In general, Gazprom demonstrated moderately strong results
Yulia Novichenkova, Uralsib
Gazprom reports quite robust performance. The Company’s revenues clearly indicate the revival of production and recovery of oil, petroleum products and gas prices, as well as export volumes build-up.
The Company itemized separately the trading operations for 2008 and 2009 approximately estimated at RUB 300 billion. Their separation caused considerable discrepancies in consensus forecasts on revenue, but the Company revised the 2008 results, therefore, in annual terms the figures are quite comparable.
Net profit was beyond expectations owing to nonrecurring items – assets revaluation (a stake in the Yuzhno-Russkoye field sold). Besides, the finance income increased and the associated companies yielded profit this year versus the losses of 2008.
In general, we expect a positive response of the equity market to Gazprom’s financial statements.
We suppose Gazprom will be rather successful in 2010. The positive outcomes of the meetings and negotiations of the Russian gas monopoly and its European gas consumers are evident, making the Company more attractive for Gazprom’s foreign customers and western investors. In the first quarter of 2010 Russian gas exports grew twofold – up to 50.1 billion cubic meters. This is explained both by the “absence” of the conflict with Ukraine this winter and by the spells of cold weather over the first three months of 2010, as well as the demand recovery from the crisis.
Ronald Smith, Crédit Agricole Cheuvreux
Gazprom’s EBITDA actually justified our expectations. At the same time, net profit considerably surpassed our forecasts and market anticipations. This is primarily explained by the receipt of profit in the amount of RUB 105 billion as a result of the asset swap deal with E.ON.
In general, however, the statements came as no surprise for the market. For Gazprom – no bad surprise is good news.
The past 2009 was one of the worst periods for Gazprom due to the global financial crisis and the January interruption in gas supplies to Europe. Nevertheless, we are confident that the year of 2010 will be much better. According to our estimates, Gazprom’s EBITDA will grow by more than 40 per cent this year.
Positive trends are already noticeable on the market. Thus, during the February – March period, a significant growth in gas demand was observed in Russia, let alone the spells of cold weather. The consuming sectors, such as metallurgy, were fully operational during the year.
In addition, a considerable increase in liquefied natural gas (LNG) demand occurred in Asia in the second quarter of 2009 and in early 2010. In the beginning of 2009 the LNG demand plunged, but as early as in January – February 2010 it hit record high. All these factors are extremely favorable for Gazprom.
Pavel Sorokin, Alfa-Bank
In general, Gazprom demonstrated moderately strong results, which were naturally supported by the nonrecurring profit from the swap deal with E.ON.
Net profit surpassed the market anticipations, but the outcomes were not rather impressive – the prime cost of goods grew considerably and caused the reduction of EBITDA.
An increase in operating expenses was mainly related to oil and gas purchase, staff and transit costs. Gazprom managed to reduce costs within a lot of other items. In particular, the Company saved costs on repairs and maintenance, materials and electricity.
In 2009 natural gas sales by Gazprom dropped in all segments due to the difficult economic situation. Gazprom was competing for the customer during the whole year. The supply dynamics started to improve only by the year end upon the economy revival and the commencement of gas offtake by European consumers on the take-or-pay principle. The cold winter was also a positive factor for the supply growth.
Despite a slight reduction in sales volume on the domestic market, Gazprom managed to increase revenues owing to price indexation. It should be noted that Gazprom’s net debt balance rose by 35 per cent, which is mostly explained by a large number of acquisitions made by Gazprom in 2009.
In the first quarter of 2010 we are assuming quite impressive results. Our expectations are based on the following grounds: firstly, there are no financial shocks; secondly, gas demand is rather high both in Russia and in Europe. Besides, the price indexation was performed on the domestic market and this will be helpful for Gazprom.
The opinions expressed in this section may not necessarily coincide with the official position of Gazprom