FTSE 100 gold miner Polymetal International (POLY) has doubled its interim dividend after its first half earnings soared on the back of higher gold and silver prices.
The company declared a dividend for the six months to 30 June of $0.40 per share, up from $0.20 last year. This brings the total shareholder payout in 2020 declared by Polymetal to $1.02 per share (including a special dividend and the final dividend for 2019), representing a 5.4% yield based on the average year-to-date share price.
EARNINGS SOAR BUT INVESTORS UNMOVED
It comes as net earnings more than doubled to $381 million, up from $153 million in the first half of 2019, with revenue rising 21% to $1.14 billion.
Polymetal said it realised an average gold price during the period of $1,661 per ounce, up 25% compared to last year, and also realized a 10% higher average sliver price. Gold prices have surged during the coronavirus pandemic because the asset is seen as a safe-haven investment.
The Russian-based miner also managed to keep a lid on costs, with all-in sustaining costs for gold of $880 per ounce, down 3% year-on-year and within Polymetal’s full year guidance of $850-900 an ounce.
However, a sign of how highly rated the stock is, investors were unmoved at the results with the company’s shares dipping 0.8% to £19.35 by mid-morning trading.
Speaking to Shares, Polymetal’s chief financial officer Maxim Nazimok said the ‘pretty strong results’ were in line with market expectations, and highlighted the firm’s operational performance with ‘no positive or negative surprises’ during the first half of the year.
He added, ‘We are delivering profits and dividends from the increased commodity prices, and that’s reassuring for all our groups of investors.’
DIVIDEND CHANGES
Alongside its half year results the company also announced changes to its dividend policy, replacing the special dividend with a modified policy for final dividend payment.
Now there will be a minimum final dividend of 50% of underlying net income from the second half of its financial year, and the board will have discretion to increase the final dividend to a maximum annual payout of 100% of free cash flow, provided it is greater than 50% of underlying net income.
With this amendment, starting from 2021, Polymetal will pay dividends twice a year on a semi-annual basis.
Nazimok explained the updated policy was designed to add ‘predictability’ to the dividend flow and stop speculation over special dividends from investors and analysts.
He added that the company is still ‘very much committed’ to its dividend and providing investors with a ‘strong yield’, as it aims to maintain an above sector-average dividend yield going forward.
