Gazprom's Net Income Halves in Q2
Net profits at Russia's national gas supplier Gazprom nearly halved in the second quarter to rubles 153.5bn ($2.1bn) from 319.1bn a year earlier, it reported on August 31, as coronavirus (Covid-19) lockdowns in Europe took their toll.
Revenues plunged 35% to rubles 1.16 trillion, and Gazprom's swung to an operating loss of rubles 103bn, versus a rubles 322bn profit a year before. Core earnings (Ebitda) slumped to rubles 66.6bn ($1.3bn), versus $7.4bn a year earlier, with analysts at BCS Global Markets (BCS GM) describing this as the worst quarterly result in at least a dozen years.
Gazprom's free cash flow was negative $1.8bn for the quarter, while its net debt crept up 9% to around $53bn, according to BCS GM. This led to its net debt to Ebitda ratio rising from 1.8 to 2.7.
Gazprom's revenues from sales to Europe and other countries outside the former Soviet Union dropped 47% to rubles 756bn. This was largely due to the impact of Covid-19 lockdowns, but other factors included high levels of gas in storage at the start of the year, a mild winter and rising competition from cheap LNG.
Sales volumes were down 16.7% at 98.2bn m3, while average prices were down 38% at rubles 9,475/'000 m3. Gazprom's domestic business performed better, seeing only a 6% decline in revenues to rubles 488.7bn and only a 7% fall in volumes to 117.6bn m3.
Gazprom's earnings were also affected by charges to reflect lower prices and a weaker ruble. But these charges were mostly booked in the first quarter, when Gazprom suffered a $1.64bn loss.