Page 72 - RusRPTSept20

said. As reported by bne IntelliNews, previously Mikhelson pledged to decide on the dividends in 2Q20. For 2Q20 under IFRS Novatek showed $2bn in total revenues, $0.99bn total Ebitda (including joint ventures such as Yamal LNG) and net income of $0.58bn. The company beat the consensus expectations on top and bottom lines by 2% and 7% respectively. Novatek has completed Russia's largest LNG project Yamal LNG and is developing the Arctic LNG-2 project. Previous reports suggested that more co-operation with foreign energy majors on LNG projects is possible.
Russian diamond mining giant Alrosa will pay no dividends for January– June 2020 due to a low free cash flow in the period, the company said in a statement on Friday with quoting Deputy CEO Alexei Filippovsky. On June 25, the shareholders approved payment of 19.4bn rubles in dividends for July– December 2019, which accounted for 100% of the company’s free cash flow for the period, the maximum allowed by the dividend policy, Filippovsky said as quoted by the company. “As regards dividends for the first half of 2020, taking into account the negative free cash flow amounting to 8.3bn rubles, there are no conditions for interim dividend payment, according to the dividend policy,” he said. The Russian government owns a 33.03% stake in ALROSA, the Yakutia republic 25% plus one share, districts of the republic 8%, the free float is about 34%.
● Oil & gas
Russian natural gas giant Gazprom could lower the dividends for 2020 as record-low gas prices in Europe could push the leverage of the company above the threshold of 2.5x, Kommersant daily writes on August 5. As reported by bne IntelliNews, Gazprom posted its first quarterly loss since 2015 in 1Q20, as the coronavirus (COVID-19) pandemic caused its European sales to collapse, and ruble devaluation led to hefty foreign exchange losses. But the company still maintained its dividend policy. The analysts surveyed by Kommersant believe that the net debt to Ebitda leverage of Gazprom is likely to tip over 2.5x by the end of 2020, which would allow the company to pay less than 40% of IFRS net profit. The state controls little over 50% of Gazprom (38.37% directly and 10.97% through state holding Rosneftegas, controlled by Rosneft's CEO Igor Sechin), while another 50% is free-floated. According to the dividend strategy adopted in the end of 2019, Gazprom would pay 40% of IFRS bottom line in 2020, and 50% starting with 2021. For 2019 Gazprom paid a record high RUB361bn ($1.05bn) in dividends. As of end of 1Q20 the leverage stood at 1.5x, but the 2Q20 and 3Q20 leverage is likely to jump as Ebitda will shrink on account of the over 40% drop in gas prices. Dmitry Marinchenko of Fitch Ratings estimated for Kommersant that for 2020 the leverage could increase to 3x, while Alexey Gromadin of Sberbank sees leverage at 2.6x.
The board of Russian regional oil major Tatneft of Tatarstan republic approved an interim dividend for 1H20 of RUB9.94 per share for both preferred and ordinary shares, the company announced on August 18. As reported by bne IntelliNews, Tatneft was the first Russian oil major to cancel the dividends for 4Q19 due to the coronavirus crisis, prompting fears of across- the-board lower payouts in Russian oil and gas equity universe. But since then the company has reiterated its dividend policy and the latest dividend decision further downplays the risk. "Today’s interim dividend declaration may seem modest, but it occurs [to] maximize the payout given legal constraints. We fully expect Tatneft to stick to its generous dividend policy in future periods," BCS Global Markets commented on August 18. Company representatives stated that the dividend proposed for 1H20 was the maximum allowable under Russian law, being a 100% payout of 1H20 net income under the Russian Accounting System (RAS), BCS GM explained. Therefore, this modest dividend per share (DPS) does not contradict our conviction that Tatneft management will indeed stick with its relatively new, generous dividend policy (the larger of 50% of net income or 100% of available FCF), BCS GM analysts believe. Currently BCS GM forecasts that Tatneft will pay a total of about RUB30/share in 2020, a conservative estimate based upon the 50% of net
72 RUSSIA Country Report September 2020 www.intellinews.com