PGNiG's management board yesterday recommended paying no dividend from 2012 earnings. PGNiG intends to maintain a high level of capital expenditures in the years ahead, hence the proposal. Indeed, PGNiG plans to plough roughly PLN 5.0bn into capital investments in 2013.
Our view:
The news is likely to come as a negative surprise as the Bloomberg consensus forecast for PGNiG’s dividend stood at PLN 0.10 per share. In line with the consensus we had forecast a dividend of PLN 0.11 per share from 2012 profit, as we had anticipated PGNiG’s capital expenditures to fall some PLN 750m short of the company’s target of PLN 5.0bn. The flip side of the higher capital expenditures seems to be the no dividend proposal. In the past, however, PGNiG’s major shareholder – the Polish Treasury – has contested the official proposal from the board of directors.
In 2011, the board recommended a DPS of PLN 0.06, while the AGM voted for a DPS of PLN 0.12. This means we cannot rule out a DPS above the current proposal.