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PKN Orlen recommends record dividend for 2022

FILE PHOTO: The logo of PKN Orlen, Poland's top oil refiner, pictured at a petrol station in Warsaw

By Patrycja Zaras

GDANSK/WARSAW (Reuters) -Poland's biggest oil refiner PKN Orlen has recommended its highest dividend yet at 5.50 zlotys ($1.24) per share for 2022, the company said in a strategy update that sent its shares up more than 5% on Tuesday.

Announcing a revamped dividend policy, PKN said it will make annual dividend distributions equivalent to 40% of the previous year's adjusted free cash flow.

The company also said it expects last year's acquisitions of gas company PGNiG and refiner Lotos to help it double core profit to about 60 billion zlotys ($13.51 billion) by 2030.

"The updated dividend policy enables PKN Orlen to join the group of oil and gas companies that share their profits with shareholders in an attractive and transparent way," said Ipopema Securities analyst Tomasz Kasowicz.

PKN said its payouts will be no less than a base guaranteed dividend, which has been set at 4 zlotys per share for 2022, and will be raised each year by 0.15 zloty until it reaches 5.2 zlotys per share in 2030.

The refiner had previously planned to pay at least 3.5 zlotys per share.

In its efforts to reduce the company's focus on fossil fuels, PKN also announced more ambitious renewable energy targets with about 120 billion zlotys of spending on green projects by 2030. That would equate to about 40% of its planned capital expenditure to 2030.

It has also committed to phasing out coal power by 2035.

The company said in 2020 that it planned to become climate neutral in the next 30 years, though Poland is the only European Union state that has not pledged to cut emissions to zero by 2050.

PKN Orlen has a target to have more than 9 gigawatts (GW) of installed clean energy capacity by 2030, up from the 2.5 GW target announced in 2020.

($1 = 4.4427 zlotys)

(Reporting by Mateusz Rabiega and Adrianna Ebert in GdanskAdditional reporting by Marek Strzelecki in WarsawWriting by Patrycja ZarasEditing by Louise Heavens, Barbara Lewis and David Goodman)