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Release
IFRS results 3Q 2011
Igor Kurinny, ING
The announced provisional results of 2011 were rather predictable. Gazprom will demonstrate exceptionally strong results in the last year, which is explained by high prices for oil and gas accordingly.
The third quarter results were much better than we had expected for EBITDA. A positive factor was that labor costs remained at the level of the previous quarter. At the same time, the issue of other operating costs that dropped significantly in the third quarter is still uncertain.
It is possible to highlight that Gazprom demonstrated rather good results in the third quarter. The negative cash flow was not a bad surprise as it was anticipated by the market - Gazprom had previously announced its great capital investments. We are more interested in the amount of capital investments for this and the next year.
We estimate that the fourth quarter results will also be rather strong. Despite the decline in supplies, gas prices will remain high.
Vadim Mitroshin, OTKRITIE Financial Corporation
The last year of 2011 was very strong for Gazprom. It may be called the record year over the corporate history. The contractual export prices for natural gas that had solidified during the whole year and the growth of sales volumes were rather helpful.
The Company also hit the record high level of investments. Nevertheless, investors expected Gazprom would generate a greater free cash flow in the last year. Therefore, the most intriguing issues facing the investment community now are the possible drop of investments in 2012, whether Gazprom will be able to improve its capital investment efficiency, what cash flow it will be able to generate and whether the shareholders will get larger dividends.
The third quarter results came as no surprise. The only remarkable thing is a significant effect produced from revaluation of reserves that resulted in higher EBITDA by the end of the quarter than it had been expected.
The negative cash flow was not unexpected by the market, as the third quarter results are traditionally the lowest ones due to the seasonal drop in gas demand. We hope that Gazprom will be able to demonstrate a positive cash flow in the fourth quarter in view of increased gas demand and higher export prices.
We may also wish Gazprom to publish its consolidated financial results under IFRS sooner, as it has been a long time since all gas companies reported their third quarter results.
Sergey Vakhrameev, Metropol Investment Financial Company
In terms of EBITDA Gazprom's third quarter financial results were far beyond the market expectations. However, the Company demonstrated a negative free cash flow again and this parameter is much more interesting to investors. The cash flow affects the dividend amount, and all investors wish that Gazprom's dividends were considerably higher.
It is noticeable that Gazprom's shares haven't responded to the Company's financial statements despite a high level of EBITDA. So, this factor hasn't been met with great joy.
In general, Gazprom did rather well in 2011 - the amount of export supplies surpassed the 2010 results. It should be noted, however, that gas exports significantly declined at the year end and in 2012 Gazprom will probably face some difficulties.
We think that Gazprom should generate a considerably greater free cash flow and pay out higher dividends. In this case the Company's shares will start approaching the all-time peak. Unfortunately, this is a matter of distant future.