Dividend policy
Aeroflot adopted the Dividend Policy Regulations in the summer of 2014; payments are made once a year.
The basis for calculating dividends since 2015 has been net profit according to IFRS standards (previously - according to RAS). A system of coefficients has been developed to determine the share of profit distributed as dividends, taking into account the results of financial and economic activities in the reporting year, the current debt burden and the medium-term financial plan:
- providing investments with sources of financing;
- providing the principal debt with sources of repayment;
- debt load.
Aeroflot's Board of Directors takes into account the following factors when making decisions:
- net profit;
- financial sources for payment;
- planned capital investments;
- volume of financing of subsidiaries.
At the moment, payments are fixed at 25%. If the coefficients deviate from the specified values, the share of distributed net profit is reduced to 20 or 15%. From 2021, according to government guidelines, 50% of net profit is allocated for payments.
Unlike other state corporations, Aeroflot did not challenge the directive and found itself in a unique situation compared to the world's leading airlines. Etihad, Qatar Airways, and Emirates do not take dividends; the state, on the contrary, subsidizes the companies to ensure reinvestment of profits. No airline (including European ones) allocates more than 7% of net profit to dividends.
How and where to buy Aeroflot shares
To buy Aeroflot shares and receive dividends on them, you need to open a brokerage account with any broker that has access to the Moscow Exchange. Aeroflot shares are traded on the stock section of the Moscow Exchange under the ticker AFLT.
Shares on the Moscow Exchange are traded in lots. One lot of Aeroflot contains 10 shares of the company. Consequently, at the current share price, the minimum cost of purchasing a “package” is 1009.6 rubles.
The register of shareholders closes on July 5. Taking into account the T+2 trading mode, the last day for purchasing for dividends is July 3.
When receiving dividends, tax will be withheld from you - 13%. Dividends will be credited to the account without taking into account tax - i.e. in fact, you will receive not 2.6877 rubles, but 2.3382 rubles per share (or 23.382 per lot).
Dividends are usually credited within 1-2 months to a brokerage account, bank account or IIS - it all depends on your broker.
All company dividends for the last 10 years
Aeroflot's dividend history dates back to 2000. If there was a net profit, payments were stable. 2014–2015 became difficult for the company; there were no payments. The highest dividends in history have been accrued in 2021 and 2021.
| For what year | Registry closing date | Total amount of dividends, billion rubles. | Percentage of net profit allocated to dividends | Dividends per 1 share, rub. | Earnings per share, % | Change from previous year |
| 2019 | 2,99 | 50% | 2,69 | 2,57% | -78,98% | |
| 2018 | July 5, 2019 | 14,22 | 50% | 12,8 | 9,15% | -26,74% |
| 2017 | July 14, 2018 | 19,4 | 50% | 17,47 | 7,77% | — |
| 2016 | — | — | — | — | — | — |
| 2015 | — | — | — | — | — | -100% |
| 2014 | July 8, 2015 | 2,78 | 25% | 2,49 | 4,36% | 114,71% |
| 2013 | May 6, 2014 | 1,29 | 26% | 1,16 | 2,19% | -35,65% |
| 2012 | May 10, 2013 | 2,01 | 12,20% | 1,81 | 3,93% | 66,63% |
| 2011 | May 11, 2012 | 1,21 | 13,21% | 1,09 | 1,58% | 210,29 |
| 2010 | May 4, 2011 | 0,39 | 13,59% | 0,34 | 0,58% | 92,35% |
| 2009 | May 5, 2010 | 0,2 | 18,44% | 0,18 | 0,52% | -86,70% |
Aeroflot's dividend history
However, the company is not doing very well, and the country's main air carrier is not happy with the stability in payments. Dividends are paid irregularly and there is no positive dynamics of their growth.
Thus, for 2014 and 2015, no dividends were paid at all. In 2017, dividends for 2021 were record high - as much as 17.48 rubles per share. For 2017, the size was already somewhat more modest - 12.81 rubles, but still good.
In 2021, Aeroflot is paying dividends based on the results of 2021, and everything is sad here - only 2.69 rubles per share.
Stock return
The average dividend yield over the last 3 years is 6.5%. The yield of Aeroflot Central Bank is growing, analysts recommend holding the securities and promise good growth potential.
Factors that can have a positive impact on quotes, become revenue drivers and lead to dividend growth:
- business expansion (increase in passenger traffic, increase in market share, opening of new hubs and flight routes);
- forecasted recovery of profit to 19 billion rubles. due to curbing the growth of controllable costs;
- increasing strategic goals for the next 5 years.
