Economy ministry offers 50% of profit as dividend guidance

YEKATERINBURG, Jul 10 (PRIME) -- The Economic Development Ministry has submitted its proposals on dividend policies of Russian state companies to the government saying that payment of 50% of the net profit in dividends is guidance, Minister Maxim Oreshkin told reporters on Monday.

“Yes, we have submitted (proposals) to the government. There are different approaches here. One should understand that the companies have to plan beforehand if they have to pay more dividends…The guidance is 50%, we included that into the letter to the government,” he said.

But different companies will have different dividends. “The deal with banks here is their capital adequacy. You cannot just simply take any amount of dividends from a bank…In some cases, we may take more than 50% from a bank if it has excessive capital that they are not spending on provision of new loans,” he said.

The companies with regulated tariffs should calculate dividends taking the tariff into account, and optimize their investment programs within the tariff without raising it. Also, if a state company does not carry out investment audit, their efficiency can be questioned, and they should pay 50% of their net profit in dividends, he said.

He also said that the ministry thinks that a 25% stake in shipping company Sovcomflot may be privatized in July–December and is working on the deal.

Russian Railways will not receive a 2% markup to a 4% cargo tariff growth in 2018, as the markup for 2017 was a one-time measure aimed to help the company do the overhaul maintenance of infrastructure.

Sales of new cars in Russia will definitely increase by a double-digit percentage this year, he said. Earlier, the Association of European Businesses said that sales of new cars and light commercial vehicles (LCV) in Russia grew 6.9% on the year to 718,529 units in January–June.

The ministry may increase its forecast for an average annual oil price of U.S. $45.6 per barrel in 2017 as the figure is slightly higher now, but there are risks that the price may fall, he said.

Russia may have deflation in August as rapid growth of prices for vegetables in June has started to retract, but inflation in 2017 is still seen at 3.8%. “There were no surprises besides the prices for vegetables in inflation,” Oreshkin said, adding that core inflation is still low, and the indicator excluding seasonality has been below 4% for five months already.

The ruble will continue to weaken, but there will be no plunges to 80 per U.S. dollar. In April, the ministry cut its forecast for an average annual ruble rate against the dollar to 64.4 from 67.5, and it expects the rate to reach 68 rubles until the end of the year. The current ruble dynamics are somewhere in between the expectations, he said.

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