OAO Gazprom, the world’s biggest natural gas producer, said its 2014 earnings used to calculate dividends fell 70 percent because of a foreign currency loss.
Net income according to Russian accounting standards sank to 189 billion rubles from 628 billion rubles a year earlier, Gazprom said Monday in a regulatory filing.
That may translate into a payout of about 2 rubles a share, compared with 7.2 rubles a year earlier as the Moscow-based company usually pays out 25 percent of domestic profit.
“Investors have long ago given up on generosity from Gazprom this year,” said Maxim Moshkov, a Moscow-based oil and gas analyst at UBS AG in Moscow. Gazprom plans to spend billions of dollars on gas links to China and Turkey amid a payment dispute with Ukraine and shrinking revenue in Europe, he said.
Gazprom’s management plans to prepare a dividend recommendation in April, the company’s spokesman Sergei Kupriyanov said by phone Monday.
Gazprom trades at 3.75 times estimated earnings, the lowest among 20 peers worldwide, amid the worst standoff between Russia, the U.S. and the European Union since the Cold War over the conflict in Ukraine. Most Russian energy exporters faced losses in late 2014 after re-valuing foreign currency debt when the ruble collapsed. Still, Gazprom lags behind even its domestic peers.
The government in Moscow, Gazprom’s controlling shareholder, estimates its dividend may drop to about 5.2 rubles a share, according to the country’s revised budget submitted to the parliament March 16. The company may see dollar revenue in Europe sink to the lowest in a decade this year, according to a February government forecast.
Gazprom faced mostly non-cash losses in the third and fourth quarters, its earnings statements show. While the company isn’t obliged to, it has the right to exclude non-cash gains and losses when calculating dividends, according to its policy.
Gazprom Chief Financial Officer Andrey Kruglov declined to comment on management recommendations when speaking to reporters March 20.
“There are factors that have to do with reduced profit, but there will also be positive factors, which will allow an adjustment of dividends toward an increase,” Kruglov said. “Positive factors” include smaller provisions as a result of Ukraine’s partial debt repayment last year, as well as a loan repayment from the Sakhalin-2 project, he said.