NOVATEK PROFIT RUB13.2 BLN
NOVATEK - 28 October 2020 - PAO NOVATEK today released its consolidated interim condensed financial statements as of and for the three and nine months ended 30 September 2020 prepared in accordance with International Financial Reporting Standards (“IFRS”).
(in millions of Russian roubles except as stated)
3Q 2020
|
3Q 2019
|
|
9M 2020
|
9M 2019
|
161,211
|
187,258
|
Oil and gas sales
|
484,447
|
634,231
|
2,560
|
1,904
|
Other revenues
|
7,825
|
7,550
|
163,771
|
189,162
|
Total revenues
|
492,272
|
641,781
|
(125,570)
|
(140,604)
|
Operating expenses
|
(388,344)
|
(473,251)
|
-
|
366,390
|
Net gain on disposal of interests
in subsidiaries and joint ventures |
-
|
674,968
|
352
|
173
|
Other operating income (loss)
|
(46,961)
|
(988)
|
38,553
|
48,731
|
Normalized profit from operations*
|
104,790
|
167,542
|
51,260
|
56,415
|
Normalized EBITDA of subsidiaries*
|
134,298
|
191,332
|
93,883
|
104,519
|
Normalized EBITDA including share in
EBITDA of joint ventures* |
265,821
|
338,296
|
88,487
|
5,740
|
Finance income (expense)
|
179,037
|
(558)
|
(86,804)
|
18,714
|
Share of profit (loss) of joint ventures,
net of income tax |
(160,028)
|
112,969
|
40,236
|
439,575
|
Profit before income tax
|
75,976
|
954,921
|
13,172
|
369,959
|
Profit attributable to
shareholders of PAO NOVATEK |
24,056
|
820,930
|
35,720
|
48,539
|
Normalized profit attributable to
shareholders of PAO NOVATEK*, excluding the effect of foreign exchange gains (losses) |
110,487
|
178,565
|
11.89
|
16.12
|
Normalized basic and diluted earnings per share*,
excluding the effect of foreign exchange gains (losses) (in Russian roubles) |
36.77
|
59.29
|
39,821
|
36,519
|
Cash used for capital expenditures
|
142,304
|
110,198
|
COVID-19 and Macro-Economic Environment
The spread of the COVID-19 virus in 2020 and the mandated shutdowns by many governments have caused financial and economic stress to the global markets. This negative economic impact has lowered demand for crude oil, natural gas and oil products, which combined with the increase in the supply of crude oil due to the cancellation of the OPEC+ production agreement in the first quarter 2020, resulted in a decline in global hydrocarbon commodity prices.
Global economic activity had begun a gradual recovery during the second quarter following the partial removals of restrictions aimed at preventing the epidemic spread, as well as a partial recovery in benchmark crude oil prices following the new OPEC+ production agreement reached and the compliance to the target cuts. This recovery has continued throughout the third quarter. Nevertheless, hydrocarbon benchmark prices remain much lower than their pre-crisis levels. In addition, the ongoing volatility in hydrocarbon commodity benchmark prices significantly influences the dynamics of the Russian rouble relative to foreign currencies. As a result, in each quarter 2020, we recognized substantial foreign exchange effects on foreign currency denominated loans by the Group’s subsidiaries and joint ventures.
These exogenous events are outside of the Group’s management control, and their scale and duration are difficult to assess. Despite the economic instability on the global markets, the Group continues to achieve strong operating results and implement its main investment projects in accordance with the Group’s approved corporate strategy. The Group’s management continues to assess the current situation and present macro-economic environment and will take appropriate actions if deemed necessary.
Revenues and EBITDA
In the third quarter 2020, our total revenues and Normalized EBITDA, including our share in EBITDA of joint ventures, amounted to RR 163.8 billion and RR 93.9 billion, respectively, representing decreases of 13.4% and 10.2% as compared to the prior year corresponding period. In the nine months ended 30 September 2020, our total revenues and Normalized EBITDA, including our share in EBITDA of joint ventures, amounted to RR 492.3 billion and RR 265.8 billion, respectively, representing decreases of 23.3% and 21.4%, as compared to the corresponding period in 2019.
The decreases in total revenues and Normalized EBITDA were largely due to a decline in global benchmark prices for hydrocarbons. Our revenues also decreased due to a reduction in LNG sales volumes on international markets resulted from an increase in the share of our joint venture OAO Yamal LNG direct sales under long-term contracts and a corresponding decrease in our spot LNG volumes purchased from Yamal LNG.
Profit attributable to shareholders of PAO NOVATEK
Profit attributable to shareholders of PAO NOVATEK amounted to RR 13.2 billion (RR 4.39 per share) in the third quarter 2020 and to RR 24.1 billion (RR 8.01 per share) in the nine months 2020 as compared to RR 370.0 billion and RR 820.9 billion, respectively, in the corresponding periods in 2019.
The Group’s financial results in 2020 were significantly impacted by a weak macroeconomic environment noted above that resulted in a decrease in our hydrocarbon sales prices and a recognition of substantial foreign exchange effects. Moreover, in both years, we recorded the effects from the disposal of interests in the Arctic LNG 2 project by recognizing a gain in the aggregate amount of RR 675.0 billion from the disposal of a 10% and a 30% participation interests in the Arctic LNG 2 project in March and July 2019, and recognizing a loss of RR 47.8 billion in the first half 2020 related to the subsequent non-cash revaluation of contingent consideration on the sale of the 40% participation interest in 2019.
Excluding the effects from the disposal of interests in subsidiaries and joint ventures, as well as foreign exchange differences, Normalized profit attributable to shareholders of PAO NOVATEK totaled RR 35.7 billion (RR 11.89 per share) in the third quarter 2020 and RR 110.5 billion (RR 36.77 per share) in the nine months 2020, representing decreases of 26.4% and 38.1%, respectively, as compared to the corresponding periods in 2019.
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