11:03 01.07.2019

Naftogaz sees 71% fall in net profit in 2018 – consolidated statements

3 min read
Naftogaz sees 71% fall in net profit in 2018 – consolidated statements

 National joint-stock company Naftogaz Ukrainy in 2018 saw UAH 11.567 billion in net profit, which is 70.6% less than in 2017 (UAH 39.449 billion), according to the group's consolidated statements published on Thursday.

The group's net income decreased by UAH 27.9 billion compared to 2017, mostly due to the effects of reflecting the Stockholm arbitration decisions in both 2017 and 2018. In 2017, Naftogaz recognized UAH 12.6 billion of net positive effect of the Stockholm arbitration decisions on the group's operating income. In March 2018, Naftogaz recognized expenses of UAH 4.8 billion related to the additional VAT paid by the group in relation to the awards.

In addition to the one-off effects of the arbitration awards, the following factors have influenced the group's results for 2018. The allowance for impairment of receivables increased by UAH 7.0 billion compared to 2017 due to a weaker collection of payments for balancing services.

According to a document audited by Deloitte, sales revenue grew by 12.7% or UAH 28.834 billion in 2018, to UAH 256.312 billion, and gross profit – by 10.2% or UAH 7.152 billion, to UAH 77.483 billion.

In terms of segments, revenue in 2018 was received from an integrated gas business (UAH 137.825 billion, in 2017 – UAH 118.447 billion), gas transit (UAH 72.347 billion, 2017 – UAH 73.937 billion); Ukrnafta (UAH 36.113 billion, 2017 – UAH 26.907 billion); gas domestic transmission (UAH 27.168 billion, in 2017 – UAH 27.621 billion); oil midstream and downstream (UAH 12.98 billion, in 2017 – UAH 11.33 billion); gas storage (UAH 1.796 billion, in 2017 – UAH 0.958 billion); other (UAH 1.378 billion, in 2017 – UAH 1.361 billion); elimination (-UAH 33.295 billion, in 2017 – (-UAH 33.083 billion)).

In terms of the geography of sales revenues, the largest share came from domestic revenues (in 2018 – UAH 177.18 billion, in 2017 – UAH 147.309 billion), the Russian Federation (in 2018 – UAH 76.048 billion, in 2017 – UAH 77.511 billion), Europe (in 2018 – UAH 2.579 billion, in 2017 – UAH 2.201 billion), Egypt (in 2018 – UAH 0.505 billion, in 2017 – UAH 0.457 billion).

The total amount of borrowings of the group in 2018 decreased by 5.6% (by UAH 3.316 billion) and by the end of the year amounted to UAH 55.999 billion. The cost of debt servicing (bank interest costs) decreased from UAH 7.308 billion in 2017 to UAH 5.016 billion in 2018. Income from interest on deposits in bank accounts increased from UAH 1.244 billion to UAH 1.691 billion. The rate on loans in hryvnia increased from 18% in 2017 to 20% in 2018, in U.S. dollars – from 7% in 2017 to 8% in 2018, in euros – remained unchanged – 2%.

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