Ukraine Naftogaz Profits Soar in 2019

Ukraine's Naftogaz reported April 29 a consolidated profit of hryvnia 63.3 ($2.32) bn after tax on its 2019 trading, up 450% from the hryvnia 11.6bn in 2018. The highlight of its year was the transit contract arbitration award against its counterparty Gazprom, the Russian gas exporter.

Naftogaz CFO Peter van Driel commented: “We have delivered a strong cash flow performance in 2019. We generated hryvnia 110bn in cash flow from operating activities, including hryvnia 55.7bn from the gas transit arbitration (net of income tax), and distributed over hryvnia 20bn in dividends to our shareholder the state of Ukraine.

"We have seen lower volumes and gas prices in the fourth quarter of 2019, and we expect the macroeconomic environment to continue to be challenging in 2020. We have identified cost reductions and remain committed to capital discipline. Our balance sheet is robust with a relatively low leverage and we are well positioned for a prolonged downturn."

Gas transmission lost even more than in 2018, reflecting the higher cost of gas purchased for balancing services, and an increase in provisions for doubtful debts for such services owing to lower collection rates.

Gas storage – the one sector that saw better result – benefited from higher tariffs effective from 01 August 2018 and switching to booking capacity instead of paying for exact volume of gas stored.

Naftogaz produced 16.1bn (Russian) m³, which was 78% share of Ukraine’s total; and transited 89.6bn (Russian) m³ across its territory.

In 2019, the group transferred to the state budget hryvnia 100.6bn in taxes and dividends of hryvnia 12.3bn, or 90% of the 2018 net profit and hryvnia 8.5bn of interim dividends for 2019.