UPDATE 1-Galp cuts investment plan, drops dividend growth policy
(Adds details, share price)
By Shrikesh Laxmidas and Andrei Khalip
LISBON, March 15 (Reuters) - Galp Energia trimmed its earnings growth forecast and cut its five-year spending target on Tuesday citing low oil prices but the Portuguese oil company said it would keep its production targets unchanged.
Galp will also abandon its policy of increasing dividend payouts by 20 percent a year from 2017, when it will fix a flat payout of 0.5 euros a share, it said in a capital markets day presentation.
Galp shares fell 1.7 percent to 10.57 euros after the company announced its outlook, before paring losses to trade one percent lower.
The company said it expects to break even in terms of free cash flow during 2018 and then turn positive, which would make it more flexible about dividends.
The dividend policy in force until 2016 "will get us to a dividend of 0.50 euros per share ...and we are assuming that the dividend will be kept flat at that level after 2016," CEO Carlos Gomes da Silva said in a webcast meeting with investors.
"Having said this and going forward, on an annual basis we will be proposing a dividend taking into consideration Galp's financial situation and evaluating opportunities to re-deploy our capital. I will also highlight that after becoming free cash flow positive we will have additional flexibility," he said.
A year ago, Galp expected oil to hit a low of $60 per barrel whereas it currently trades below $40. Continuación...