Sollers wants shareholders to earn decent dividend return - CEO

YEKATERINBURG. July 11 (Interfax) - PJSC Sollers wants to provide a "decent, market" dividend return for its shareholders and intends to focus on this indicator, the Russian automotive group's CEO, Nikolai Sobolev told Interfax on the sidelines of the Innoprom-2023 exhibition.

"We, as a joint-stock company, naturally want our shareholders to have a decent, market dividend return. Therefore, among other things, we will use specifically the indicator of dividend return as a reference," Sobolev said when asked if the company will pay dividends in 2024.

He said the company pays dividends "when [its] financial position allows. However, a decade passed between the company's last two dividend payouts.

Sollers approved the payment of a dividend of 45.39 rubles per share this year. This board recommendation was released on May 2 and on that day the company's share price on the Moscow Exchange jumped 7.4% to 448 rubles, and rose as much as 11.5% from opening to 465 rubles in the course of the day. Sollers shares have since gained substantial ground and are now trading at more than 800 rubles.

The company told Interfax that the decision to pay final dividends for 2022 was made because the company had retained net profit for the previous few years. "The company's current financial position enables it to pay dividends while also financing the group's investment program," Sollers said.

Before this year, the last time Sollers paid dividends was for 2012, when it paid out 52.52 rubles per share. The company's share price was in the range of 600-800 rubles in 2013.

At Innoprom-2023, Sobolev recalled that at the start of every year, in line with the company's dividend policy, the board of directors sets a "comfortable debt to EBITDA ratio" at which dividends can be paid if it is not exceeded. It was reported earlier that at the start of 2023 the board kept the threshold debt ratio at one.

"For next year, based on the scale of the investment program, which is substantial, and based on the company's financial results, the board of directors will recommend a ratio that investors will probably understand. Well, and again, we will go by the dividend return indicator," Sobolev said.

PJSC Sollers includes the Ulyanovsk Automobile Plant (UAZ), which makes UAZ vehicles and is the group's key asset; the ZMZ plant in Nizhny Novgorod Region; a former joint venture with Ford in Yelabuga that restarted LCV production at the end of November 2022; an auto plant in Russia's Far East that was formerly a joint venture with Mazda and is now being prepared to resume operations; and a former joint venture with Isuzu in Ulyanovsk Region that was liquidated in late February.

Sollers did not publish IFRS financial statements for 2022. The company posted a net loss of 1.1 billion rubles to IFRS for the first half of 2022 on revenue down 29% to 28.2 billion rubles.

Sollers sold 16,518 automobiles in the first half of 2023, 12.9% more than a year earlier, data from the Association of European Businesses showed. The company's market share edged up to 3.9% from 3.8% a year earlier. Russia's car and LCV market grew by 9.9% to 428,308 vehicles in the first half.

Sollers Group's former principal shareholder, businessman Vadim Shvetsov sold a controlling stake in the company in June 2022 to Sollers senior executives. Their company Alter Invest now owns 77.6% of Sollers shares. The free float is about 17%, according to data on the Moscow Exchange website.