Financial Times
Sign In
Russia Business & Finance Add to myFT
Russia demands big dividend payouts from state-owned companies
Putin-backed move sparks rise in shares and is aimed at plugging holes in federal budget
Vladimir Putin approved Russia dividend plan
EPA
Share on Twitter (opens new window)
Share on Facebook (opens new window)
Share on Whatsapp (opens new window)
3 Save
APRIL 28, 2017 by: Henry Foy in Moscow
Russia has demanded its state-owned companies pay out half of their profit in dividends this year, in a renewed attempt by the government to squeeze companies like Gazprom, Rosneft, Aeroflot and Alrosa to plug holes in the federal budget.
Sample the FT’s top stories for a week
You select the topic, we deliver the news.
Select topic
Enter email addressInvalid email
Sign up By signing up you confirm that you have read and agree to the terms and conditions, cookie policy and privacy policy.
Shares in state-run companies soared on Friday morning after the decree, which will boost government coffers as well as those of private investors, was announced late on Thursday.
Russian president Vladimir Putin approved the plan “in general terms”, according to deputy prime minister Igor Shuvalov.
Gas monopoly Gazprom opened 3 per cent higher and federal power grid companies spiked more than 4 per cent in early trading in Moscow.
The dividend decree, signed by prime minister Dmitry Medvedev, follows a similar demand made last year that was largely overlooked.
But market analysts expect broad adoption of the order this year, with negotiations to take place on a company-by-company basis.
Rosneft, Russia’s biggest oil company and the world’s largest listed oil producer by output, has said it plans to pay out 35 per cent of its 2016 earnings in dividends.
The company is expected to be allowed a waiver due to its particular holding structure that means the government does not directly hold a controlling stake.
Moscow’s benchmark MICEX index of shares opened up 1 per cent higher on Friday morning led by gains in state-run companies, before retreating slightly.
The order is a boon to private shareholders in many of the companies that would not typically look to distribute so much of their earnings.
But analysts at BCS Global Markets, a trading and research house, cautioned that some companies may find ways to reduce the payout by claiming special dispensation.
Gazprom on Thursday said it planned to pay out 7.89 roubles per share in dividends, less than would be mandated by the 50 per cent order.
The windfall is critical to Russia’s federal budget, which has been hit by recession, a fall in long-term oil and gas prices, and the continued fallout from US and EU sanctions imposed on many of the country’s biggest enterprises in response to Russia’s invasion and annexation of Crimea in 2014.
In February, Russia’s deputy economy minister Olga Dergunova said that increasing dividend payments could bring as much as Rbs110bn ($1.9bn) of additional budget income.
Copyright The Financial Times Limited 2017. All rights reserved. You may share using our article tools. Please don't cut articles from FT.com and redistribute by email or post to the web.
Share on Twitter (opens new window)
Share on Facebook (opens new window)
Share on Whatsapp (opens new window)
3 Save
Read latest
Rouble moves higher despite Russian rate cut
Enviado desde mi iPhone utilizando Tapatalk