Gasum Reports 87% Decrease in Operating Profit

Finland’s Gasum reported a year-on-year 87% decrease in operating profit in 2014, explaining the result in light of the decline in natural gas sales, write-offs, and a €12.8 million change in the fair value off derivative contracts. 

‘In addition to the sales margin lost due to the lower natural gas volume sold, operating profit was also eroded by the write-offs made during the period under review relating to issues including preparatory work for the western extension of the transmission pipeline network (€8.0 million written off) and the decrease in the fair value of derivative contracts entered into for the purpose of hedging the sales margin of natural gas sold to customers under a fixed price factor following the oil price collapse toward the end of the year’ reads a note released on Tuesday.

Return on equity in 2014 was 1.1%. It was 8.9% in 2013.

During the year, Gasum acquired a majority share in Skangass, which brought along a doubling in balance sheet total. 

The company, which is owned by the State of Finland (75%) and Gazprom (25%), confirmed its strategy and its commitment to LNG, despite tax changes further affecting the competitiveness of gas against coal.

“The tax changes taking effect at the beginning of 2015 will further reduce the competitiveness of natural gas in combined heat and power (CHP) production” Gasum wrote in its Financial Statements 2014.

It also said that it will continue to pursue its own terminal project, explaining that the terminal can be built only if the gas market in the Baltic Sea area develops. Skangass’ terminal in Pori (Finland) should be completed in early autumn 2016.