ER miner Kazakhmys posted a flat core profit for 2011 as stronger metal prices were offset by an 18 per cent rise in production costs, including soaring wages for skilled workers in Kazakhstan, home to its core operations.
The FTSE 100 miner announced a higher-than-expected 27 per cent dividend hike but warned it was unlikely to complete a $250m (£157m) buyback announced last year. The firm has bought back $83m of shares to date.
“We are mindful of the freefloat and comments made by shareholders that they would like to maintain a certain level of freefloat,” chief financial officer Matthew Hird said, when asked if he would consider a fresh buyback.
“So we won’t rule it out, but going forward it is more likely that if we had surplus capital we would be returning it through an increased dividend.”
Kazakhmys – whose shares have rallied more than 21 per cent this year and outperformed the sector as copper prices recover – said dividend increases were likely to ease as it ramps up spending on its growth projects.
Capital expenditure for 2012 is expected to be $1.5bn, more than double than in 2011, largely due to development of its $1.8bn Bozshakol project.
Charles Cooper, at Oriel in London, said the dividend hike would not do enough to make up for the failure of the buyback for some investors.