Gazprom's Dividend Blockage Sparks Concern Over Russian Economy

Russian state-backed gas giant Gazprom has seen its shares fall by nearly 30% after its investors blocked the payment of a dividend for the first time since 1998. The decision was made due to the current economic situation, with Gazprom's deputy chief executive, Famil Sadygov, stating that it is "not advisable to pay dividends based on the 2021 results." This move has sparked concern among investors, with analysts warning that minority shareholders may not receive a payout if the state were to withdraw most of the profits through increased taxes. Additionally, the cancellation of the dividend has been described as a "disaster for Gazprom shares," which had been the company's only investment appeal through high dividends.

Key Takeaways:

• Gazprom's shares fell by almost 30% after investors blocked the payment of a dividend for the first time since 1998.
• The company's largest shareholder is the Russian state, but its shares are also traded in Moscow, affecting retail investors.
• Gazprom's dividend represented a rare source of income for Russian retail investors after the West imposed sanctions on many Russian companies over Ukraine's invasion.
• Gazprom is at the center of the Kremlin's efforts to weaponise energy in retaliation to the sanctions.
• Russian lawmakers backed a draft bill increasing Gazprom's mineral extraction tax bill by 416 billion roubles this year.
• Analysts warn that minority shareholders may not receive a payout if the state were to withdraw most of the profits through increased taxes.
• The cancellation of the dividend has been described as a "disaster for Gazprom shares," which had been the company's only investment appeal through high dividends.
• Sberbank, Russia's largest bank, also cancelled its proposed dividend yesterday.
• Uniper, an energy company in Germany, has seen its shares fall after warning of the financial fallout of lower supplies from Russia.

Statistics:

• Gazprom's dividend proposal for 52.53 roubles a share equated to over $20 billion.
• Gazprom's mineral extraction tax bill is set to increase by 416 billion roubles this year.
• 40% of Europe's gas is normally provided by Russia.
• Gazprom has limited its supplies through Ukraine and the Nordstream 1 pipeline to Germany.
• Gazprom's shares are traded in Moscow, affecting Russian retail investors.

Sources:

• News story from Emily Gosden in The Guardian is not available, however, the same narrative was used in a Financial Times (FT) story.
• Finam analysts: "The main fear is that minority shareholders may not get anything if the state moves to the constant practice of withdrawing most of the profits through the tax."
• Tinkoff Investments analysts: "The decision to cancel the dividend was 'a disaster for Gazprom shares' as the company's only investment appeal was through high dividends."
• Sberbank: Gazprom's largest shareholder is the Russian state.
• Uniper: Shares fell after it warned of the financial fallout of lower supplies from Gazprom.