Large companies plan to increase their dividend payments

According to the survey of CFOs conducted by SEB, an increasing number of large companies are looking to use unassigned funds to pay dividends to their owners. When compared to the previous year, fewer enterprises are planning strategic investments in Estonia, although an increasing number of them are looking to invest abroad.

It was revealed that in the next six months, 25 per cent of the large companies surveyed in Estonia are looking to use their unassigned funds mainly for dividend payments to owners. In the previous year, only 10 per cent of companies shared this position. The figures are high also when compared to the large companies of Latvia and Lithuania. According to the survey, 18 per cent of companies in Latvia and only 10 per cent of companies in Lithuania shared such plans.

The most popular use for unassigned funds is still making strategic investments domestically. These were planned by 39 per cent of Estonian enterprises, which is still significantly less than in 2015, when the figure was 54 per cent. However, the share of enterprises looking to invest outside Estonia has grown significantly. While in 2015, 10 per cent of the CFOs surveyed mentioned plans for strategic investments abroad, in this year’s survey already 17 per cent stated it. Latvian and Lithuanian companies are also becoming increasingly interested in expanding to foreign countries. According to this year’s survey, 12 per cent of Latvian companies and 17 per cent of Lithuanian companies are planning to use their unassigned funds for expansion abroad.

Eerika Vaikmäe-Koit, Head of Corporate Banking at SEB Eesti: “Many sectors have already made significant investments in prior years and do not see any reason to increase them further in the current state of slow economic growth, preferring to pay dividends instead. It is also natural that an increasingly greater number of enterprises are thinking of expanding their operations abroad. Due to the rapid growth of incomes, we can afford to do less low-paying work, which is why it may be wise to move some of the activities to countries with a lower cost base, while focusing on the processes creating the most added value locally.”

Slow economic growth drives the search for efficiency, which is why some consolidation is expected on the market. According to the survey, 37 per cent of the Estonian CFOs surveyed are expecting an increase of merger and takeover transactions, which is significantly more than last year.

This is already the fourth survey of Baltic CFOs. The previous surveys were conducted in 2014 and 2015. A total of 263 major companies, with a turnover of more than EUR 20 million, from Latvia, Lithuania and Estonia, took part in the survey conducted in September of this year.

For more information:

Evelin Allas
Communications Manager
Marketing and Communications Division
SEB

Phone: +372 665 5649
Mobile: +372 511 1718
Address: Tornimäe 2, 15010 Tallinn
E-mail: evelin.allas@seb.ee
www.seb.ee

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