Gazprom shares plunge 25% after dividend blocked

Gazprom lost a quarter of its market value on Thursday after the Russian state-backed group said investors had blocked plans to pay a large dividend.

“The shareholders decided that in the current situation it is not advisable to pay dividends based on the 2021 results,” said deputy chief executive Famil Sadygov.

The company’s biggest shareholder is the Russian state, which directly holds a 38 per cent stake with an additional 12 per cent owned by two other state companies. The stock plunge on Thursday prompted Moscow’s stock exchange to halt trading of the group’s shares.

Gazprom’s board recommended a dividend of Rbs52.53 in May on the back of soaring gas prices, as its 2021 net profit hit an all-time high of Rbs2tn ($36.4bn).

The recommendation would have meant a record payout of Rbs1.2tn, or $21.8bn at the current exchange rate.

Gazprom announced its new dividend policy in 2019, with the plan to pay out 50 per cent of profits by 2022 — a decision that quickly made it the biggest company by market capitalisation in Russia.

The shareholder rejection of the payout marks the first time since 1998 that the company has not paid a dividend.

Stock in several other Russian energy groups also dropped on Thursday morning on expectations that their boards may follow suit.

In early trading hours on Thursday, Russia’s top oil producer Rosneft lost nearly 7 per cent, Rosseti power distribution company shed 5 per cent in share value, third-largest producer Surgutneftegas dropped nearly 3 per cent and Transneft pipeline operator lost 2 per cent.

State-owned Sberbank, Russia’s top lender, also announced on Thursday that it would not pay dividends for last year, prompting a 5 per cent fall in the company’s shares.

Gazprom’s dividend news comes as the company reduces gas supplies to customers in Europe, including Germany’s Uniper, which issued a profit warning on Thursday.

While Gazprom’s sales have been falling, dropping almost 30 per cent year on year in the first half of 2022, soaring gas prices have helped it offset the losses.

Gazprom also announced the election of new directors on Thursday, including Russia’s agriculture minister Dmitry Patrushev, who took the position vacated after former German chancellor Gerhard Schröder rejected a nomination to the board.

Separately, local media reported that Vladimir Mau, a Gazprom board member since 2011 who was re-elected on Thursday and also head of the Russian Presidential Academy of National Economy and Public Administration, had been arrested for fraud.