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8.3.2 Dividends dynamics
Russia's largest non-financial companies paid RUB1.69 trillion ($26.7bn) in dividends for 2017 , up by 16% year-on-year and making an average payout of 38% of net profit as compared to 31% for 2016, Vedomosti daily said on July 31 citing the estimates of the Analytic Credit Rating Agency ( ACRA ). In June bne IntelliNews reported that Russian stocks are paying the highest dividend yields in the world with an average yield of 5.5%, and the stocks of the most generous companies handsomely outperform the leading indices. With peak payout season nearly on us investors are shopping for the bargains. Notably, most of the increase came from the oil and gas sector, with biggest names paying RUB700bn for 2017 in dividends, or up by 24% y/y. While state-controlled companies increased their dividend payments notably, with 19% y/y hike to RUB697bn, the payout amounted to 35% of average profit, below the demand of the Finance Ministry to pay 50% of the IFRS bottom line. The state budget got RUB270bn from the dividends paid by state-controlled companies. Oil and gas amounted for 42% of all dividends, followed by metals and mining (27% of total or RUB455bn, paying out almost entire free cash flow), transportation companies (8% of total or RUB139bn), and telecom and utilities (7% and 6% of total, respectively). The calculations of ACRA were based on 277 largest Russian companies with a total share of 35% in all corporate revenues in 2017 (RUB49 trillion).
Russian utilities major and investor’s favourite Rosseti plans to allocate a record RUB5bn for dividends for 2018 , according to Pavel Grebtsov, director of the tariff policy department of the company. Half of the amount of RUB2.5bn has already paid out to shareholders on the basis of the results of the first quarter. Management will also recommend that the board of directors make a decision on preliminary dividends for nine months. "Our policy is aimed at stable dividend payments to our shareholders. We believe that dividends should be built up systematically. Therefore, if there is a decision of our shareholders, intermediate dividends will be made, "Grebtsov said. Since its inception in 2013, the company has paid dividends only in 2016, when the shareholders received RUB3.8bn. At the end of 2017, it refused to pay dividends due to a paper loss under RAS of RUB13.2bn, which resulted from a revaluation of shares and the creation of a provision for impairment. In the consolidated IFRS reporting, which reflects the performance of the entire group, and not just the parent structure, the company's net profit rose 39.5% to RUB137.1bn. In the first half of 2018, net profit of Rossetei increased by 9.1% and amounted to RUB40.6bn.
Novatek Board of Directors has proposed paying an interim dividend of RUB 9.25 ($0.14) per share for 1H18 , according to a company press release. The record date for the dividends is set for 10 October. The extraordinary shareholders meeting is to decide on dividends on 28 September, with registration closing on 4 September. VTBC estimate that the proposed dividend implies a 37.4% payout of IFRS net income for 1H18, for an annualised yield of 1.9%. This yield and payout are relatively low say the bankers, but are likely to be generally in line with market expectations.
Russian oil major Gazprom Neft might raise the payout ratio from 28% of IFRS net income paid for 2017, seeing 50% as the long-term target, the oil arm of Russian gas giant Gazprom said following the publication of strong second-quarter financials. For the second quarter Gazprom Neft posted revenues were $9.9bn, Ebitda was $2.7bn, and net income came in at $1.6bn.
Rosneft’s Board of Directors recommended to the company’s EGM interim dividends of RUB 14.58 ($0.22) per share on August 21, according
76 RUSSIA Country Report September 2018 www.intellinews.com