Doubtful Dividend Discharge: Gazprom and Norilsk Suffer Holdbacks on 2024 Payments
Headline: Major Russian Giants, Like Gazprom and Norilsk Nickel, Scrap 2024 Dividends Amid Economic Pressure
Subhead: Severe economic uncertainties, high interest rates, and sanctions take a toll on these companies, rendering them financial conservatives.
In a striking turn of events, some of Russia's largest corporations, such as industry heavyweight Gazprom and Norilsk Nickel, have elected to forgo dividend payments for the year 2024. These business decisions, which were approved at their respective annual meetings, were primarily spurred by a perfect storm of economic uncertainty, high-interest rates, and the crushing weight of Western sanctions.
Ever since the EU cut off significant imports under sanctions, Gazprom's revenues have taken a nosedive—plummeting from a whopping €100 billion in 2022 to a mere €22 billion in 2024. Such drastic financial setbacks make it an uphill battle for companies to maintain dividend payments.
Companies like Norilsk Nickel suffer from restricted access to vital technology and sanctions on subsidiaries such as Alrosa, which put severe pressure on profit margins. In this constricted operational environment, these companies are compelled to prioritize cash conservation over dividend payouts.
Historically generous dividend payer Norilsk Nickel has, in recent years, decided to temporarily suspend payouts, with a strategic emphasis on channeling funds towards capital expenditures instead of distributing profits to shareholders.
In a broader context, Russia is currently grappling with a decline in foreign direct investment, which has dropped by an alarming 91% since 2021. This economic contraction further impacts corporate liquidity and influences dividend policies.
In essence, a combination of sanctions-driven revenue losses, a challenging investment climate, high financing costs, and a strategic shift towards preserving capital for operational investments, explains the reasons behind these major Russian companies' decision to forsake 2024 dividends [1][2][4].
The economic strain caused by sanctions, high interest rates, and unfavorable business conditions has led Gazprom and Norilsk Nickel, two major Russian corporations, to forego dividend payments in 2024. As these companies grapple with reduced revenues and cash constraints, they are prioritizing capital conservation over dividend distributions to security their operations.
