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Highlights
- Woodside Energy (ASX:WDS) shares experience a near 3% decline.
- Investors worry about the final dividend ahead of next week's announcement.
- Concerns stem from cost and tax guidance affecting profit expectations.
Shares of Woodside Energy (ASX:WDS) have seen a notable decline of nearly 3% on Monday, driven by investor concerns over the final dividend to be declared next week. This drop comes after the company issued updated guidance regarding its projected costs and tax expenses, which has left some market participants uncertain about the dividend payout.
According to MST Energy analyst Saul Kavonic, Woodside’s core net profit for the full 2024 year is expected to be around US$2.8 billion (approximately A$4.4 billion). This forecast has raised concerns that the final dividend for the year may amount to US49¢ per share. This payout would represent a lower-than-expected 80% payout ratio, which is about 20% below the consensus estimate.
While the company has experienced strong performance, particularly from its new Sangomar oil project in Senegal, there has been a letdown in the dividend announcement. The market had anticipated a more generous dividend, especially with the inclusion of profits from the sell-down in the Scarborough LNG project in the second half of the year. Kavonic described this as a missed opportunity, noting that a potential US$200 million shortfall on the dividend could overshadow the strong performance of the company’s resource base and the positive results from the Sangomar project.
Despite the positive fundamentals, the market seems to be more focused on the dividend disappointment, leading to a sharp drop in Woodside’s share price, which was down by 2.9% at A$24.83 by midday on Monday. This underscores how sensitive investor sentiment can be to dividend announcements, even when a company’s overall operational performance is strong.
Woodside Energy has faced a complex situation where solid project outcomes, like the Sangomar oil project and Scarborough LNG developments, are somewhat overshadowed by concerns about cost pressures and tax expenses. As the company moves toward finalizing its 2024 results, the market will closely monitor any updates on its financial outlook, with particular attention on the upcoming dividend declaration.
The outlook for Woodside Energy remains strong in terms of its project pipeline and revenue generation, concerns about the dividend payout are affecting investor confidence, leading to a short-term decline in its share price.
