Russia's Gazprom says second quarter net profit halved, worst is over

MOSCOW (Reuters) - Russian natural gas giant Gazprom's GAZP.MM second-quarter net income more than halved year-on-year to 149.2 billion roubles ($2 billion), but it said energy markets were recovering from the impact of the COVID-19 pandemic.

FILE PHOTO: The logo of Russian gas giant Gazprom is seen on a board at the St. Petersburg International Economic Forum (SPIEF), Russia, June 6, 2019. REUTERS/Maxim Shemetov

The company slightly improved its forecast for gas exports to 170 billion cubic metres (bcm) for this year from an earlier projection of around 166 bcm but did not change its expectations for gas prices in Europe.

Oil and gas producers across the world have been affected by lower prices and a collapse in fuel demand because of movement restrictions to tackle the pandemic.

But the state-run Gazprom still managed to deliver a profit after a first-quarter loss of 116 billion roubles and said third quarter trading was improving.

Gazprom's shares reversed a morning positive trend, losing more than 1% by the close in line with a 1% decline in the Moscow stock market .IMOEX.

Gazprom’s Deputy Chief Famil Sadygov said in a statement the company was sticking to its previously announced dividend plans. Markets had improved in the third quarter and spot gas prices had exceeded $100 per 1,000 cubic metres in Europe, he said.

Alexander Ivannikov, the head of Gazprom’s financial department, told investors in a follow-up call that the net debt/EBITDA ratio may exceed 2.5 by the end of the year - a level which triggers changes to dividend policy - but the company still aims to “fulfil its pledges on dividend payout”.

In its financial report, Gazprom said April to June revenue fell to 1.16 trillion roubles from 1.78 trillion roubles in the same period of 2019.

The company’s natural gas sales to Europe, a major source of income, fell in the first half of the year by 47%, year-on-year, to 756.3 billion roubles ($10.3 billion).

($1 = 73.9976 roubles)

Reporting by Vladimir Soldatkin and Olesya Astakhova, editing by Louise Heavens and Barbara Lewis