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Gazprom shares dive after dividend cancelled for first time since 1998

Stock Markets Jun 30, 2022 10:27AM ET
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© Reuters. FILE PHOTO: Logo of the Russian energy company Gazprom is seen on а station in Sofia, Bulgaria, April 27, 2022. REUTERS/Spasiyana Sergieva

MOSCOW (Reuters) - Russian gas giant Gazprom (MCX:GAZP) has decided not to pay dividends on last year's results, the first time it will not pay out since 1998, sending its shares plunging by nearly 30%.

"The shareholders decided that in the current situation it is not advisable to pay dividends based on the 2021 results," Deputy CEO Famil Sadygov said.

He added that Gazprom would rather focus on Russian regional gasification, preparation for the heating season and paying increased taxes.

Gazprom shares plunged by more than 29% on the decision, which reversed a board recommendation to pay a dividend of 52.53 roubles per share in what would have been its biggest payout.

Gazprom plans to spend 526 billion roubles ($10 billion) by 2025 to increase Russia's gasification from its current level of 72%.

On Thursday Russian lawmakers backed a draft bill that would provide for a one-off increase in Gazprom's monthly mineral extraction tax bill by 416 billion roubles between September and November, or by 1.2 trillion roubles in total, TASS news agency reported, as the government boosts social payments.

Analysts criticised the decision to abandon dividends, which are one of the few ways Russian retail investors can profit at a time of severe Western sanctions on Russian companies.

"This is a disaster for Gazprom shares, as the company's only investment appeal was high dividends. The decision is also likely partly linked to the finance ministry's willingness to increase ... budget revenue," Tinkoff Investments analysts said.

Gazprom's decision comes as the Group of Seven economic powers looks to cap the price of Russian oil and gas as a way to prevent Moscow from profiting from its actions in Ukraine, which have led to a sharp rise in energy prices.

Russian gas flows to Europe via Ukraine and the Nord Stream 1 pipeline have also fallen.

In its statement on Thursday, Gazprom did not mention either the G7 proposals to cap gas prices or the reduced flows to Europe, both of which threaten to cut its revenue and potentially its tax payments as a result.

"The main fear is that minority shareholders may not get anything if the state moves to the constant practice of withdrawing most of the (Gazprom) profits through the tax. It is also a minus for the entire market in 2022," Finam analysts said.

($1 = 52.5000 roubles)

Gazprom shares dive after dividend cancelled for first time since 1998
 

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Comments (2)
Puk Pups
Puk Pups Jun 30, 2022 6:04AM ET
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NAIVE PEOPLE IN RUSSIA. Who told you that you are the owners of companies in Russia because you have shares in these companies. Everything in Russia belongs to the Kremlin, and you are just puppets in their game. Everything in Russia is window dressing, keep pretending that you have a free market and property rights! In fact, you have nothing of your own in Russia, and even your life does not belong to you, you will easily be sent to die for the interests of the oligarchs and you will not be able to refuse their "offer" to die!
Mase Gumbo
Mase Gumbo Jun 30, 2022 4:31AM ET
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hahaha
 
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