Page 9 - FSU OGM Week 22 2021

FSUOGM PERFORMANCE FSUOGM

Gazprom swings back to profit in

Q1 on bullish gas demand

RUSSIA RUSSIAN gas giant Gazprom generated from an earlier estimate of RUB1.79 trillion.
RUB447.3bn ($6.1bn) in net profit in the first Analysts at BCS Global Markets (GM) said
Gazprom gained from quarter, up from a RUB116bn loss a year earlier, Gazprom had performed strongly as expected.
bullish gas demand in on the back of higher prices and increased sales. Strong free cash flow (FCF), coming in at $3.1bn,
Europe. The state-owned gas supplier saw sales to its helped Gazprom reduce its net debt to $49.4bn
core European market slump last year owing to by the end of March, 6% less than three months
a combination of factors, most significantly the earlier. Its net debt to EBITDA ratio now sits at
impact of the coronavirus (COVID-19) pan- 2.3, down from 2.7 in the previous three-month
demic. But its business has been much stronger period.
this year, thanks to colder weather, reduced LNG “Q2 2021 should continue the strength seen
supply and low levels of gas in storage in Europe in Q1 2021, given the sharp improvement in
driving up demand for its output. the European gas prices since mid-December,
Gazprom’s revenues reached RUB2.29bn in a trend which has continued well in the second
the first quarter, up from RUB1.7bn a year ear- quarter,” BCS GM said in a research note.
lier, while its core earnings (EBITDA) surged In their conference call, Gazprom’s manage-
38% to RUB700.6bn. Export volumes to coun- ment stressed that the European gas market out-
tries in Europe and elsewhere outside the former look was strong, although they did not update
Soviet Union surged to 64.5bn cubic metres in their forecast for full-year sales. The company’s
the three-month period, up from 51.6 bcm a year previous “conservative” target was 175-183 bcm
earlier, while sales to Russia grew to 91.7 bcm of gas sales in Europe at an average price of just
from 77.2 bcm. over $200 per 1,000 cubic metres. With Euro-
Gazprom also benefitted from a favoura- pean spot prices now trading at above $300 per
ble ruble exchange rate, generating a foreign 1,000 cm, this forecast “seems not just conserva-
exchange gain of RUB16.3bn in the first quar- tive, but very conservative,” BCS GM said.
ter, compared with a loss of RUB551.4bn a While avoiding commenting on export lev-
year before. The Russian currency collapsed els, deputy Gazprom head Vitaly Markelov said
over March and April of last year as a result of the company aimed to increase production in
the coronavirus-induced slump in demand for 2021 to 506.5 bcm, up from a previous forecast
crude oil. of 497 bcm. This would also bring output to its
Gazprom, which recently broke ground on highest level since 2021. The growth will come
a major new gas processing and LNG complex on the back of increased flow at existing fields
on the Baltic Sea, has also revised upwards its rather than any new project launches, the com-
investment plan for 2021 to RUB1.83 trillion, pany said. ™

Week 22 02•June•2021 www. NEWSBASE .com P9