Norma pays out hefty dividends

TALLINN - The Estonian seat belt equipment producer Norma is paying out large dividends, but observers smell a rat, considering the company's economic results and poor market situation in the country.

Under the board's proposal, Norma will pay out 83 percent of the group's net profit, or 39.6 million kroons ($2.77 million) in dividends. That amounts to 3 kroons per share.

The Estonian business daily Aripaev, however, speculated that Norma's owners are using the company's profit for themselves instead of helping the company to develop.

According to Aripaev, the share of profit left in the company has decreased from 90 percent to almost 17 percent during the last three years.

Last year was not the best for Norma - net profit was 47.6 million kroons, down 99 million kroons from the profit in 1997.

The 1998 revenues have also declined due to the fall in sales and unfavorable foreign currency rates. Norma suffered about a 42 million kroon loss from the decrease of the rates of the Russian ruble and U.S. dollar.

The group's turnover for last year was 482.7 million kroons compared with 560 million kroons in 1997.

But the company's management refutes any criticism. Peep Siimon, managing director, said Norma can afford to pay out dividends because it is overcapitalized.

"Last year's results were good. An almost 10 percent profitability rate is a good indicator," said Raivo Harand, controller at Norma.

The managers of the company, who are also big shareholders in Norma, have decided to reinvest their revenues received in dividends in order to decrease liabilities and increase investments.

The share price climbed up by almost 8 percent after the board announced its decision March 23. Analysts predict a drop in price after dividends will be paid out. The list of shareholders entitled to receive the dividend will be approved on April 30.

Norma has also had good progress in the recovery of debt from its Eastern customers, and two of its largest clients Avotaz and Gaz. Clients' debts to Norma for deliveries amounted to 136.7 million kroons at the end of last year, which compared with the company's turnover, is still very high.

For next year, management has predicted a steep rise in the company's unconsolidated profits from 37 million kroons to almost 81 million kroons and a comparatively conservative rise in turnover from 413.7 million kroons to 440 million kroons.