Lukoil Board Pledges to Return Quarter of Profit to Shareholders

  • Russian oil producer establishes floor for future payouts
  • Board recommends final 2015 dividend of 112 rubles a share

Lukoil PJSC, Russia’s second-largest oil producer, pledged to return at least a quarter of its profits to shareholders.

Lukoil will distribute a dividend of no less than 25 percent of net income according to International Financial Reporting Standards, the Moscow-based company said Monday following a board meeting. While the decision sets a floor for future payouts, in the past Lukoil has often ended up distributing more.

“This sets the minimum level of dividend, which is good,” Alexander Kornilov, a Moscow-based analyst at Aton LLC, said by e-mail. Lukoil is actually proposing to pay out about half of 2015 earnings as a dividend this year, and distributed a 30 percent share a year earlier, he said.

Lukoil is among Russian oil producers prioritizing shareholder payouts after benefiting from declines in the ruble that reduced costs. The country’s largest oil company, state-controlled Rosneft OJSC, said last week it plans to increase its dividend to 35 percent of 2015 profit. Both producers have cut spending to weather a collapse in crude prices amid a global glut.

As part of the new dividend policy, Lukoil will increase the annual payout by at least the ruble rate of inflation based on the consumer price index published by Rosstat, it said in a statement.

The board recommended a final 2015 dividend of 112 rubles a share, taking the total payout for last year to 177 rubles, or about 50 percent of profit. That’s an increase from 154 rubles a share on 2014 earnings.

The company will hold its annual general meeting on June 23 in Perm, Russia. The board will propose that July 12 be set as the record date for the final dividend.

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