February 19, 2020 / 9:30 AM / 5 months ago

Russia's Rosneft says Q4 net profit up 45% amid a jump in oil sales

MOSCOW, Feb 19 (Reuters) - Russia’s largest oil producer Rosneft posted a 45% growth in fourth quarter net profit on Wednesday and a 20% growth in 2019 crude oil sales despite the impact of a pipeline contamination and global efforts to cap output.

Rosneft reported its financial results a day after the United States imposed sanctions on its Geneva-based Rosneft Trading SA unit as Washington targets Moscow over its backing of Venezuela President Nicolas Maduro’s government.

Rosneft said fourth-quarter net profit was 158 billion roubles ($2.4 billion), compared with 109 billion roubles in the year-earlier period.

The results were negatively affected by contamination at the Druzhba oil pipeline last year, uncertainty due to launch of new quality standards for petroleum products by the International Maritime Organization and the OPEC+ agreement to cap output.

No mention was made of the U.S. sanctions or Venezuela operations. Rosneft itself is not subject to the sanctions.

The company, which accounts for over 40% of oil production in Russia, said it had generated 2.22 trillion roubles in revenue, up 2.7% from a year ago, while its earnings before interest, taxes, depreciation and amortisation (EBITDA) were little changed at 488 billion roubles.

Investors were cheered as the company said that strong results would allow it to increase the final dividend for 2019 “at a much faster pace” than the 5.2% growth in its dividend for the first half of 2019.

Subject to shareholder approval, the 2019 dividend yield based on the average share price will be at around 8%, Rosneft said in the statement.

Its shares increased 1.7% by 0850 GMT, outperforming a wider index which was up 0.9%.

Rosneft also said its net debt and trading liabilities declined by 174 billion roubles in 2019, while its net debt was 1.4 times EBITDA at the end of the 2019.

“The introduction of sanctions on Rosneft’s subsidiary is negative for sentiment, but at this stage we do not anticipate a material effect on Rosneft’s financials,” analysts at Aton said in a note.

Rosneft Trading SA trades mostly crude purchased from third-party vendors and its business accounts for less than 1% of Rosneft’s EBITDA, according to analysts at BCS Global Markets.

The U.S. told Rosneft Trading’s counterparties to wind down their transactions with the unit by May 20. (Reporting by Olesya Astakhova and Polina Devitt; Writing by Polina Devitt; Editing by Mike Harrison)

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