Management of Romania's Romgaz recommends lower payout ratio

The management of Romanian state-controlled natural gas company Romgaz summoned the shareholders for April 25 to choose between a higher dividend, calculated under emergency ordinance 64/2001 that sets the minimum payout ratio at 50% for state-controlled companies, and a lower dividend in line with a 20% payout ratio that would allow the company to finance from own sources a larger part of the ambitious investment program.

The lower dividend proposal, recommended by the management, is justified by the high level of investments assumed by Romgaz through the 2024 revenue and expenditure budget, namely RON 4.7 billion (EUR 940 million), of which RON 3.3 billion for its offshore project Neptun Deep, according to the company, quoted by Bursa.ro.

The higher dividend, RON 1.37 billion, would result in a yield of 6.5%, while the lower one would keep the yield at only 2.6%.

Although the investors broadly expect the management to abandon the lower dividend scenario mainly because it breaches the emergency ordinance and the Government's need for deficit funding, the shares of the company dropped by 0.55% on March 25 after the note sent by the company's management to investors.

Romgaz has a market capitalization of RON 21 billion (EUR 4.2 billion), and its shares rose by 44% y/y.

After the tax and the solidarity contribution, the shareholders were left with RON 2.8 billion (EUR 560 million) net profit (+10% y/y) in 2023.

(Photo source: Inquam Photos/Adel Al-Haddad)