Naftogaz Group Q1 2020 results: net profit of UAH 3.2 billion

Naftogaz Group reports consolidated net profit of UAH 3.2 billion after tax for the three months ended 31 March 2020

Naftogaz Group reports consolidated net profits of UAH 3.2 billion after tax for the three months ended 31 March 2020.

Q1 2020 was characterised by:

· 3.9 bcm gas production and 6.3 bcm of gas sold;

· Significant drop in oil and gas prices;

· Cash flows generated by operating activities amount to UAH 10.9 billion;

· Free cash flows amount to UAH (16.9) billion and include UAH 23.2 billion of investment in Treasury bonds maturing in June 2020;

· Total taxes paid to the State Budget exceeded UAH 24.1 billion;

· On 1 January 2020, obligations of Naftogaz to operate state-owned gas transmission infrastructure were terminated.

SUMMARY OF RESULTS

in UAH billion Q1 2019 Q1 2020 variance
Net profit from continuing operations 16.0 3.2 (12.8)
Segment result – Adjusted EBITDA 37.8 8.0 (29.8)
Cash flows generated by operating activities from continuing operations 27.9 10.9 (17.0)
Free cash flows from continuing operations 14.1 (16.9) (31.0)
Capital expenditures 11.4 3.8 (7.6)
       
  31 Dec 2019 31 Mar 2020 variance
Net debt 42.6 43.4 0.8
Gearing, % 9.8% 12.4% 2.6

Naftogaz Chief Financial Officer Peter van Driel commented: “We are facing challenging circumstances with the Covid-19 crisis and the macroeconomic environment, with a sharp decline in gas prices this quarter.

Cash flow from operating activities for the first quarter was UAH 10.9 billion, compared with UAH 28.0 billion, excluding discontinued operations, for the same period a year earlier. The result reflected lower gas prices and demand. We are lowering our spend and remain committed to capital discipline. Our balance sheet is robust with gearing at 12.4%.”

PERFORMANCE BY SEGMENT

Segment result – Adjusted EBITDA by segment was as follows:

in UAH billion Q1 2019 Q1 2020 variance
Exploration and production 14.0 7.8 (6.2)
Oil midstream and downstream (0.1) 0.4 0.5
Commercial 13.3 (0.1) (13.4)
Gas storage 0.1 0.3 0.2
Ukrnafta 0.9 (0.4) (1.3)
Other (0.1) 0.0 0.1
Total 28.1 8.0 (20.1)

Exploration and production result reflected lower gas prices compared to Q1 2019.

Oil midstream and downstream benefited from lower transportation costs and other cost savings.

Commercial was primarily attributable to lower volumes and lower selling prices affecting gas sales revenues compared to Q1 2019.

Gas storage reflected higher revenues from pumping services due an increased demand.

Ukrnafta’s result were negatively impacted by lower gas selling prices as well as lower volumes of crude oil sold.

Other activities include transit-related services and a product-sharing agreement with the Arab Republic of Egypt and Egyptian General Petroleum Corporation. The result was negatively impacted by foreign exchange losses related to the product-sharing agreement that was offset by the result of the new contract with Gazprom on transit through Ukraine.

ADDITIONAL INFORMATION

Contributions to the State Budget. For the first three months of 2020, the Group transferred to the State Budget UAH 24.1 billion of taxes, including UAH 10.4 billion of corporate income tax.

The Group’s Unaudited Condensed Consolidated Interim Financial Statements as at and for the three months ended 31 March 2020 are available here.




Communications Department
NJSC Naftogaz of Ukraine




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