KGHM CEO revealed in an interview with Bloomberg yesterday that the company’s Supervisory Board approved setting the prospective dividend payout rate at 30-40% for the coming years, well below 87% level this year, on the need to accelerate investment in new shafts (Glogow Gleboki), in order to maintain mining output unchanged over the long term.
Our view: The news does not sound negative to us, although we were anticipating 50% payout ratio next year. We believe that in the environment of high copper prices it makes sense to increase capex on mining capacity, even if technically it could become operational only in 10 years time. We reiterate our Buy rating for KGHM.