Naftogaz group has published its consolidated financial statements for the first nine months of 2019 (ending 30 September 2019), along with auditor conclusions. The complete document is available at link.
Naftogaz group generated UAH 21.3 billion in net profit over the first nine months of 2019, which is 27% higher than over the same nine-month period in 2018. Pre-tax profits over the first nine months of 2019 reached UAH 28.9 billion, which is 26% more than over the same period last year. This result was mostly due to higher performance indicators in such segments as Gas Transit and Integrated Gas Business.
Integrated Gas Business
Gas sales under public service obligations (PSO)
Gas sales under PSO resulted in UAH 17.2 billion profit, which is UAH 1.8 billion less compared to the same indicator for the first nine months of 2018. This lower result was impacted by a decrease in gas sales volumes by 1.3 bcm, or 11%, as well as an increase in bad debts allowance for gas of UAH 2.4 billion.
Gas sales beyond PSO
In the first nine months of the current year, natural gas sales beyond PSO dropped compared to the same period in 2018 and produced UAH 0.8 billion in losses. The key factor was a decrease in gas sales by 0.2 bcm (from 0.8 bcm for the nine months of 2018 down to 0.6 bcm for the nine months of 2019) and a decline in natural gas prices. The decrease in gas sales, in turn, resulted from an overall drop in industrial gas consumption.
Accounts receivable for natural gas
Accounts receivable (excluding doubtful debt allowance) arising from gas sales, as of 30 September 2019, increased by UAH 10.1 billion, or by 19.2 %, compared to the same period last year. This growth in the company’s receivables resulted mostly from an increased share of debt owed by heat producers (by UAH 8.2 billion) and from the deterioration in their payment discipline. The latter may also be explained by amendments made to the CMU Resolution No. 867 dated 19 October 2018, which lowered the mandatory payment level for heat producers from 90% down to 78% in the heating season 2018/2019.
Over the first nine months of 2019, gas transit volumes grew by 1.3% against the same period last year to reach 66.3 bcm.
The result of the gas transit segment increased over the first nine months of 2019 from UAH 6.8 billion to UAH 15.8 billion compared to the same period of the previous year, mostly due to higher gas transit volumes and lower depreciation expenses in the cost of gas. The adverse effects suffered by the segment were caused by foreign currency fluctuations.
Domestic Gas Transmission
The result of the domestic gas transmission segment deteriorated by UAH 1.4 billion over the first nine months of 2019 due to lower domestic transmission volumes and due to expenses for doubtful debt allowance caused by unpaid balancing services, and made up UAH 4.7 billion in losses.
This year, Naftogaz group has accumulated record-breaking gas volumes in its underground gas storage (UGS) facilities, striving to minimize the risks for the heating season 2019/2020 and create a secure back-up in case of interrupted gas transit to EU countries. Over the nine months of 2019, gas volumes injected to UGS facilities reached 11.7 bcm, which is by 2.9 bcm, or by 33%, more compared to the same period last year.
Gas storage activities resulted in UAH 0.7 billion profit, which is UAH 0.6 billion higher than for the same period last year.
Taxes and Other Payments to the State Budget
Over the first nine-month period in 2019, Naftogaz group paid UAH 84.4 billion in taxes and dividends, which made up nearly 15% of overall budget revenues this year so far.
NJSC Naftogaz of Ukraine