Gazprom to pay lowest dividend since 2000

The Russian state told its gas monopoly Gazprom to cut its 2008 dividend by 86 percent to its lowest level since 2000, the firm said on Monday, as it faces a sharp fall in gas demand in its main markets. Gazprom, the world's largest gas producer and supplier of a quarter of Europe's needs, said in a statement its state-run board proposed cutting the payout to 0.37 roubles ($0.011) per share.
The last time Gazprom paid such a low dividend was for 2000, when it approved a payout of 0.30 roubles per share. Sources told Reuters in April the firm's management proposed a dividend of 1.28 roubles per share, down from 2.66 roubles paid in 2007.
Shares of Gazprom were down 2.1 percent at 0905 GMT, slightly outperforming the broader market. "Although people have never been buying Gazprom because of the dividend, it is still an unfriendly act toward the shareholders," said Artyom Konchin, an analyst at UniCredit Securities.
He said Gazprom cut the dividend for the year when it enjoyed record profits as gas prices are adjusted to oil with a lag of six to nine months. "It turns out that the shareholders have to share the pain that the company is currently experiencing," he added.
Gazprom reported lower-than-expected profit attributable to shareholders of 742.9 billion roubles for 2008, equivalent to $29.9 billion at 2008's average rouble rate, up from 13 percent from the previous year in rouble terms. The results were under international accounting standards while the gas behemoth pays the dividend according to Russian Accounting Standards (RAS).
The 2008 payout will amount to 5 percent of its RAS net profit, down from the 17.5 percent it has been paying in recent years. Gazprom's gas production fell by more than a quarter in April to the lowest levels in a decade, continuing its spiral downward in response to plummeting European demand.
Denis Borisov from Solid brokerage said Gazprom could not afford paying high dividends at a time when it faces record capital expenditure on projects to bring on stream new fields and pipelines. "Given that its cash flows would fall significantly this year because of a fall in demand and prices, it would be unwise to channel big sums to dividends," he said.