Russia’s largest natural gas producer Gazprom took a 17% year-on-year fall in net profit to RUB245bn ($3.78bn) in April-June, according to IFRS results released on August 29. Net profit for the first six months of 2016 overall declined by 9.6% y/y t RUB625bn.
Squeezed between lower export prices and increased domestic competition, Gazprom has been deteriorating in value, and recently lost its position as Russia’s largest company in terms of market capitalisation to Sberbank.
The energy company's capitalisation stood at around RUB1.22 trillion ($19bn) in the end of August, sinking deeply from about $90bn back in 2009 and nearly $300bn when it was the world's fourth most-valuable corporation in pre-crisis 2008.
However, net income of RUB245bn in the second quarter was better than RUB186bn expected in an Interfax survey, as Gazprom was helped by a RUB152bn currency gain on the stronger ruble in the reporting quarter.
The fall in net profit in the second quarter of 2016 was attributed to rising operating costs undermining revenue growth. In the second quarter alone revenues grew 5% y/y to RUB1.33 trillion and to RUB3.06 trillion in January-June overall.
Meanwhile, net sales to European and other non-CIS countries increased by 18% y/y in the first half of 2016 to RUB1.13 trillion. The growth in volume of gas supplies was twice as fast at 36% y/y to 109.4bcm, reflecting the average decline in prices of European gas supplies by 17.7% y/y in the reporting period.
In Russia, sales revenues declined by 1.8% y/y in January-June to RUB420bn (total volume sold down by 8.3% y/y to 110bcm), despite a price increase of 8.2% y/y.
Reports earlier in August said Gazprom’s earnings are threatened by a fall in European spot prices for natural gas to a seven-year low of $120 per thousand cubic metres (kcm).
For Gazprom, every $10/kcm decrease in spot prices for the fourth quarter of 2016 can translate into a 5.5% loss for fourth-quarter Ebitda, VTB Bank estimated, noting that Gazprom has been increasing the spot component in the final gas contract price for European clients.
Gazeta.ru reported on August 29 that average exports price of Russian gas in 2016 will decline to $170/kcm, down from $240 seen in 2015, according to the estimates of the Fund of National Energy Security. This threatens Gazproms with a loss of about $7bn.
|Gazprom - KEY METRICS|
|Financials, $ mln|
|EPS (adj), $||0.32||0.52||0.09||0.13|
|Valuation, Gearing and Yield|
|Gazprom and affiliates||7.30%|
Moldovan businessman Anatolie Stati’s spokeswoman said on January 9 that Stati will ask bailiffs to sell a $5.2bn stake in the Kashagan oil field owned by Kazakh sovereign ... more
Romanian gas transport company Transgaz has teamed up with Spain’s Regasificadora del Noroeste in an attempt to take over its Greek peer DESFA, where the Greek state has put a 66% stake up for ... more
Poland’s state-controlled oil and gas company PKN Orlen has launched an offer to take over Czech refiner Unipetrol, the Polish company said on December 13. PKN Orlen said it will go through with ... more