Page 86 - RusRPTApr20

8.3.2 Dividends dynamics
Select state-owned enterprises (SOEs) have demanded a delay to their obligation to pay the state dividends.
“In the current, highly uncertain environment, we advise investors to rely on management dividend guidance and intentions as the most reliable historically. We await more clarification in the weeks ahead,” BSC Global Markets chief economist Vladimir Tikhomirov said in a note.
Unnamed state companies ask the government to delay dividend payments in 2020 on March 18, according to reports citing Finance Deputy Minister Moisseev.
The Finance Ministry has so far ignored the calls and expects to receive all the dividends listed in the budget for this year. No specific companies have been mentioned, while some reports indicated that companies demand delaying the payment by 3-6 months. Nor are there details on whether the delay would impact dividends to the state or to all shareholders. Moisseev has also mentioned that dividend delays will be considered by the government on a case-by-case basis.
At this stage, transportation, hospitality and entertainment industries are among those most heavily hit by the coronavirus pandemic due to global quarantine measures, with falling passenger traffic, especially on international routes, Tikhomirov says. Russian air transportation has already been heavily impacted. With the spread of restrictive measures domestically, the impact is likely to increase in the coming weeks.
The oil and gas sector is another industry that faces significant decline in free cash flow (FCF) generation in 2020 due to falling energy prices. “We believe select names in the industry may also have asked for flexibility with regards to dividends,” says Tikhomirov.
86 RUSSIA Country Report April 2020 www.intellinews.com