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8.3.2 Dividends dynamics
● Oil & gas
Gazprom's management indicated during the investor day yesterday that all of its subsidiaries would pay out 50% of 2019 IFRS net income in dividends to be distributed in 2020. Analysts say this implies that Gazprom Neft will switch to a 50% payout this year (from 2019 net income), a year earlier than previously expected. This could boost the 2020 dividend yield by up to 1 pp, to over 9%, and would imply a dividend for 2H19 of RUB23.6 per share, assuming a total payout of 50% of net income for the full year 2019. The company paid an interim dividend for 1H19 of RUB18.14 per share (a payout of 41%), for a 4% yield.
● Banks
Russia’s second-largest bank state-controlled VTB will stick to its commitment to pay 50% of IFRS net profit for 2019, but could split the payout in two tranches to ease capital pressures, Reuters and Vedomosti d aily reported on February 25 citing the board member Dmitry Pyanov. As covered by bne IntelliNews, in 2019 VTB pursued an investment makeover, pledging to pay 50% of IFRS net profit in dividends and to bridge the digital development gap with Sberbank. But capital pressures on VTB persisted, with an additional share issue of the state-controlled bank reportedly planned. VTB is expected to show a bottom line of RUB200bn in 2019, with record-high RUB100bn ($1.5bn) dividends to be paid. But the bank will split the payments 50/50 between different share types, paying the ordinary shares dividends first, and setting the payout for the preferred shares in 4Q20.
● Other
Russian power company Enel Russia committed itself to RUB3bn of annual dividend payments for FY19-21 at its strategy day. This translates into an implied payout of 52% on the company’s forecasted numbers (56% of VTBC’s NP forecast) vs. the company’s negative FCF for 2020-22F for the period, as management tries to juggle the need to invest and the need to meet shareholders’ dividend expectations. This proposal matched bankers’ forecasts: with 2021F net profit set to fall 69% from the 2018 level on the back of the Reftinskaya loss and DPM1 payment expiry, this was the most logical solution to shield investors from profit volatility. Nevertheless, bankers expected Enel Russia to be more generous. On VTBC’s estimates, the company could well afford a RUB 4bn annual payment, or 30% more than what was announced.
74 RUSSIA Country Report March 2020 www.intellinews.com
