12 May 2022 09:18

Rusagro might revisit dividends, buyback

MOSCOW. May 12 (Interfax) - Rusagro Group , which decided not to pay out final dividends for 2021, might return to the issue of dividends later this year.

"As for dividends, here the situation is also complicated. We see now that payment of dividends gives rise to significant risks, at least right now for our company, like for all Russian companies, I think. Therefore, we're not returning to this issue for now but, naturally, closer to when the decision will be made on payment of interim dividends for 2022 I think this issue might be raised," Rusagro chief financial officer Boris Chernicher said in a conference call on Wednesday.

Asked if Rusagro is considering a buyback program as an alternative to dividends, he said the company "is considering various options."

"I think that if this question remains relevant we can give an answer to it during the call on the results of the second quarter, because this issue will probably be discussed at the general meeting of shareholders," Chernicher said.

At the end of February, Rusagro's board approved final dividends for 2021 in the amount of $137.2 million ($5.10 per share or $1.02 per GDR), but in March the company decided not to pay the dividends due to uncertainty regarding the "current situation in relations between Russia and Ukraine." Interim dividends for 2021 totaled $119.7 million.

Rusagro's dividend policy calls for paying out at least 50% of IFRS net profit. The company paid dividends twice a year, for the first half and final dividends for the year.

Chernicher also said in the conference call that it is difficult to forecast the dynamics of revenue, profitability and free cash flow in the current circumstances. He said "pressing problems" are the company's priority.

"As for cash flow, it's difficult to plan. We see the results of the first quarter, but one must understand that we're giving only a month in the new situation that we find ourselves in. Plus, we can't forecast what will happen with cash flow in the course of the subsequent nine months. It's difficult to make any clear plans," Chernicher said.

"The Primorye cluster [Rusagro's major pig farming project] is almost complete, but right now our priority, I'd say, is solving more pressing problems, although we are, of course, also thinking about development, when such a possibility arises. In other words, right now we have more issues related to the current market and looking for alternatives to those avenues that have ended up blocked to use due to sanctions," Chernicher said.

He said there are problems working with foreign banks, with settlements in foreign currency regarding exports and imports, and with supplies of key components that the company previously bought in the United States and European Union countries.

"We're also seeing that some countries are refusing to work with us, refusing to accept goods from us, goods coming from Russia in general. Therefore, this leaves a certain mark. But it is also necessary to understand that while some already relatively final, stable situation has not settled, it's difficult to assess potential margins for the group. On one hand, there are some positive factors, [but] on the other there are about as many negative factors, so in the current situation it's simply not possible to say what the margin, EBITDA and revenue will be in 2022," Chernicher said.

"Of course, developments are no longer changing for us with such kaleidoscopic frequency but, nonetheless, any fairly sudden news right now can lead to completely unpredictable consequences," he said.