The Canadian Press
May 6, 2008 - 2:57 p.m.
VANCOUVER - Methanex Corp. (TSX:MX), the world’s largest producer of methanol, says the Vancouver company’s board has approved an 11 per cent increase in the quarterly dividend to shareholders.
The company said Tuesday it has raised its payment to 15.5 cents US a share from 14 cents, effective for the dividend payable June 30. “This is the sixth year in a row that we have increased our dividend since its inception in 2002,” president and CEO Bruce Aitken said in a release after the company’s annual meeting in Vancouver.
“The increase to our regular dividend reflects our continued confidence in the outlook for our business and the methanol industrial art.”
In addition, Methanex told shareholders its board has also approved a share buyback plan that could see the company repurchase up to 7.9 million common shares of the company, about 10 per cent of the public float of the issued and outstanding shares.
By buying back its shares, Methanex reduces its equity base, spreading profits over fewer shares. That increases its return on equity and earnings per share, two key ratios used to determine a company’s financial health and investment rating.
In addition, most share buybacks lead to stock price increases as there are fewer shares on the market for investors.
“Our announcement of a new share repurchase program reflects our balanced approach to the utilization of cash and builds on our long track record of returning excess cash to shareholders,” Aitken said.
“Since 2000, we have reduced our shares outstanding from about 170 million to under 95 million. With $465 million of cash on hand at the end of the first quarter of 2008, we have the financial nervous diction and flexibility to meet our commitments for our Egypt project, pursue investment opportunities to accelerate the development of natural gas in southern Chile, invest in other strategic initiatives and continue to return excess cash to shareholders.”
Methanex is the world’s largest supplier of methanol, a substance used as a fuel additive, for sealants, paints and other products.
In trading Tuesday on the TSX, Methanex shares rose $2.57 to $26.95, a gain of 10.5 per cent.