Page 145 - RusRPTSept21

planned maintenance in Uzbekistan, the large y/y increase was due to the stopping of exports to China in 2Q20 in response to the lack of demand resulting from COVID-19. Given that we get a general idea of the company’s production dynamics from CDU-TEK, we view the production results as largely neutral. Lukoil will report its 2Q21 IFRS results on 27 August and hold a conference call the same day.
Lukoil has reported its 2Q21 results. All in all, they were rather strong on the back of higher prices and volumes, with the company’s EBITDA reaching 2019 levels, even though the economy has not fully recovered from the COVID crisis.
There were slight outperformances on EBITDA and net income vs. consensus and us. FCF, before working capital changes, was ahead of our forecast due to strong operations and lower-than-projected capex. However, a sizeable working capital buildup of more than $1bn lowered the actual FCF. According to management, this buildup might be reversed in the following quarters (although the outcome will depend on the market environment). The 1H21 financials imply a 5.3% interim dividend yield, which places Lukoil ahead of most of its peers that have already reported.
Purchases boost revenues. Lukoil’s 2Q21 topline grew 18% q/q, which was 2% above what we expected and 5% above consensus. The company increased oil purchases 21% q/q during the quarter. This exceeded our expectation by more than 1mnt and, along with growing production, helped increase oil sales 7.5% q/q (5% above our expectations). Thanks to this, revenues from crude oil sales grew 23% q/q and exceeded our forecast by 4%. Downstream revenues (+16% q/q) were broadly in line (-1%) with our forecast (lower oil product purchases were offset by an inventory release). Despite lower gas production numbers (amid maintenance at Uzbeki assets), gas revenues were flattish q/q, ahead of our expectation.
Slight outperformance by EBITDA and net income. On the cost side, operating expenses and transport costs matched our projections, growing 7% q/q and 11% q/q, respectively, with higher upstream and downstream production. Purchase expenses were just 1% above us, as higher crude oil purchase volumes were largely offset by lower downstream purchases. Taxes were also reported in step with what we anticipated. A drag came from SG&A: this line grew 18% q/q and exceeded our projection. Thus, EBITDA came in at $4.58bn, up 8%
145 RUSSIA Country Report September 2021 www.intellinews.com