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Monday, March 30, 2009

Gazprom Likely to Cut '08 Dividend

30 March 2009 - Reuters - Gazprom said Friday that it was likely to cut its dividend payout for 2008 following a fall in its annual net profit, the first decrease in this decade. But the company will not change its dividend policy based on market capitalization and profits, and it will continue to invest in its main projects, chief financial officer Andrei Kruglov said. "Since 2008 net profit was not as much as in 2007, there will be a change in the payment, but it will only be connected to the profit level and will not be the result of a change in the dividend policy," Kruglov said. Gazprom said Friday that it swung to a 259.87 billion ruble ($7.76 billion) loss, under Russian accounting standards, in the fourth quarter of 2008 from a 147.2 billion ruble profit in the third quarter. Denis Borisov, an analyst at Solid brokerage, said the loss implied that its 2008 net profit was 173 billion rubles, a drop of more than 50 percent year on year. Gazprom has been growing net profit every year since at least 2000. Kruglov said Gazprom's board would consider the dividend payment at a meeting later this year and that the firm was standing by its dividend policy, which was adopted in 2003. The policy provides that the firm should pay annual dividends of not less than 2 percent of its market capitalization but not more than 10 percent of its net profit under Russian accounting standards. Borisov said that if Gazprom paid 10 percent of its net profit, the payout might amount to about 73 kopeks (2.1 cents) per share, nearly a quarter of the 2.66 rubles per share paid in 2007. Gazprom said the fourth-quarter loss resulted from the revaluation of its assets. Gazprom's shares on the MICEX closed down 3.3 percent on Friday, largely in line with the exchange's oil and gas index. Kruglov reiterated that Gazprom was likely to cut its 2009 capital expenditure program after the first quarter, but the board has yet to review specific figures. "After the first quarter, the investment program will be revised. This is because consumption is falling. It is our rule to produce as much as we can sell," he said. But Kruglov added that the company would not cut down development programs at its main projects, such as construction of the North Stream gas pipeline to Europe and development of gas deposits on the Yamal peninsula. Gazprom's total investment program -- which consists of capital expenditure and long-term financial investments -- is set at 920.5 billion rubles for this year. The gas export monopoly has said it might ask the government to co-fund its investments in 2009, but this seems uncertain given that the state is preoccupied with holding on to the billions of dollars it needs to keep the economy afloat and help state-owned giants refinance foreign debts.

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