Gazprom shares plunge 25% after dividend blocked

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

“The shareholders have decided that in the current situation it is not worthwhile to distribute dividends based on the results of 2021,” said Deputy CEO Family Sadigov.

The company’s largest shareholder is the Russian state, which directly owns 38% of the company’s shares with a further 12% owned by two other government companies. The stock’s drop on Thursday caused the Moscow Stock Exchange to stop trading in the group’s shares.

GazpromThe company’s board of directors recommended a dividend distribution of Rbs52.53 in May against the background of rising fuel prices, as its net profit in 2021 peaked at 2tn Rbs ($ 36.4 billion).

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The recommendation meant a record payment of Rbs1.2tn, or $ 21.8 billion at the current exchange rate.

Gazprom has announced its new Dividend policy In 2019, with the plan to pay 50 percent of profits by 2022 – a decision that quickly made it the largest company by market value in Russia.

The postponement of the shareholders’ payment marks the first time since 1998 that the company has not paid a dividend.

Shares in several other Russian energy groups also fell on Thursday morning amid expectations that their board of directors would follow suit.

In the early trading hours on Thursday, Russia’s senior oil producer Rosneft lost nearly 7 percent, Rusty’s electricity distribution company dropped 5 percent of the stock, third-largest producer Surgutneftegas fell nearly 3 percent and Transnational pipeline operator lost 2 percent.

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Russia-owned Sberbank, Russia’s top lender, also announced on Thursday that it would not distribute dividends last year, causing a 5% drop in the company’s shares.

Gazprom’s dividend news comes as the company reduces its gas supply to customers in Europe, including German Unifer, which has issued Profit warning On Thursday.

While Gazprom’s sales fell nearly 30 percent year-on-year in the first half of 2022, soaring gas prices helped it offset losses.

Gazprom also announced the election of new directors on Thursday, including Russia’s agriculture minister Dmitry Petrushev, who took office after former German chancellor Gerhard Schroeder rejected his candidacy for the board.

Separately, local media reported that Vladimir Mao, a member of Gazprom’s board since 2011 who was re-elected on Thursday and also the head of the Russian Presidential Academy of Economics and public administration, has been arrested for fraud.

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