Gazprom has shown good financial statements and the Company may be congratulated on robust performance in 2010

Artem Konchin, UniCredit

Gazprom has announced robust results in the fourth quarter of 2010.

Quarterly profit of the Company totaled record-breaking USD 11 billion. Growing prices in the export markets by 8–9 per cent versus the previous quarter and by 41 per cent year-on-year basis had a positive impact on the shown results. But the growing indicators were slightly restrained by a 10 per cent decrease in export volumes comparing to the fourth quarter of 2009 but partially offset by growing export to the former Soviet Union states.

The results in general confirm that the Company’s business is still oriented for natural gas export but the share of the related business lines – heat and power production as well as sales of oil derivatives – continued to steadily grow in consolidated revenues of Gazprom. Thus, 53 per cent of the Company’s revenue in the amount of USD 36.5 billion is attributable to gas export to the FSU states and Europe while the share of the exported gas reached 74 per cent in the total proceeds from natural gas sales. However, I would like to highlight the growing share of the non-core business in the total proceeds.

Staff expenses unexpectedly increased in the fourth quarter exceeding USD 4.2 billion. Other expenditures generally fell within our forecasts.

The income from selling 10 per cent of NOVATEK allowed Gazprom to receive non-operating income in the amount of nearly USD 2.6 billion increasing its balance and net profit. As a result, net profit from selling shares of NOVATEK showed more than a half increase. Gazprom keeps on generating the considerable cash flow exceeding USD 9 billion in the fourth quarter. Nevertheless, capital expenditures of the Company remained at quite a high level – USD 8.33 billion.

Igor Kurinny, ING

Gazprom’s performance in the fourth quarter can be described as neutral. The proceeds slightly exceeded our forecasts but EBITDA was below market expectations.

Even though the proceeds were on a rise, we are anxious about rapid growth of the Company’s operating and capital expenditures. The amount of capital investment made by Gazprom was slightly above our expectations and led to a lower cash flow from operations.

In the first quarter we expect a considerable growth in gas sales and prices mainly driven by the seasonal factors.

Lev Snykov, VTB Capital

Gazprom has shown good financial statements and the Company may be congratulated on robust performance in 2010.

One can note that the positive cash flow in the fourth quarter speaks well for the successful operations of the Company in the end of the year even though the capital expenditures slightly exceeded our forecasts.

Due to gas sales and prices behavior, we believe that the first quarter of 2011 is likely to show better results than the fourth and the first quarters of 2010.

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