Gazprom posts 1Q 2010 net profit of 336.8 billion roubles

Russian gas major, Gazprom, has posted a 1Q 2010 net profit of 336.8 billion roubles under IFRS.

The bottom line is up year on year from the 1Q 2009 net profit of 110.2 billion roubles, on the back of sales revenues also increasing 14% to 956.8 billion roubles from 837.2 billion roubles in 1Q 2009.

According to the statement, net gas transportation sales grew the most in the first three months of 2010, going up 96% year on year to 25.1 billion roubles, which Gazprom attributed to the increase of volumes of gas transported for independent gas suppliers.

Net sales of gas increased by 1% year on year to 612.8 billion roubles in 1Q 2010, which was primarily due to higher volumes of gas sold in all geographical segments, excluding Europe and other countries, where net sales were down 22% year on year to 286.2 billion roubles. This mainly resulted from the 36% decrease of average realized prices in rouble terms, which was partially compensated by the 37% increase of the volume of gas sold, the company noted.

According to Andrey Polishchuk, oil and gas analyst at BCS Financial Group, a low base effect, created by a gas dispute with Ukraine, and a cold winter also contributed to Gazprom’s solid dynamics during the period.

“Growth is also linked with the fact that in contrast in 1Q 2009 there were problems with gas deliveries to Europe because of the gas conflict with Ukraine.”

This year’s cold winter proved another positive effect for Gazprom."

Regardless, Polishchuk added that he expected a weaker performance in the coming periods.

“Since then the volume of gas extracted by Gazprom has not followed suit, and we expect worse results in the second and third quarters, with profitability falling from the existing 43% to 40%.”

Yulia Novichenkova, oil and gas analyst at Uralsib, also said that Gazprom was likely to see lower financials in the future, as the need to meet the requirements of the European counterparts was becoming inevitable.

“We still believe that some more pressure will be coming from Europe in terms of gas price discounts and we think that Gazprom will have to meet the expectations coming from European countries and reduce prices for some certain particular clients, probably not all of them, but some of them obviously, especially Germany and Italy – I mean the largest customers of Gazprom.”