Russ Oil-Gas

Russian major oil-gas ...

  Gazprom    RusEnergy    World    Pipeliners  Zee Beam 







Monday, July 10, 2006

Gazprom's 2005 figures "not bad"

07-11-2006 RBC News Analysis - Russia's gas giant Gazprom has published its accounting statements for 2005 in accordance with international accounting standards. The company reported a 49 percent increase in net profit to RUR 315.931 billion (about $11.75 billion), slightly below expectations. But revenue was better than expected, rising 42 percent to RUR 1.383 trillion. Net debt reached an all-time high of RUR 797.465 billion (about $29.67 billion), up 60 percent from RUR 499.855 billion 12 months before. The group almost halved its capital investment in production, at the same time increasing transportation costs by half. Analysts described Gazprom's result as "obviously not positive" but "not bad, quite in line with expectations." Gazprom is the world's largest gas company. It produced 547.9 billion cubic meters of natural gas and more than 12 million tonnes of oil last year. The State Property Agency controls 38.37 percent of Gazprom, and state-owned Rosneftegaz has a 10.74 percent stake in the gas monopoly. Gazprom's affiliates have 7.025 percent, of which 2.93 percent belongs to Gerosgaz, a joint venture of Gazexport and Germany's E.ON Ruhrgas. E.ON Ruhrgas holds 6.5 percent of Gazprom. Hafta Moscow has 4.2 percent, and the National Depositary Center holds 2.26 percent. Russian individuals control 13.07 percent. On Friday Gazprom published its consolidated reports for 2005 in accordance with international accounting standards. It reported a 49 percent increase in net profit to RUR 315.931 billion (about $11.75 billion). Revenue was up 42 percent at RUR 1.383 trillion, of which Sibneft accounted for RUR 90.989 billion. Net debt stood at RUR 797.465 billion (about $29.67 billion), up 60 percent from RUR 499.855 billion in 2004. Sales profit climbed 58 percent to RUR 454 billion. Capital investment in production almost halved, from RUR 167 billion in 2004 to RUR 94 billion. At the same time, the gas company increased investment in transportation by half, from RUR 107.7 billion to RUR 158 billion. Total debt obligations topped RUR 1.6 trillion. On the whole, analysts were somewhat disappointed by the results. Andrei Gromadin, at MDM Bank, assessed Gazprom's figures as "obviously not positive" while Leonid Slipchenko, at Rye, Man & Gor Securities, said they were "not bad but quite in line with expectations." The gas giant was expected to report a higher net profit, at about $345 billion. Experts also pointed to a number of other problems. Denis Borisov, at IFK Solid, said ROS (return on sales) dropped to 17.05 percent in the fourth quarter from 27.4 percent in the third quarter. The annual ROS stood at 22.8 percent. He attributed Gazprom's increased revenue to high gas prices on world markets and inclusion of Sibneft's results in the consolidated report. The lower return on sales was due to a significant increase in operating costs and financial expenses (losses from exchange rate changes and interest payments), Denisov said. And Gromadin says the company's expenses are rising too fast. Mikhail Korchemkin, managing director at the East European Gas Analysis consultancy, believes that Gazprom's production and transportation costs in 2005 reflect the seasonal nature of the company's operations. "In the 2004 report, the seasonal increase in gas production in the fourth quarter was accompanied by lower production costs, which cannot be," he said. Andrei Gromadin also thinks that Gazprom should not reduce investment in production. "Last year's rise in output was largely due to acquisitions, and in future Gazprom will have to increase capital investment in production," he noted. And Sergei Pravosudov, the head of the National Energy Institute, said Gazprom's production was declining when Alexei Miller came to the company, and the management focused on this problem. "Now output is rising by the year. Over the past three years, the bulk of the company's investment has been in the gas transportation network. Indeed, it is much more expensive to take gas from the Yamalo-Nenets Autonomous District to central Russia than to produce it. This year Gazprom is expected to adopt an investment program for the Bovanenkovskoye gas field on the Yamal Peninsula. This will require significant expenses. At the same time, the gas company will start the construction of a new pipeline from the Bovanenkovskoye gas field to Ukhta," he said. Gromadin also pointed to Gazprom's large debt burden. "Though Gazprom purchased Sibneft (now called Gazpromneft), the net debt could have been smaller," he said. On the other hand, Pravosudov says Gazprom is paying off its debt quickly. "The relative debt burden is expected to reach the level preceding the acquisition of Sibneft," he noted.

Contact me:  

eXTReMe Tracker This page is powered
by Blogger. Isn't yours?