OAO Gazprom (OGZPY:US) fell the most in six weeks on concern the world’s biggest natural gas producer will pay a lower-than-forecast dividend after demand for its fuel weakened in Europe and at home.
Gazprom slumped as much as 3.1 percent to 131.98 rubles, the lowest since April 2009, before closing down 2.2 percent at 133.21 rubles in Moscow, the most since Feb. 14. Depositary receipts lost 1.4 percent to $8.54 today. The Russian gas export monopoly’s American depositary receipts (OGZPY:US) defied a rebound in the Bloomberg Russia-US Equity Index (RUS14BN) yesterday, sinking 1.9 percent to $8.66, the lowest level in three weeks.
Profit at state-run Gazprom, which supplies a quarter of Europe’s gas, dropped 37 percent to 556 billion rubles ($18 billion) last year, according to a report prepared to local accounting standards and published late yesterday. That translates into a dividend of 5.9 rubles a share given the company’s policy of returning 25 percent of profit to shareholders.
“The numbers imply a dividend way below our expectations, which clearly undermines sentiment in the stock,” Lev Snykov, a partner at Greenwich Capital in Moscow, which holds Gazprom shares, said yesterday by phone. “It is now unclear whether investors can count on Gazprom as a dividend story going forward.”
The second-cheapest stock on Russia’s Micex Index (INDEXCF), Gazprom estimated a payment of 7 rubles to 8 rubles last month, while analysts forecast 7.84 rubles, data compiled by Bloomberg show.
Gazprom’s press service declined by phone today to comment on planned payouts.
Gazprom paid a record-high dividend of 8.97 rubles a share for 2011. The company has been distributing 25 percent of its profit reported under Russian accounting standards in dividends since 2010 and plans to do so again for the years 2012 and 2013, Chief Financial Officer Andrey Kruglov said in June.
“We believe that investors are likely to be disappointed that the company’s prospective dividends are substantially lower than guided,” analysts at VTB Capital, led by Dmitry Loukashov, said in a note today. The analysts said the financial results were in line with their view of the company facing “a deteriorating operating and market environment.”
The gas producer is yet to approve its payout for 2012. It could pay from 17.5 percent to 35 percent of net income in dividends under its current policy, Alexander Kornilov and Ekaterina Malkova, analysts at Alfa Bank, said in a research note today.
Gazprom reduced shipments to Europe 7 percent in 2012 and recognized 133.2 billion rubles of retroactive payments to customers in the first nine months of the year. An increase in the mineral extraction tax also hurt Gazprom’s profitability, Ron Smith and Alexander Bespalov, analysts at Citigroup Inc. in Moscow, wrote in a research note.
“The future becomes even bleaker for Gazprom,” Ilya Kravets, director of investment research at Daniloff Capital LLC in New York, said by phone yesterday. Daniloff Capital sold all of its Gazprom shares last month, concerned about the gas company’s profits deteriorating. “I am not comfortable with it longer term. As competition tightens for Gazprom at home and demand for gas from European consumers declines, the investment case for Gazprom is worsening.”
Gazprom’s control of Russian gas exports may be scrapped, Russian Prime Minister Dmitry Medvedev said in a Jan. 23 interview. The state-controlled company was granted a legal monopoly by President Vladimir Putin in 2006.
One ADR equals two Moscow-listed shares. Trading volume in New York was almost triple the daily average over the past three months, data compiled by Bloomberg show.
The company trades at three times estimated earnings in Moscow, the second-cheapest equity on the 50-stock Micex Index after OAO Transneft, which trades at 2.6 times projected profit, data compiled by Bloomberg show.
The Micex has an average dividend yield of 4 percent, the highest level since March 3, 2009, according to data compiled by Bloomberg. The yield for companies in the Bloomberg Russia-US gauge has more than doubled to 4.3 percent from 1.6 percent in July, the data show. Dividend yields are calculated by dividing annual dividends per share by the price per share and expressing it as a percentage.
Gazprom’s 12-month gross dividend yield of 6.6 percent is less than a fourth of oil producer TNK-BP’s yield at 27 percent, data compiled by Bloomberg show. OAO Rosneft bought TNK-BP from BP Plc and AAR partners for $55 billion last week, the country’s biggest ever deal, and may cut TNK-BP dividend payouts.
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