Lots of Russian Companies Suspend Returns Payments Amid Economic Uncertainty
High interest rates, lowered revenue, and sanctions pressure affect Russia’s largest firms.
The boards of directors of at least two publicly traded Russian companies have decided to withhold dividends from their 2024 results due to financial challenges. According to Rosstat, Russian companies earned 30.4 trillion rubles ($381.1 billion) in 2024, a 6.9% decrease from 2023. Adjusted for inflation at 9.4%, real profits dropped by about 15%, while total profits for dividend-paying firms remained stable at 37.6 trillion rubles ($471.5 billion). However, losses surged by 37.7% to 7.2 trillion rubles ($90.2 billion).
Leading companies like Gazprom, Norilsk Nickel, NLMK, and Severstal are among those pausing dividend payments due to financial strains. Other affected firms include En+ Group, Rusal, and Rosseti, with more expected to follow suit.
Financial Pressures Across Various Sectors
Financial challenges are widespread, affecting industries such as mining, power, retail, real estate, agriculture, logistics, machinery, and healthcare.
Companies like Magnit, Lenta, M.Video, and others are also halting dividend payouts to shareholders. Market analysts predict that more companies may suspend dividends, including RusHydro, Alrosa, Aeroflot, and Vse Instrumenty.
Factors Driving Reduced Profits
Export revenue losses and sanctions impact firms like Gazprom, NLMK, Norilsk Nickel, Rusagro, and Sovcomflot. The decision to preserve liquidity and prioritize operational needs amidst high borrowing costs exceeding 21% is seen as a prudent move.
Export-oriented businesses are grappling with the effects of a strong ruble, diminishing profits for industries like metallurgy, oil, fertilizer, and agriculture.
