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Reports 2014
Release
Alexey Kokin, Uralsib
Q4 results based on Gazprom’s 2014 statements were disappointing in terms of EBITDA, but pleasing in terms of the cash flow – both operating and free. It is obvious that EBITDA turned out to be so low due to the nonmonetary write-offs, which the Company described in its report. The only write-off case which raises concerns is Gazprom’s guarantees provided to Ostchem.
As for the cash flow, it was good to observe the investments at a rather moderate level making it possible to obtain the record high free cash flow during the last eight quarters despite a rather weak domestic market.
Thus, on the one hand, the profit and loss statement doesn’t reflect high performance of the Company, on the other hand, we see a good free cash flow, which is much more important. Speaking of the main issues of 2015, I would like to point out two of them. The first one is Gazprom’s strategy in the European market (whether the monopoly is able to win back its share in the European market). The second one is the investment program growth during the year.
Artem Konchin, Otkrytiye
We would like to highlight a strong operating cash flow achieved by Gazprom in 2014. This indicator reflects the real earnings generated by the Company while running its core business and, to a certain extent, better reflects Gazprom’s operating activities as compared to the revenues presented in the profit and loss statement.
Meanwhile, the amount of capital investments remains within acceptable frameworks – around RUB 1 trillion and the Company is not going to bring down the dividend payouts this year according to the results of 2014. I think, in 2015 the market will keep focus on the Chinese contracts and recovery of gas sales to Europe.
Maxim Moshkov, UBS
We consider Gazprom’s statement for 2014 to be generally positive, because the Company keeps generating an impressive free cash flow for the second year in a row. We estimate that Gazprom’s free cash flow hit the record high of some USD 14 billion in 2014.
It is important that Gazprom increased net profit proportionally to the net foreign exchange loss, and this allowed the Company to pay out the 2014 dividends at the level of 2013, despite the reduction of profits.
We anticipate that Gazprom’s performance will be weaker in the next three quarters, which would reflect the movements of oil prices we saw before the 2014 end. At the same time, we expect an upswing in gas exports to Europe, and that would level out a downfall in export prices to some extent. We believe that Gazprom’s capital investments in US dollars will be smaller in 2015, thus enabling the Company to generate a positive free cash flow.