The investment peak of expenses cut off the profits of Gazprom

Capacities and taxes compel the monopoly to increase debt.
Gazprom last year reduced its net profit by a quarter - to 714 billion rubles, despite the growth in sales volumes and gas prices in non-CIS countries. The company's indicators predictably undermined the exchange rate revaluation, as well as the growth of the investment program and debt. The net debt of Gazprom for the year has impressively increased by 24%, to 2.4 trillion rubles, which, incidentally, is still quite moderate 1.6 EBITDA. The profit ratio was also affected by the accrual of a reserve of $ 2.6 billion on payment to Naftogaz as part of the decision of the Stockholm Arbitration.

Net profit of Gazprom over the past year decreased by 25%, to 714 billion rubles., Follows from the company's IFRS reporting. The fall in profit was expected due to the strengthening of the ruble in the past year, which is why the group Gazprom in 2017 received 10.7 billion rubles. loss on foreign exchange differences, while in 2016 - 453.6 billion rubles. arrived.

Also, a record investment program predictably affected the profit figure: 1.5 trillion rubles, which is 10.5% higher than the level of 2016. To finance the investment program, as well as to refinance previously borrowed loans, Gazprom increased net debt by 24% to 2.4 trillion rubles. Debt load on the company increased, however, not too much - up to 1.63 to the EBITDA resulted (in 2016 there were 1.46).
The increase in borrowing was also indirectly related to the increase in the tax burden - last year the main taxes on Gazprom (MET, export duty, excise and property tax) increased by 38.4%, to 1.246 trillion rubles, mainly due to an increase MET.

Payments for taxes reduced the ability of the group to invest projects from free cash flow, which last year was negative in the amount of 375 billion rubles. In addition, Gazprom reserved $ 2.6 billion to pay Naftogaz as part of the Stockholm Arbitration award, although the company has still not officially announced whether it will implement this decision and pay.

At the same time, the general situation on the markets last year was quite favorable for Gazprom - the company increased sales of gas and oil abroad in both absolute and monetary terms due to an increase in the average price. Net revenue (excluding export duties) for gas sales to Europe increased by 4%, to 2.2 trillion rubles, in Russia - by 7% to 875.7 billion rubles. Sales in Russia increased, primarily due to an increase in gas consumption, by 15 billion cubic meters (7%) due to cold weather.

This year, Gazprom is going to spend almost 2 trillion rubles on the investment program, which, apparently, will require further growth of the debt. However, the increase in oil and gas prices can help the company, as now the price of Brent is $ 74 per barrel, while Gazprom's budget is $ 43.8.

Gazprom disclosed that in March Nord Stream 2 AG, a Nord Stream 2 project company, attracted € 404 million from five European companies - Shell, Engie, OMV, Uniper and Wintershall - as the next tranche of bridge financing for the construction of the gas pipeline. Last year the same companies allocated € 1.5 billion.
It is assumed that Gazprom finances the project in proportion to its partners, so, probably, the company will allocate Nord Stream 2 funds through an additional issue.

It also follows from the statements that Gazprom, which is a 100% shareholder of Nord Stream 2 AG, has pledged its entire package as part of a financing agreement with the five European companies. Thus, it seems that the transaction with Glas Trust, which Kommersant wrote on April 3, is only part of these agreements from April 2017, and not a separate attraction of funds in the framework of project financing. The total budget of the project is € 9.5 billion.