Page 150 - RusRPTJun21

came in at $4.2bn (+70% q/q), which was 13% above both us and consensus. Below the operating level, the company reported an FX loss of $15mn (we projected $53mn). The rest of non-operating items broadly matched our forecasts. Net income for the quarter was $2.1bn, 13% and 19% ahead of us and consensus.
Lukoil’s capex was $1.4bn, 16% below our expectation of 1.7bn. On the back of better profitability and lower capital spending compared with our forecasts Lukoil reported higher than expected FCF for the period: $2.5bn. Based on the official dividend policy (i.e. adjusted for interest and lease payments) we calculate an indicative DPS of RUB211, which implies a robust 3.5% quarterly or 15% annualised DY (the company pays dividends on a semiannual basis, though).
The conference call on the 1Q21 earnings is scheduled for 27 May at 15.00 Moscow time (08.00 New York, 13.00 UK). We expect the company to elaborate on its oil and products production plans for the year, providing some details on the operating performance of its key assets. We also expect questions on dividends (we anticipate Lukoil reiterating its commitment to distribute dividends in line with the official policy) and the buyback as a form of shareholder return (to recap, Lukoil has approved a buyback of up to $3bn which is possible until the end of 2022).
● Other
Bashneft has reported its 1Q21 IFRS numbers. While coming broadly in line with us on revenues, they were notably better than we had expected on the EBITDA level, chiefly due to lower purchase expenses (which likely reduced realised purchase prices significantly), although the company does not disclose sufficient data on purchase volumes to support this conclusion unequivocally). The resulting EBITDA margin was significantly ahead of our forecast, but still below levels typical for 2017-19, as production and refining volumes remained low. Overall, we treat the results as relatively solid, although we note that they come after a particularly weak 4Q20. Under the current dividend policy, the results do not imply sizeable cash returns for shareholders.
Surgutneftegas has published its 1Q21 RAS results. Operating income was RUB 81.7bn (USD 1.1bn), up 26% QoQ. Net income was RUB 179.6bn (USD 2.4bn), vs. the USD 2.3bn net loss in 4Q20 thanks to USD 1.4bn net other income. The cash pile reached RUB 3.79tn (USD 50bn) as of the end of 1Q21.Operating income was 4% above us thanks to slightly better downstream revenues. Net income was 7% ahead of our expectations, mainly due to larger net other income (FX gain). The bottom line implies a RUB 1.66/sh 1Q21 contribution to 2021 prefs DPS (non-annualised 3.7% DY). For FY21, we except an 8.6% DY for Surgut’s prefs.
Transneft’s 1Q21 IFRS results came slightly worse on the topline than we had expected on the back of oil sales and other revenues (while revenues from the core transportation business matched our forecast).
The miss on revenues was overcompensated by the lower than projected cost of goods for resale. Below the operating level, the
150 RUSSIA Country Report June 2021 www.intellinews.com