While last year's total turnover and profit of our listed enterprises grew quite modestly (by one and two percent, respectively), dividends are rather generous. For several, dividends or payments from share capital reduction are manifold year-on-year.
Take Tallink, paying eight cents per share – four times the two cents last year. It’s two percent of dividends plus six in paybacks.
«Generally speaking, all enterprises are indeed paying according to or above the expectations,» said Swedbank’s Baltic chief shares analyst Marek Randma. «In our assessment, last year was good above expectations, due to the good economic environment – overall, the economy grew, wages grew, inflation was low, interests record low, loans volume at banks increased.»
To this, LHV economists Joonas Joost and Shana Gavron agreed. «Looking back, the bulk of Tallinn Stock Exchange was positively surprising: Tallinna Kaubamaja, Tallink, Olympic, Ekspress Grupp, Merko, Nordecon and Harju Elekter,» they added.
As explained by Mr Randma, company balance sheets have improved year by year and debt payments are down; also, investments continue to be relatively low. «Therefore, it was possible for the companies to increase dividends,» said the economist.
Rather unexpectedly, at general meeting Ekspress Grupp proposed to pay five cents per share. In last year’s report, the media group board suggested four cents. Business daily Äripäev thinks the upward pressure was from majority owners.
«With both Olympic and Ekspress, they have very strong cash flows and they would probably be able to pay at least the same size of dividends next year,» said the LHV economists. «With both, however, the size of payments depend on whether they do sizable takeovers during a year or not.»
The casino group Olympic EG pays 15 cents per share. Of that, 10 cents are paid on July 15th and five cents on October 14th. If approved at general meeting, which is rather certain, majority owner Armin Karu draws out €10.2m. This might be the biggest dividend taken out in Estonian corporate history.
For next year, the economists predict not such an abundant harvest of dividends.
«We expect spending pressure to increase, especially with those that are labour intensive,» said Swedbank’s Mr Randma, adding that considering low investments these past years it is difficult to boost profits. Therefore, the companies are expected to start increasing investments in order to raise turnover. «Of the companies we cover, only OEG has substantially increased dividends, thus expected to show bigger turnover next year. Also, due to the arrival of Megastar, Tallink has also notified of larger investments next year,» he added.
Mr Joost and Mr Gavron added that unless Tallink asks for bondholder permission to make a one-off payment of over half of profit next year as well, their next year’s dividends (including cutting of share capital) will probably be smaller.
By LHV economists, smaller dividends are also expected from Tallinna Kaubamaja.
«Tallinna Kaubamaja’s dividends are largely dependent on financial needs related to expansion planned for the building,» they noted. «Therefore, despite the predicted profit rise, we expect a bit more conservative dividend of 50 cents per share next year.»