Gazprom’s profits for 2014 plunge by 700%

Gazprom OJSC has published its consolidated financial statement based on the IFRS saying its profits for 2014 decreased dramatically, as the Russian ruble devaluated. For example, the company’s operating profits dropped 17.5% as compared to 2013 amounting to 1,310,424 million rubles. Profit before profit tax fell 4.8-fold to 306,823 million rubles. Full year profit totaled 157,192 million rubles, with nearly 7-fold decline versus 2013.  Total comprehensive income for the year almost halved totaling 683,780 million rubles.

Profit attributable to the owners of Gazprom OJSC dropped by 86% to 159,004 million rubles.  The company explains this mainly with increase in the foreign exchange differences due to appreciation of US dollar and euro against ruble.   Expenses on foreign exchange differences increased due to the revaluation of the foreign denominated borrowings.  In addition, profit fell, as expenses on reserves grew amid impairment of assets.

According to the consolidated financial statements, “such an increase includes charge for impairment provision of accounts receivable of the national oil company NAK Naftogaz Ukraine in the amount of 34,068 million rubles, JSC Moldovagaz in the amount of 5,948 million rubles, and charge for provision under financial guarantees in the amount of  47407 million rubles.”

In 2014, Gazprom increased gas sale insignificantly – less than by 0.1% - to 2,985,385 million rubles.  Net proceeds from sale of gas to Europe and other countries increased by 4% to 1,752,147 million rubles, as the average estimated price in rubles grew by 11%, which was partly offset by a 9% decline of the sales volume.

Net proceeds from sale of gas to the post-Soviet countries dropped by 2% to 411,722 million rubles, as sales volume fell by 19% in natural units. This was partly offset with the growth of the average estimated price in rubles by 19%.

Net proceeds from sale of gas inside the country increased by 3% to 820,567 million rubles, as the average estimated sales price in the domestic market rose by 8%. This was partly offset by the 4% decline of the sales volume.

Net debt balance increased by 48% to 1,650,63 million rubles as of Dec 31 2014, as ruble depreciated against US dollar and euro, which was partly offset by an increase in cash and cash equivalents.

To recall, ruble depreciated against all the world currencies by 40%-70% over the year, mainly as oil price has almost halved.