May 30, 2019 / 4:35 PM / 3 months ago

Gazprom reports 44% jump in first-quarter net profit, promises higher dividends

MOSCOW (Reuters) - Gazprom reported a 44% jump in first-quarter net income to 536 billion rubles ($8.3 billion), boosted by higher gas sales volumes and prices, and promised to increase dividends in coming years.

FILE PHOTO: A view shows a map of gas fields on the Yamal peninsula at an office of Gazprom company in Bovanenkovo, Russia May 21, 2019. Picture taken May 21, 2019. REUTERS/Maxim Shemetov/File Photo

The state-controlled company is a lynchpin of Russia’s commodity-reliant economy with its sales accounting for more than 5 percent of the country’s $1.6 trillion annual gross domestic product.

Alexander Ivannikov, head of Gazprom’s financial department, told a conference call with analysts on Thursday that the company was working on a new dividend policy, expected to be approved this year.

Gazprom usually bases its dividend payout on net income under Russian Accounting Standards, which typically only considers the parent company, saying that it also needs to fund multi-billion investments in new pipelines to Europe and China.

However, the government has long argued that the company should pay out 50 percent of its net income under International Financial Reporting Standards, which take account of income from subsidiaries.

Ivannikov said Gazprom could achieve that payout level within 2-3 years. The company already surprised markets earlier this month with a management-board proposal to hike the 2018 dividend to 16.61 rubles per share, up from a previous proposal of 10.43 rubles.

Gazprom’s shares in Moscow rose 2.64 percent on Thursday.

EXPORTS

A Gazprom manager said the company was sticking to its forecast of 194 - 204 billion cubic meters of gas exports to Europe this year at an average price of up to $235 per 1,000 cubic meters.

Russian gas exports have been increasingly politicized after Moscow annexed the Crimea peninsula from Ukraine in 2014. A wider standoff between Russia and the West has also contributed to Moscow’s global energy expansion.

Gazprom’s sales to Europe account for around two thirds of its total gas sales. The volumes of gas shipped to Europe declined in the first quarter to 62.4 billion cubic meters (bcm) from 71.5 bcm in January-March 2018, the firm said on Thursday.

Revenue in the January-March quarter rose to 2.29 trillion rubles from 2.14 trillion a year earlier.

($1 = 64.9800 rubles)

Reporting by Vladimir Soldatkin, Olesya Astakhova and Maria Grabar; Editing by Jason Neely, Edmund Blair and Kirsten Donovan

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