Gazprom’s Q1 financial results generally turn out to be better than expectations

Ilya Balakirev

Ilya Balakirev, UFS IC

All the trends represented in the Q1 financial statement are quite expected, since it was about half a year ago and we all saw how the market was behaving and what the prices were… Still, it would be interesting to have a look at the final figures.

All in all, the results met our expectations and I consider the Q1 results as moderately positive.

We predicted growing gas sales in Europe and higher EBITDA. Not only did the actual figures meet our expectations, but they surpassed them. The gas sales growth in Europe was so high that the Company managed to compensate for the declined sales in the CIS. As for the revenues, they turned out to be a bit worse than we had expected due to a more considerable reduction of supply prices for the CIS as well as the effects of changes in exchange rates determining the amount of export revenues in rubles.

Despite the positive results, we are not expecting a considerable positive response to the financial statements, as the decent Q1 results have already been represented in the price quotations. At the moment, the investors are more focused on the Company’s future listing on the MICEX Stock Exchange as well as the announced changes in the dividend policy and the outcome of the talks about gas supplies to China.

Ivan Khromushin

Ivan Khromushin, Lead Analyst, Gazprombank

Gazprom’s Q1 financial results generally turned out to be better than our expectations. The main difference is explained by EBITDA that surpassed our forecasts by 7 per cent and the consensus forecast – by 10 per cent, which we consider to be a positive factor.

Better net profit performance was hindered by bigger depreciation expenses and reserves for asset impairment as well as lower operating indicators of associated companies and joint ventures than we forecasted mostly due to the reduction of Sakhalin Energy net profit and due to Slavneft Q1 net loss.

Pavel Sorokin

Pavel Sorokin, Morgan Stanley

Two factors in Gazprom’s financial statements are drawing attention. The first one is prices and sales volume that were a pleasant surprise despite the ongoing discussions on discounting and the pressure on selling prices in Europe.

The second one is that Gazprom once again demonstrated a free cash flow. If this trend progresses during the year, it will become a positive sign for the investors and will influence the Company’s stock value in the best way.

Rather high sales dynamics both in Q1 and over the year are especially worth mentioning. It gives hope that the financial indicators will improve in the current year.

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