05 April 2019, 11:24 / Business

Transneft plans to allocate only 25–40% of profits to dividends

Transneft . plans to allocate 25–40% of its profits under IFRS for dividends for 2018, Interfax reports, citing a statement by the company’s president, Nikolai Tokarev “There is no decision yet. I think everything will be clear in the near future,” he said.

According to a government decree of 2006, state-owned companies must allocate at least 50% of net profit to dividends, excluding income from the revaluation of financial investments, “unless otherwise established by government acts.” Vedomosti is awaiting comment from the Ministry of Finance.

In March, Deputy Prime Minister Dmitry Kozak said that the size of Transneft's dividends for 2018 would depend on the company's investment program. At the end of 2017, Transneft allocated 54.9 billion rubles for dividends. (about 30% of net profit according to IFRS).

First Vice President of Transneft Maxim Grishanin said in January that if the company is obliged to pay 50% of net profit as dividends, then it will have to reduce the development program by another 30-40 billion rubles. to 120 billion rubles, which had already been planned to be reduced. Grishanin noted that in the long-term development program Transneft proceeds from dividends of 25% of net profit according to IFRS. Reducing funding for the development program will lead to technological risks, he explained. Grishanin called for taking into account the level of debt burden when deciding on dividends.

Transneft's net profit according to IFRS in 2018 increased by 17% year-on-year and amounted to 224 billion rubles.