31 August 2018, 18:52 / Business

Gazprom management allowed dividend growth for the first time

warned Gazprom But the priority is to spend money on the investment program and reducing the debt burden, Vitaly Petlevoy

Investors immediately reacted to these statements - Gazprom rose in price by 2.3% / Evgeniy Razumny / Vedomosti

The top manager of Gazprom admitted for the first time that based on the results of this year, if the current dynamics in gas prices and exports remain the same, the company may increase dividends. The head of the financial and economic department of Gazprom, Alexander Ivannikov, spoke about the possible increase in dividends. However, he immediately made a reservation that the priority was spending on the investment program and reducing the debt burden (it decreased in the second quarter to 1 EBITDA).

It is planned that Gazprom’s investment cycle will end in 2019, Ivannikov recalled. “Increased dividends can be expected from 2020, which will be paid in 2021,” he added.

Investors immediately reacted to these statements - Gazprom rose in price by 2.3% to 3.54 trillion rubles. (by 16.51 Moscow time), by 18.00 the growth adjusted to 2%, by closing on Thursday - to 3.5 trillion rubles.

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“We have declared the position of management (and there are no prerequisites for changing it downward), these are dividends for the next three-year period in ruble terms not lower than the previous year - not lower than 8.04 rubles. per share,” Ivannikov noted. According to him, if Gazprom, if the current situation continues, has undistributed funds left from its positive cash flow, then management may propose to use them for dividends. However, shareholders are involved in the decision-making process and it is impossible to predict the final figure today, the top manager said.

In the first half of 2018, Gazprom earned 365 billion rubles. free cash flow, recalls BCS analyst Kirill Tachennikov. “Of course, at the end of the year, free cash flow will depend on capital expenditures. But the company can distribute part of it to shareholders,” the expert believes.

“If the current situation continues, Gazprom’s operating cash flow may exceed 2 trillion rubles, then after the implementation of the capital investment program there should be 300-400 billion rubles left,” says Dmitry Marinchenko, director of Fitch’s corporate department. In theory, Gazprom could use this money to pay dividends and increase the level of dividend payments to almost the recommended 50% of profits. In practice, possible difficulties with entering external capital markets, the sanctions “fever”, as well as an intensive capital investment program will most likely incline Gazprom to greater prudence - surpluses, if any, will be used to replenish the liquidity cushion, he says.

In April of this year, the board of Gazprom proposed to the board of directors to maintain dividends at the 2016 level - 8.04 rubles. per share, or 190 billion rubles, i.e. about 26% of net profit according to IFRS (710.8 billion rubles in 2017). The Board of Directors and the meeting of shareholders approved this decision.

The idea to oblige all state-owned companies to pay shareholders 50% of net profit appeared several years ago. But Gazprom always paid less, explaining this by the need to carry out large-scale construction projects - among them the construction of the Power of Siberia, Turkish Stream, Nord Stream 2. The investment program for this year is a record one - 1.27 trillion rubles, and in 2019 it will increase by almost 10% to 1.4 trillion rubles.