[Click eStock] "Gazprom, Gas Demand and Prices Also Hit Bottom in Q3"

[Asia Economy Reporter Eunmo Koo] An analysis suggests that both gas demand and prices for Gazprom (Gazprom·GAZP.RM) hit bottom in the third quarter.

Gazprom's revenue for the third quarter of fiscal year 2020 recorded 1.3981 trillion rubles, a 13.8% decrease compared to the same period last year. The decline in sales related to gas and crude oil was particularly notable. In Europe, partial lifting of lockdown measures led to a recovery in gas demand compared to the previous quarter, but the overall scale shrank due to price drops and reduced demand.

Total gas sales volume decreased by 3.0% year-on-year. By region, Russia saw an 8.1% decrease, Europe and other regions increased by 3.7%, and the former Soviet Union region declined by 25.0%. Prices fell by 9.5% in Russia, 15.8% in Europe and other regions, and 15.5% in the former Soviet Union. Operating profit recorded 32.1 billion rubles, down 84.6% from the previous year.

Yoo Jaeseon, a researcher at Hana Financial Investment, explained in a report on the 4th, “The main factors were poor performance in the gas sector due to decreased sales volume and price drops,” adding, “Foreign exchange losses were recognized in non-operating income, turning pre-tax profit and net profit into losses.” He further diagnosed, “Gas exports to Europe significantly increased in the fourth quarter, and the trend is expected to continue into the first quarter of this year, indicating that performance is passing through the bottom.”

Although the decline in oil and gas prices makes it unavoidable to bear performance burdens in 2020, the existing dividend payout guidance of 40% adjusted net profit is being maintained. Researcher Yoo said, “If the net debt ratio to EBITDA exceeds 2.5 times, the board may recommend lowering dividends, but management is persuading the board not to use exceeding the debt limit as a reason to reduce dividends,” and explained, “The position to raise the dividend payout target to 50% after this year remains unchanged.”

This content was produced with the assistance of AI translation services.