FRANKFURT (Reuters) – German carrier Lufthansa on Monday said it would start pegging its dividend payout ratio to net profit in the future, adding this would give the group, which issued a profit warning a week ago, more flexibility.
Lufthansa said it would pay out a regular dividend of 20-40% of net profit, adjusted for one-off gains and losses, in the future. Its previous dividend policy was based on a payout ratio of 10-25% of earnings before interest and tax.
“The payout range of the new dividend policy offers the Group more flexibility compared to the previous policy to achieve dividend continuity,” the group said, without elaborating further.
Shares in Lufthansa, which is due to hold its capital markets day on Monday, were up by 1.8% in early Frankfurt trade, according to data from Lang & Schwarz.
Based on Refinitiv estimates for the year 2019, the new payout ratio would result in a total dividend payment of 305 million to 611 million euros ($347-$696 million), compared with 233-583 million under the old regime.
Poor margins at Eurowings compared with sector rivals were cited by Lufthansa last week as a major reason for the profit warning. Eurowings’ revenue was also forecast to fall sharply in the second quarter.
Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.