Factors that may negatively affect Aeroflot's stock prices and dividends:
- reduction in aircraft load and demand for air tickets (passenger traffic is growing more slowly than competitors);
- ban on flights to the US due to sanctions;
- an increase in prices for aviation fuel by 10.2% against the backdrop of falling oil prices;
- decreased demand for international flights when the national currency depreciates;
- risk of government intervention (the main shareholder sets the amount of net profit used to pay dividends).
The profitability of Aeroflot's assets is affected not only by dividends, but also by fluctuations in stock exchange prices. Since May 30, there has been a steady increase in value. Based on the results of trading on June 21, 2021, the cost of one share was 100.4 rubles. Analysts predict further growth. VTB Capital predicts 130 rubles, Aton – 125, Refinitive – 120.
So far, the profitability outlook is better than the retrospective. But it is worth considering that the adopted development strategy will increase net debt in the near future. The positive effect from the growth of passenger traffic and the opening of new hubs will not appear soon. You shouldn’t expect good dividend yield from investing in Aeroflot shares earlier than in a few years.
How to buy shares and receive dividends
Individuals have free access to purchase Aeroflot shares. To do this, just choose a broker and conclude an agreement with him.
Best brokers
The conditions and procedure for purchasing securities are negotiated directly with the selected company. Here is a list of reliable brokers.
Reliable Russian brokers
| Name | Rating | pros | Minuses |
| Finam | 8/10 | The most reliable | Commissions |
| Opening | 7/10 | Low commissions | Imposing services |
| BKS | 7/10 | The most technologically advanced | Imposing services |
| Kit-Finance | 6.5/10 | Low commissions | Outdated software and user interface |
Warning about Forex and BO
I would like to remind you that Forex and binary options have nothing to do with buying shares, even though these words may appear in the same article. Forex is an interbank currency exchange market; Binary options trading involves short transactions where you need to bet on the rise or fall of an instrument. Is there any income there? It is possible, but do not forget that it is associated with high risk.
Key financial indicators of Aeroflot
| million rubles, unless otherwise indicated | 4K 2018 | 4K 2017 | Change, % | 2018 | 2017 | Change, % |
| Revenue | 145 225 | 128 161 | 13,3% | 611 570 | 532 934 | 14,8% |
| Operating expenses | 162 414 | 129 612 | 25,3% | 591 913 | 492 523 | 20,2% |
| EBITDA | -13 867 | 2 221 | -724,4% | 32 569 | 54 495 | -40,2% |
| EBITDA margin | -9,5% | 1,7% | -11,3% | 5,3% | 10,2% | -4,9% |
| Net income (loss) | -15 901 | -4 277 | 271,8% | 6 589 | 22 872 | -71,2% |
| EPS, rub. | -15 | -4 | 247,6% | 6,0 | 21,3 | -71,8% |
| CFO | -16 586 | -7 418 | 123,6% | 19 495 | 47 432 | -58,9% |
| 4K 2018 | 3K 2018 | 4K 2017 | Meas., c/c | Meas., YTD | ||
| Net debt | 63 582 | 35 900 | 48 961 | 77% | 30% |
Source: data
Previously, Aeroflot signed a contract worth over $5 billion. to lease 50 MC-21 aircraft in 2020-2026, and was supposed to become its 1st largest operator, but the start of serial production of MC-21 aircraft was recently delayed by a year from the end of 2021 to the end of 2020 due to sanctions. We do not consider this news negative, as we believe that an increase in the share of Russian-made aircraft (including the lease of an additional 100 SSJ-100 aircraft) may in the future reduce the operating profitability of the air carrier. The company plans to use Boeing 737 and Sukhoi Superjet at the Krasnoyarsk hub.
Aeroflot dividends
According to Aeroflot's dividend policy, the target dividend payment rate is 25% of net profit under IFRS, taking into account the expected dynamics of income, investments, and debt load. At the end of 2021, the company paid 50% of profit under IFRS within the framework of the government directive on dividends for state-owned companies, at the end of 2017 - 62% of profit under IFRS or 50% of profit under RAS.
This season, Aeroflot shares will be unattractive based on dividend criteria. When distributing 50% of the profit according to IFRS, DPS 2018P may be 2.6 rubles. (-80% y/y) with a yield of 2.6% compared to 8.5% on average for payments for 2016-2017.
