Metso Corporation bows to pressure and cancels planned extra dividend
"Reactions of personnel" said to be main reason for move
The Board of Directors of the engineering company Metso decided on Thursday to cancel a planned general meeting at which the company was to have decided on an extra dividend to be paid to shareholders.
News of the planned dividend raised controversy after Metso said on Tuesday that it would initiate co-determination talks with personnel aimed at cutting up to 630 jobs.
The plan to pay out extra dividends while cutting staff was criticised by Minister of International Development Heidi Hautala (Green), who is also responsible for state ownership steering (the Finnish state has a minority holding in Metso) and Minister of Labour Lauri Ihalainen (SDP) criticised the payment of extra dividends at a time when people are being let go.
The two ministers were joined on Thursday by Prime Minister Jyrki Katainen (Nat. Coalition Party), who said in a television interview with MTV3 that companies should give more careful thought to the timing of rewarding their owners and cutting personnel.
Metso CEO Matti Kähköen said that the reactions by politicians had only a small significance on Thursday’s decision to cancel the dividend.
"In a company on the stock exchange we have to think about everyone’s interest. The statements don’t have much of an impact. The reaction of personnel was overwhelmingly the most important factor", Kähönen says.
"The reactions from personnel were such that it was better for the owners, the company, and personnel to withdraw the extra dividend so that the reorganisation in the paper machine business could be dealt with."
When asked if the cancellation of the extra dividend would mean that there would be a bigger dividend in store in the spring, Kähkönen said that the company would move ahead with its dividend policy "steadily, without jerking".
On Thursday, before the announcement of the cancellation of the extra dividends, Helsingin Sanomat asked Metso’s biggest owners if they were in favour of postponing the dividend.
The answers were cautious, but there was a general feeling of approval of the dividend.
The 11.1 per cent holding of the Finnish state makes it the largest single shareholder in Metso.
The state holding is managed by the state-owned holding company Solidium, whose CEO Kari Järvinen pointed out that consideration of the extra dividend was based on a decision made in the spring by the company’s general meeting, to which the company had to react. Järvinen sees the impending job cuts as a necessary reaction to changes in the market.
"It is clear that when the decisions are joined up, it will raise discussion about whether or not it is fair and reasonable. I have great understanding for that."
Järvinen finds it hard to find any economic reasons for Solidium to oppose the payment of an extra dividend. Still, he says that a company should have "sensitivity toward the media and society".
Järvinen also insisted that Solidium is in no hurry to maximise dividends that it would get in the short term. The cancelled dividend would have brought Solidium about EUR 8 million.
He added that no government ministers had been in contact with him to give any kinds of instructions on how Solidium should react to the proposed extra dividend.
Metso’s third-largest owner is the pension insurance company Ilmarinen, whose deputy CEO Timo Ritakallio saw no economic reason why the extra dividend should not have been paid out.
However, he emphasised that it is important to be tactful. "How things look is important", Ritakallio said.
Previously in HS International Edition:
Metso cuts hundreds of jobs, pays millions in dividends (19.9.2012)
Metso stock exchange release 20.9.2012: Metso’s Board of Directors withdraws the proposal for an extra dividend