-billion full-year dividend income plan. 

The payout was in line with expectations but the miner was Thursday's second largest bluechip loser in Warsaw with a slide of almost 5 percent.

"The dividend will not negatively impact the company's liquidity or its future development abilities," said Polish treasury minister Mikolaj Budzanowski.

KGHM is also likely to bear the brunt of a new mining tax which is expected to bring in 1.8 billion zlotys for state coffers this year.

KGHM chief executive Herbert Wirth said the higher dividend would not hurt core investments.

"Despite the fact the dividend level might be higher than the management proposed, I think that the investments in our core business will remain intact," Wirth told reporters.

"I think that a debt level of 1.5 times EBITDA is acceptable for mining companies," he added. "It shouldn't be EBITDA times 3."

Hunger For More
Societe Generale analyst Leszek Iwaszko said KGHM shares were hit by profit taking after rising more than 30 percent in the last month. 

"During the last few weeks KGHM performed substantially better than copper prices and other miners around the world," he said. "This boom (...) was solely due to the expectations of a high dividend."

Wirth told Reuters last month that KGHM will put off new foreign acquisitions until 2014 as it concentrates on incorporating its C$3-billion ($2.92 billion) purchase of Canadian rival Quadra FNX and its Chilean Sierra Gorda project.

By 2018, KGHM wants to raise annual copper output by 57 percent to 700,000 tonnes, with Quadra contributing 100,000 tonnes to last year's KGHM output of 446,000 tonnes.

It expects a 60-percent drop to 3.8 billion zlotys in 2012 net profit which will not benefit from last year's boost from one-off asset sales. ($1 = 1.0261 Canadian dollars) ($1 = 3.4152 Polish zlotys)
 

Poland Takes Bigger Than Planned Div from KGHM

Industry News 09:53:43AM Jun 29, 2012 Source:SMM

LUBIN, Poland, June 28 (Reuters) - Poland squeezed a much bigger dividend out of KGHM than the state-controlled copper miner wanted to pay as the government chased down funds to ease its budget deficit.

Poland has already pushed through higher payouts at top utility PGE, insurer PZU and the Warsaw Stock Exchange to help bring the deficit below the 3 percent of GDP mandated by the European Union.

Shareholders at Europe's No.2 copper producer on Thursday approved a government motion to pay out more than half last year's record profit, well above the company's 30-percent offer.

The dividend of 28.34 zlotys ($8.3) per share, compared with management's proposal for 17 zlotys, will yield a payout of almost 5.7 billion zlotys.

The treasury, which oversees state assets and controls KGHM via a 32-percent stake, will take 1.8 billion zlotys from the payout, closing in on its 8.2-billion full-year dividend income plan. 

The payout was in line with expectations but the miner was Thursday's second largest bluechip loser in Warsaw with a slide of almost 5 percent.

"The dividend will not negatively impact the company's liquidity or its future development abilities," said Polish treasury minister Mikolaj Budzanowski.

KGHM is also likely to bear the brunt of a new mining tax which is expected to bring in 1.8 billion zlotys for state coffers this year.

KGHM chief executive Herbert Wirth said the higher dividend would not hurt core investments.

"Despite the fact the dividend level might be higher than the management proposed, I think that the investments in our core business will remain intact," Wirth told reporters.

"I think that a debt level of 1.5 times EBITDA is acceptable for mining companies," he added. "It shouldn't be EBITDA times 3."

Hunger For More
Societe Generale analyst Leszek Iwaszko said KGHM shares were hit by profit taking after rising more than 30 percent in the last month. 

"During the last few weeks KGHM performed substantially better than copper prices and other miners around the world," he said. "This boom (...) was solely due to the expectations of a high dividend."

Wirth told Reuters last month that KGHM will put off new foreign acquisitions until 2014 as it concentrates on incorporating its C$3-billion ($2.92 billion) purchase of Canadian rival Quadra FNX and its Chilean Sierra Gorda project.

By 2018, KGHM wants to raise annual copper output by 57 percent to 700,000 tonnes, with Quadra contributing 100,000 tonnes to last year's KGHM output of 446,000 tonnes.

It expects a 60-percent drop to 3.8 billion zlotys in 2012 net profit which will not benefit from last year's boost from one-off asset sales. ($1 = 1.0261 Canadian dollars) ($1 = 3.4152 Polish zlotys)