Aeroflot's board of directors proposes dispensing dividends.
Aeroflot, Russia's largest airline, has announced a dividend of 5.27 rubles per share for 2024. This will mark the first time since 2019 that shareholders will receive a dividend, according to the company's report. The decision follows a revised dividend policy, which aims to distribute 50% of adjusted profit as dividends under international financial reporting standards.
The shareholder payout is scheduled for approval at the annual general meeting on June 30. If approved, it will be the first payment shareholders have received in nearly five years. In the interim, Aeroflot's shares on the Moscow Exchange have seesawed, with trading data showing a 2.7% increase as of 16:30 Moscow time, trading at 68.06 rubles.
The move comes amid a challenging economic landscape for Russian companies, with many leading firms, particularly in the mining and energy sectors, having suspended or waived dividend payments from their 2024 results. According to state statistical data, Russian companies' total earnings declined by 6.9% in 2024, with real earnings (adjusted for inflation) dropping approximately 15%.
However, Aeroflot's decision to resume dividend payments is seen as a positive sign, reflecting possible stabilization in its financial performance amid financial pressures, high interest rates, and reduced revenues. The policy indicates a move toward shareholder-friendly practices, which may help attract new investment after periods of economic uncertainty and geopolitical isolation.
The resumption of dividend payments could have a positive impact on Aeroflot's stock market valuation and investor sentiment. By committing to a clear and predictable payout structure, Aeroflot may shore up its reputation among domestic and international investors despite ongoing sanctions and market volatility. However, distributing half of its adjusted profit as dividends could potentially limit the company's ability to reinvest in its operations, fleet renewal, and technological upgrades, posing risks in a highly competitive and capital-intensive industry.
Aeroflot's approach could potentially set a precedent for other Russian companies, especially if economic conditions stabilize. Its willingness to share profits with shareholders could encourage a broader shift toward greater transparency and shareholder value in the Russian market.
The dividend payout scheduled for June 30 marks Aeroflot's intention to distribute Half of its adjusted profit as dividends, reflecting a shift towards shareholder-friendly practices in the finance sector, despite the challenging economic circumstances of the industry. Aeroflot's decision to resume dividend payments, amid ongoing sanctions and market volatility, may have implications for other Russian companies, potentially inspiring a wider trend towards transparency and shareholder value.
