Supervisory Board at KGHM approved dividend payout at 48% of last year’s record high net earnings, above company’s standard 30% ratio, resulting in PLN 5.5 dividend per share and 4.7% dividend yield. The dividend is subject to approval at the company’s AGM in May.
A KGHM representative said that losses on hedging activities may amount to PLN 3bn in the years 2006-07, assuming that copper prices would hold at current level. This is not really surprising as it corresponds to earlier news on company hedging ratios and participation levels. The new management team said it is going to change their hedging techniques, in order to make its hedging position more flexible.
Together with the continued rally on copper prices, we view the news coming from inside KGHM as supportive for the stock price. Later today we will publish a new research note on KGHM with a new fair value estimate.