Cabinet orders state firms to pay 50%-90% dividends from 2018 profit

Ukraine’s Cabinet of Ministers published this week its
resolution on dividend distribution of state-controlled companies adopted on
Apr. 24. According to the resolution, all state-controlled companies should pay
90% of their 2018 profit in dividends if it exceeded UAH 50 mln, and 50% if the
profit was below UAH 50 mln. Exceptions are Oschadbank (OSCHAD), Ukrainian
Railway (RAILUA) and two other state companies, which were ordered to pay 30%
of their profit in dividends.

Alexander Paraschiy: The
resolution slightly contradicts earlier statements that declared state
enterprises should pay only 50% of their profit in dividends.
Most such companies, including Centrenergo (CEEN UK) and Turboatom (TATM UK),
have already convened AGMs at which shareholders already decided to pay 50% in
dividends (although their 2018 profit exceeded UAH 50 mln).

Meanwhile, the AGMs of high-profit companies like Naftogaz
and Ukrnafta (UNAF UK) have yet to decide on their dividends. So they will have
little choice but to obey the published government regulation and distribute
almost all their 2018 profit in dividends.

For the state enterprises, such large dividend
payouts do not look efficient. But taking into account the state budget’s weak interim collections, they look like an aggressive attempt to generate
revenue.