German container line Hapag-Lloyd wants to share its success by handing back more profit to shareholders as dividends.
The executive board will propose paying out €1.10 per share — a total of more than €193m ($220m) — at the annual general meeting in June. It is also putting forward a proposla to change its policy.
The 2019 figure constitutes 51.8% of its consolidated profit for the year, deviating from its usual dividend level of between 20% and 30%.
Investors will be asked to OK pay-out amounts of at least 30% of earnings in future.
"The changed dividend policy allows Hapag-Lloyd to appropriately share its success with its shareholders despite economic fluctuations customary in the industry," the German company said.
"Simultaneously, the company preserves the required flexibility for further developments and maintains adequate liquidity."
The dividends will be subject to existing financial agreements, consideration of market conditions, further development and growth plans, and the preservation of of "an adequate level" of liquidity, Hapag-Lloyd added.
Difference of emphasis
The move is in contrast to Ireland-based tanker owner Ardmore Shipping's decision this week to place less emphasis on returning cash to shareholders.
This came after chief executive Anthony Gurnee complained the tanker owner's shares were trading at a significant discount.
Ardmore said that its policy of paying out 60% of earnings from continuing operations in dividends will be amended as it raises fleet maintenance to its top capital allocation priority.
"Our overriding objective is building long-term shareholder value through operating performance, capital allocation and effective risk management in what is a highly cyclical industry," Gurnee said in a statement.
Analysts this year have been tipping shipping companies - particularly tanker owners - for bigger dividends.
Hapag-Lloyd posted improved earnings in 2019 thanks to better freight rates, higher volumes and stricter cost control.
The Hamburg-based liner operator said Ebitda rose to €1.98bn from €1.139m in 2018.
Revenues increased by 9% to €12.6bn, which was roughly in line with analysts’ estimates.
Hapag-Lloyd attributed the stronger performance in part to improved freight rates, which averaged $1,072 per teu in 2019, some 2.6% higher than the previous year.
