Today is the ex-dividend date for Krka. Usually, on the ex-dividend date, one can expect that the share price will decrease by app. the amount of the dividend yield. For Krka, the 2024 dividend yield amounts to 5.9%, and as such, we should expect a similar decrease in share prices.

This refers to the EUR 7.5 DPS approved recently by Krka, representing an increase of 13.6% compared to the previous year. In absolute amounts, the approved dividend amounts to EUR 230.9m, to be paid from the 2023 net profit of EUR 381.9m, implying a payout ratio of 60%. Meanwhile, the remaining 40% of the profit will be allocated equally (EUR 75.1m each) to other profit reserves, and retained earnings, respectively.

Based on the share price before the announcement, the dividend yield on this payment amounts to 5.9%. Due to this, we expect that the share price reduction recorded today will be similar to this number, or slightly lower, as the incentive from the dividend payment on the ex-date disappears. Of course, other factors can influence the share price as well, such as the macroeconomic and geopolitical environment, as well as the performance of the Company and its sector. To put things into context, Krka’s share price grew by 34.5% on a YTD basis. The payment date is set for 25 July 2024.

Krka dividend per share (EUR, left), and dividend yield (%, right) (2013 – 2024)

Source: Krka, InterCapital Research