Fitch: RusHydro, Gazprom most exposed to Russia dividend plan

MOSCOW, Apr 21 (PRIME) -- The Russian government’s plan to raise the dividends it receives from state-controlled companies in 2016 will increase pressure on the credit profiles of some companies, including hydropower firm RusHydro and gas giant Gazprom, Fitch Ratings said Thursday.

“Continued demands for higher payouts over the next few years could have a wider impact, but this would depend on how flexible the government was willing to be for companies with big investment plans, or those that might struggle to raise debt,” the agency said.

Fitch believes that RusHydro is the most exposed because its leverage is already close to 3.0x. It would be challenging for the company to increase the dividend from around 25% of net profit to 50% and keep leverage below 3.0x unless the higher dividend is offset by capex cuts.

Gazprom has already recommended paying 50% of its net profit under Russian Accounting Standards (RAS) in dividends for 2015. “But we estimate its profit under International Financial Reporting Standards (IFRS) could be double the figure reported under Russian rules. The government has said companies should pay 50% of whichever profit figure is higher, so unless it is given an exception it could have to double its planned dividend,” Fitch said.

Fitch projects Gazprom’s leverage at below 2.5x in 2016. “But a higher dividend would weaken Gazprom’s liquidity and may force it to increase borrowings and reduce its massive capex program. If the dividend payout ratio remained at the same level in 2017–2018, its rating could come under pressure,” the agency said. Russian Prime Minister Dmitry Medvedev said Wednesday he had signed a ruling obliging state companies to pay at least 50% of a net profit in dividends for 2015.

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