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Kesko CEO says new strategy not a risk to dividends
May 28, 2015 / 9:58 AM / 2 years ago

Kesko CEO says new strategy not a risk to dividends

HELSINKI, May 28 (Reuters) - Finnish retailer Kesko’s new strategy which includes making investments and possible acquisitions will not weaken its ability to pay dividends, its chief executive said in a radio interview on Thursday.

Kesko had said on Wednesday it aims to spend 1 billion euros ($1.1 billion) on new stores and supermarkets in the next few years and is looking at possible acquisitions.

Asked in the interview about a fall in the share price following that announcement, Chief Executive Mikko Helander said there were some expectations in the market of extra dividends being paid following Kesko’s recent agreement to sell 485 million euros ($530 million) worth of real estate.

“Perhaps someone concluded that this strategy would somehow detract from our ability to pay dividends. That is by no means what this is about,” he told public radio YLE.

The share price was up nearly 1 percent at 33.79 euros by 0952 GMT, having fallen 3.4 percent on Wednesday to 33.46 euros.

Inderes Equity Research said it expected the company, which is basically free from net debt, to use some leverage with its future investments and pay out some of the real estate gains.

“The company has a clear pressure to pay some extra dividend and we expect an extra payout of 1.0 euros once the real estate deal has been confirmed (in June),” Inderes analyst Sauli Vilen said in a note to investors. ($1 = 0.9146 euros) (Reporting By Jussi Rosendahl; Editing by Greg Mahlich)

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