We think Company’s shares are notably good investments
Stanislav Kondratyev, Uralsib
In terms of EBITDA and net profit, Gazprom's third-quarter results were slightly worse and slightly better accordingly than we and the market have anticipated. It was expected that Gazprom's net profit would double in the third quarter due to exchange gains in this quarter comparing with the bigger losses in the second and the third quarters of 2011.
EBITDA decreased by 23 per cent year-on-year despite a 15 per cent rise in Russian gas tariffs in the third quarter. It happened mostly because of the severance tax growth and a 9 per cent fall of average gas sales price set up for Europe and Turkey. It's worth mentioning that the average price for European consumers has dropped the fourth quarter in a row.
In the third quarter a free cash flow was close to zero totaling USD 140 million. That confirmed our view point that an unexpectedly high free cash flow generated by Gazprom in the first quarter was just a simultaneous bounce, and the figure is unlikely to change in the future.
Maxim Moshkov, UBS
We rated Gazprom's third-quarter results as positive. The proceeds of associated companies greatly surpassed our expectations. We consider that the main reason for that was the ongoing growth of transaction profitability shown by Sakhalin Energy. The company made a net profit of USD 3.5 billion following the 9-month results of 2012. Once again, it proves that the project has been and still remains a profit making one.
The cessation of retroactive payments, an increase in European gas sales, a rise in gas prices in Russia as well as a decrease of capital expenditures made their contribution to the recovery of a cash flow that turned out to be fairly negative and accounted for USD 470 million following the 9-month results.
We expect a further free cash flow rise in the fourth quarter, following sales growth and steady gas prices in Europe as well as a decrease of capital expenditures. Our overall forecast for 2012 is that a free cash flow would total some USD 5 billion. We also consider that the future growth of Gazprom dividend payouts has not been reflected yet in the current stock quotes, and we think that the Company's shares are notably good investments.
Andrey Polishchyuk, Raiffeisen Bank, Austria
We rated the Company's financial statements as neutral. Gazprom's profit margin was the same as we had anticipated, but EBITDA and the proceeds - higher than our expectations. It is linked with the sales proceeds from refining products and electric power.
As for the gas sector, the statements were within our expectations. We didn't manage to guess what the average gas sales price would be for the Russian market - in fact, it turned to be 19 per cent higher year-on-year, while gas tariffs in Russia increased by 15 per cent since July 2012. In my opinion, the consolidation of regional gas companies put forward gas sales prices on the domestic market.
As it was previously anticipated, Gazprom's free cash flow is negative, but better than our forecast. This is due to us expecting the Company to make bigger investments in the third quarter. However, I believe that a free cash flow in the fourth quarter, a “high season” for the Company, will be positive. Therefore, there is a chance that 2012 will be rounded off with a small free cash flow. Initially we expected it to be USD 975 million which we think can be quite achievable.
The opinions expressed in this section may not necessarily coincide with the official position of Gazprom