Page 118 - RusRPTMay20

9.2 ​Major corporate news 9.2.1​ Oil & gas corporate news
● Gazprom
Gazprom​ released 4Q19 IFRS. The results were largely in line with analyst expectations. ​Revenue rose c23% q/q (-12% y/y) to c$30.7bn – broadly in line with BCSe and consensus, given c50% q/q higher gas sales and 15% q/q growth in export gas price to c$200/mcm. This was somewhat offset by the 5% q/q drop in Gazprom Neft’s top line due to the fall in fuel oil price in late 2019 EBITDA was flat q/q at $5.68bn matching BCSe and consensus, as the positive effect of higher domestic gas sales q/q was offset by Gazprom Neft’s 16% lower q/q EBITDA and growth in other expenses, including one-off reserves following legal claims from Poland Net profit fell c26% q/q to c$2.43bn (in line with BCSe and 14% below consensus) due to weaker results of associates (-c$0.6bn q/q), despite the c$0.86bn FX gain (vs FX gain of $0.1bn in 3Q19) and flat EBITDA Management previously announced that FY19 DPS of RUB15.2/sh is based on 30% payout with no adjustments, corresponding to c$2.45bn net profit in 4Q19 FCF was record low at c-$7bn, as OpCF was negatively affected by working capital build up (S-T deposits increased by c$4bn) and c$3bn payment to Naftogaz, amid seasonally high CapEx (+26% q/q) Net debt surged 15% q/q to c$50bn, given negative FCF with net debt to EBITDA almost reaching 2x
Gazprom​ capex will fall by 20% the company said in a conference call following the release of FY19 IFRS on April 29​. Below are the key takeaways: Supply volumes on the domestic market are expected to decline 9% y/y in 1Q20 and 5% y/y on average for FY20 Gazprom expect 166.6bcm gas exports and $133/mcm for 2020 – a huge drop y/y of 17% and 37%, respectively V or U- shape recovery from the coronavirus may drive gas prices up two or three-fold on a horizon of several years Gazprom plans to cut operating and capital investments by 20% y/y in 2020: o 20% reduction in OpEx will be achieved with 17% lower export volumes, an improvement of working capital management efficiency, stock reduction and lower gas purchases in Russia o CapEx for the group is guided at Rb1.3trln (ex-VAT) – a 20% y/y reduction (of c$4bn) will be achieved via shifting some projects to future years Gazprom confirmed no changes to the dividend policy – no less than 50% payout from adjusted net income in 2022 Gazprom will make all efforts to avoid breaking the limit of 2.5x net debt to EBITDA, as in this case the company would need to cancel or lower dividends and may break debt covenants. Gazprom’s net debt/EBITDA amounted to 1.7x as of end-2019
Russia’s Gazprom said on April 1 that it restarted natural gas deliveries to China ​following the completion of regular maintenance at the Power of Siberia pipeline. The pipeline had been shut since mid-March as the Russian energy giant and China’s CNPC agreed that it would undergo a maintenance check-up twice a year (every spring and autumn). Gazprom and CNPC signed an agreement on gas supplies to China via the eastern route in May 2014. It was concluded for 30 years and envisages an annual supply of 38bn cubic meters of Russian gas to China. The Power of Siberia pipeline was launched in December, delivering 328mn cubic meters of gas to China. The 3,000-kilometer (1,864 miles) pipeline is set to bring 38bn cubic meters of the blue fuel to the country by 2025.
118​ RUSSIA Country Report​ May 2020 ​ ​www.intellinews.com