Mechel could allocate $250 mln to dividend payouts

Mechel could raise dividends in line with US GAAP net income growth which, according to Antanta Capital’s estimates, reached about $500 mln in FY06, up 30% y-o-y. Therefore, the steelmaker could shell out up to $250 mln as FY06 dividends.

The company’s dividend policy calls for at least 50% of net income to be distributed to shareholders. In 2005 Mechel allocated 50% of net income to its shareholders and expects to spend 50% of net income on dividend payouts this year.

According to estimates, Mechel’s US GAAP net income was some $500 mln in 2006, up 30% against the FY05 figure when dividend payouts amounted to $190 mln and thus, the company could distribute some $250 mln to its shareholders as FY06 dividends.

The target price of Antanta Capital for Mechel’s ADRs and shares is $33.2 and $11.07 apiece, respectively, which is almost equal to their current stock valuations.