Gazprom reported record profits for the fourth quarter and the whole of 2021

In 2021, Gazprom earned 2.09 trillion rubles. net profit under IFRS against 135 billion rubles. a year earlier. The company announced this on April 28. The monopoly’s revenue increased by 62% and reached 10.24 trillion rubles, EBITDA increased 1.5 times during the reporting period to 3.69 trillion rubles. Net revenue from gas sales increased by 85% to 5.7 trillion rubles, and from sales of oil and gas products – by 44% and amounted to 2.6 trillion rubles.

“The main factor influencing the financial result was the increase in gas and oil prices. The consequence of this was an increase in sales revenue, as well as an increase in spending on purchased gas and oil, “- said in a release” Gazprom “to the report. The growth of revenues from the sale of oil and gas refining products in the company is also explained by the growth of average prices “in all geographical segments.”

Vedomosti wrote in February 2022, citing the Federal Tax Service, that the average price of gas exported from Russia had risen significantly last year. Gas has risen to $ 274 per 1,000 cubic meters. m, and liquefied natural gas (LNG) – up to $ 273 per 1 ton. In 2020, pipeline gas and LNG were exported abroad, according to the FCS, at $ 140 per 1,000 cubic meters. m and $ 228 per 1 ton, respectively, that is, pipeline gas has risen almost 2 times, LNG – by 20%.

According to Famil Sadygov, Gazprom’s deputy chairman of the board, the average export price of gas in the fourth quarter of 2021 reached $ 517 per 1,000 cubic meters. m, which is three times more than for the same period in 2020. In general, the average price of export deliveries for the whole of 2021, according to his estimates, rose to $ 298 (2 times higher than a year earlier). Both figures were record highs for Gazprom.

Gazprom is also consolidating its subsidiaries in its IFRS reporting, including Gazprom Neft, in which about 96% of the monopoly is owned. Brent oil rose by 53% in 2021, WTI – by 57%, at the beginning of 2022 they traded at $ 78 and $ 76 per barrel. The growth rate of the value of varieties has been the highest since 2009. The average annual price for the Russian Urals, according to the Russian Ministry of Finance, last year was $ 69 per barrel against $ 41.7 in 2020.

The volume of gas supplies to foreign countries (excluding supplies to the CIS countries – “Vedomosti”) last year amounted to 185.1 billion cubic meters. m, which is 5.8 billion cubic meters. m more than in 2020, said in January 2022, Chairman of the Board of Gazprom Alexei Miller. This result, he said, entered the top four historical records of the company. Purchases of pipeline gas from Russia increased by 15 countries last year, with the strongest growth coming from consumers in Germany (+ 10.5%), Turkey (+ 63%) and Italy (+ 20.3%).

As of the end of 2021, Gazprom’s net debt decreased by 26%, or 1 trillion rubles. compared to the beginning of the year – up to 2.9 trillion rubles., According to IFRS reporting. The company also forecasts the growth of the investment program in 2022: it may reach 2.26 trillion rubles. against 2 trillion rubles. a year earlier.

Sadygov stressed that the net debt / EBITDA indicator, reflecting the debt burden, was already “in the lower part of the comfort range” in the third quarter of 2021. In the fourth quarter, it fell sharply and reached a level of 0.7 by the end of the year. “We expect that the debt burden will continue to decline – in a situation of high uncertainty, this is the key to maintaining financial stability [компании]”, – added the top manager.

The profit of the gas monopoly in the fourth quarter of 2021 compared to the same period in 2020 increased by 53% and amounted to 543 billion rubles., Revenue increased by 74% to 3.52 trillion rubles. Both of these quarterly figures also became record holdings for the holding. Sadygov noted that EBITDA, which reached 1.5 trillion rubles in the fourth quarter, was higher than in 2020.

The main reason for significant revenue and profit growth is record high gas prices in Europe, says BCS Global Markets senior analyst Ronald Smith. Alexei Grivach, Deputy Director General of the National Energy Security Fund, agrees. Gas prices in Europe in 2021 on average compared to 2020 have grown about 2 times, he recalls. The company’s management policy to curb the growth of the group’s operating expenses also played a role, the expert said. They grew by only 35%, while sales revenue grew by more than 60%, he said.

A more modest net income in the fourth quarter is due to Gazprom’s depreciation of $ 6.1 billion in assets for the quarter, but these are accounting adjustments, not monetary losses, Smith explained.

According to the results of the first quarter of 2022, it is probably also worth expecting an increase in financial indicators, as average gas prices [в Европе] during this period even higher, notes Smith. Sales fell slightly, but the price will have a stronger effect, he explains. Grivach notes that gas prices in the first quarter “are in space” and more than compensate for the decline in gas imports by Europeans. Revenue from exports for the quarter may exceed the figure for the whole of 2020, he predicts.

By the end of 2022, there will be serious questions about how much gas Gazprom actually exports due to the issue of ruble settlements, Smith said. If there are no significant suspensions of supplies, 2022 will be the most profitable year in dollar terms in the history of Gazprom, the analyst predicts. According to him, before the publication of the BCS Global Markets report, the dividends of the gas holding were forecast at 46 rubles. per share. Now this estimate may be a little higher.

According to Gazprom’s dividend policy, dividends are paid at least 50% of the adjusted IFRS net income. “If such a decision is made, dividends for 2021 may amount to about 52.5 rubles. per share. At the current level of quotations of Gazprom shares in the region of 240 rubles. per share dividend yield can be almost 22% “, – said in a review of” BCS World of Investment “.

On April 28, Gazprom’s shares on the Moscow Stock Exchange rose only 0.16% to 237.53 rubles. per piece.

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