Below are historical and forecast data on Aeroflot dividends:
Source: data
Forecast for key financial indicators of Aeroflot
| billion rubles, unless otherwise indicated | 2017 | 018 | 2019F | 2020P |
| Revenue | 532,9 | 611,6 | 673,0 | 720,8 |
| Height, % | 7,5% | 14,8% | 10,0% | 7,1% |
| EBITDA | 54,5 | 32,6 | 50,8 | 58,0 |
| Height, % | -28,9% | -40,2% | 56,1% | 14,0% |
| EBITDA margin | 10,2% | 5,3% | 7,6% | 8,0% |
| Net profit | 22,9 | 6,6 | 18,8 | 25,2 |
| Height, % | -38,9% | -71,2% | 186,0% | 33,5% |
| Net debt | 49,0 | 63,6 | 40,0 | 13,3 |
| Ch.debt/EBITDA | 0.90 x | 1.95 x | 0.79 x | 0.23 x |
| DPS, rub. | 12,8 | 2,6 | 8,5 | 11,3 |
| Payment rate, % profit according to IFRS | 62% | 50% | 50% | 50% |
| DY | 9,1% | 2,6% | 8,5% | 11,3% |
Source: company data, Bloomberg forecasts, FINAM Group of Companies
Brief description of the issuer
Aeroflot is one of the largest air carriers in Russia with revenue of 612 billion rubles in 2021. In addition to the Aeroflot airlines of the same name, the Group owns the air carriers Pobeda (100%), Aurora (51%), and Rossiya (75%). 1 share). Aeroflot's share of the air transportation market in terms of passenger traffic is about 40%. The network of routes covers 57 countries and 173 regular destinations. The average age of the Group's aircraft is 4.2 years.
Capital structure. The controlling stake, about 55%, is owned by the state through the Federal Property Management Agency (51.17% of shares) and the Rostec State Corporation (3.3% of shares). Institutional investors hold 34.8% of the shares. Free-float is 45%.
Is it worth buying Aeroflot shares?
Speaking in terms of numbers, Aeroflot's business does not inspire hope. 2016 and 2017 were generally difficult years for the air carrier. Own capital went negative (-63.7 billion rubles in 2021 against 67.29 billion in 2016), the amount of net debt increased by a cosmic amount - from 49.8 billion rubles in 2021 to 635.4 in 2017 .
At the same time, although revenue is growing, net profit and EBITDA are falling. Thus, profit decreased from 38.8 billion rubles in 2021 to 23 in 2021 and to 5.7 in 2021, EBITDA decreased from 78 to 56 and then to 33.5 in the same years.
Cash flow is also declining - now it is 33.5 billion rubles compared to 56 last year and 78 the year before.
All this leads to a reduction in earnings per share. If in 2021 there were 35.43 rubles per share, then in 2021 it was already 21.34, in 2021 - only 6, and at the end of the first quarter of 2021, profit took a negative value - minus 15.87 rubles.
And here’s another interesting article: Is it worth buying Enel Russia shares for dividends in 2021?
Animators are scary to even watch. If you're not afraid, take a look for yourself. Remember, this dramatic distortion is due to a sharp rise in debt.
This situation is due to many reasons:
- rising prices for fuel (mainly kerosene);
- decrease in passenger traffic - fewer Russians began to fly, especially abroad;
- the need to modernize the outdated aircraft fleet;
- pressure from competitors, including small air carriers, which actually “eat away” a significant part of the profit;
- Aeroflot lacks profitable investments and projects, as well as assets that can be sold (as is the case with Central Telegraph).
One could add ineffective management to the list of reasons, but it seems to me that in a shrinking market in the absence of subsidies and in the conditions of sanctions pressure + rising fuel prices, it is very difficult to make any effective decisions.
On the one hand, it seems that Aeroflot shares are now declining and can be picked up. After all, this is a state-owned company, and its bankruptcy is unlikely to be allowed.
On the other hand, stocks still have room to fall - and to be honest, I'm surprised that the fall is still so relatively slow. If you look at the multipliers, then Aeroflot is even overvalued. So, in my opinion, taking shares of the company is dangerous. If only in anticipation of further growth. But definitely not for dividends. And what do you think?
Should you buy Aeroflot shares?
- Yes 47%, 49 votes
49 votes 47%49 votes - 47% of all votes
- No 31%, 32 votes
32 votes 31%
32 votes - 31% of all votes
- In a year - perhaps 22%, 23 votes
23 votes 22%
23 votes - 22% of all votes
Total votes: 104
02.07.2019
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Aeroflot goes to the regions
Speaking to shareholders on June 25, Aeroflot CEO Vitaly Savelyev said that the group plans to create a network of hubs in Russian regions.
By the fall, the company's management should present a new strategy containing proposals for the creation of regional hubs. But he did not specify the details. “There is production and business logic in creating regional hubs. “Aeroflot covers the entire territory of Russia in different segments, and it is logical that it will have hubs not only in the capital,” a source close to Aeroflot told RBC. According to him, a hub has actually already been created in St. Petersburg, where Rossiya flies from, and another one may appear in Perm, where repairs of Sukhoi family aircraft are carried out.
President Vladimir Putin previously called for the development of interregional air transportation, bypassing Moscow. According to his May decree, the share of regional transportation should increase to 50% (now most flights between regions are carried out through Moscow).
