Lotos should pay a dividend from 2005 profits, while retaining around PLN 500 mln to invest in the company's future development, Polish Treasury Minister Wojciech Jasinski told Friday's Gazeta Wyborcza. This comes against the company's announcement not to pay out a dividend for the next three to four years. Press speculates that the rumored dismissal of the CEO might be also connected with the change in the dividend policy of the Treasury Ministry.
In 2005, Lotos' net profit came in at PLN 930 mln, so the proposed dividend represents almost a 50% payout ratio. In our view, this could endanger the financing of the company's planned capacity expansion project.
We consider this news as negative for the share price.