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FSUOGM PERFORMANCE FSUOGM

Naftogaz posts mixed results in Q3

UKRAINE UKRAINE’S national gas supplier Naftogaz Core earnings from the company’s
suffered wider losses in the third quarter of upstream business more than halved to
Naftogaz's improved UAH5.5bn ($194mn), from UAH4.8bn a year UAH16.3bn from UAH34.5bn, owing to
numbers were not earlier, as lower gas prices dragged down on its lower gas prices partly offset by lower sub-
enough to bring its year- earnings. soil royalties. Naftogaz’s commercial seg-
to-date earnings into The company’s adjusted EBITDA rose to ment losses widened to UAH16.3bn from
the black. UAH0.5bn, though, from a loss of UAH2.8bn UAH9.9bn, as a result of smaller volumes and
in Q3 2019, while operating cash flow also came weaker prices, as well as increased provisions
to UAH0.5bn, in stark contrast to the figure of for deliveries made under public-service
UAH12.6bn loss a year earlier. obligations (PSOs). PSOs were finally abol-
“Despite a challenging environment, we are ished for the household sector in August, but
performing while transforming,” CFO Peter van remain in place for district heating firms.
Driel said in a statement. “Our operating cash Naftogaz’s oil production division Ukrnafta
flow is improving and we remain focused on slumped to a UAH2.2bn loss in January to Sep-
capital discipline. We continue to strengthen the tember, from UAH1.0bn in core earnings a year
efficiency of our operations.” earlier. The company blamed the result on lower
Naftogaz’s improved numbers were not gas prices and a drop in oil sales volumes.
enough to bring its year-to-date earnings into Its midstream and downstream earnings,
the black. Its adjusted EBITDA for January to meanwhile, dropped to UAH1.3bn from
September recorded a UAH1.2bn loss, owing to UAH1.9bn, and it booked a UAH4.1bn loss from
poor performance earlier in the year when the other segments, including its activities in Egypt,
coronavirus (COVID-19) crisis was at its height. as a result of impairments. This compares with
This compares with a UAH26bn gain it made in UAH2.3bn in losses a year before.
the same period of 2019. As Concorde Capital analyst Alexander Para-
In the first nine months, Naftogaz’s earn- schiy remarked in a note, Naftogaz’s second and
ings were weaker across the board save for its third quarters are traditionally its weakest, given
gas storage business, which achieved a growth the warmer weather and the reduced need for
in adjusted EBITDA to UAH4.1bn from gas for heating. With European gas prices now
UAH2.3bn a year earlier. recovering, “we expect the company will report
Storage is in high demand across Europe much better operating profit in the Q4 2020 and
after over a year and a half of record-high LNG therefore will further improve its EBITDA as a
imports and a slump in consumption triggered result for the full year,” he said.
by the coronavirus (COVID-19) pandemic. Naf- While Naftogaz’s bottom line will remain
togaz has also introduced more attractive tariffs negative, it “remains a stable and cash-rich com-
and tax breaks to encourage more European pany, which allows us to remain neutral on its
traders to store their gas in Ukraine. eurobonds,” Paraschiy said. ™

P14 www. NEWSBASE .com Week 48 02•December•2020