Q3 results may be considered as moderately positive

Ronald P. Smith

Ronald P. Smith, Citi

Gazprom’s Q3 proceeds met our expectations, whereas EBITDA and net profit surpassed our expectations by 7 and 39 per cent respectively. The net profit increase is conditioned by the operating profit being higher than we expected. The reporting period showed a strong free cash flow. As a whole, Gazprom generated a free cash flow of USD 8.9 billion over the nine months. We believe that at the end of the year this figure may come to some USD 10.9 billion. According to our forecasts, the year-end EBITDA will be around USD 60 billion.

Andrey Polishchuk

Andrey Polishchuk, Raiffeisen

Q3 proceeds, EBITDA and net profit surpassed our estimates, which we consider a very strong indicator. However, the free cash flow turned out to be below our expectations. Taking into account all these factors, we estimate Q3 results as neutral for Gazprom’s stock quotes. We believe, it is the contract signing with China and a possible increase in dividend payments that mostly affect the Company’s stock quotes now.

We find it beneficial that Gazprom’s operating expenses nominated in rubles showed almost no increase, though the tax burden on the Company grew.

Valery Yevdokimov

Valery Yevdokimov, Chief Analyst, Nordea Bank

As a whole, Q3 results may be considered as moderately positive. A positive trend is that quarterly dynamics show an increase in quarter proceeds by some 7.5 per cent as compared with Q3 2012. The operating profit growth averaged 25 per cent largely due to the moderate advancement of operating expenses (by 2 per cent). So, Q3 proceeds rose faster than the operating costs. The quarterly operating profit margin grew from 23.5 to 27.5 per cent in the reporting period. Drawback: Q3 net profit dropped by almost 11 per cent.

The cumulative figures for four successive quarters demonstrate the operating profit margin stabilization at 30 per cent and the net profit stabilization (absence of the upward trend) during the year. From a creditor’s point of view such dynamics are not a problem. For equity investors the absence of growth in the enumerated indicators may suggest the insufficient fundamental support to developing the sustained stock growth in future.

The opinions expressed in this section may not necessarily coincide with the official position of Gazprom