gazprom: 2017 ifrs results...2017 ifrs results disclaimers this presentation has been prepared by...
TRANSCRIPT
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GAZPROM:
2017 IFRS RESULTS
APRIL 27, 2018
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Alexander Ivannikov
Head of Department
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DISCLAIMERS
This presentation has been prepared by PJSC Gazprom (the “Company”), and comprises the slides for a presentation to investors
concerning the Company. This presentation does not constitute or form part of any offer or invitation to sell or issue, or any solicitation of
any offer to purchase or subscribe for, any shares or other securities representing shares in the Company, nor shall it or any part of it nor
the fact of its presentation or distribution form the basis of, or be relied on in connection with, any contract or investment decision.
Any viewer of this presentation considering a purchase of such securities is hereby reminded that any such purchase should be made
solely on the basis of the information contained in the prospectus or other offering document prepared in relation thereto and will be
subject to the selling restrictions set out therein. The information in this presentation should not be treated as investment advice. Care
has been taken to ensure that the facts stated in this presentation are accurate, and that the opinions expressed are fair and
reasonable. However, the contents of this presentation have not been verified by the Company. Accordingly, no representation or
warranty, express or implied, is made or given by or on behalf of the Company or any of its members, directors, officers or employees or
any other person as to the accuracy, completeness or fairness of the information or opinions contained in or discussed at this
presentation. None of the Company or any of their respective members, directors, officers or employees nor any other person accepts
any liability whatsoever for any loss howsoever arising from any use of this presentation or its contents or otherwise arising in connection
therewith.
The information in this presentation includes forward-looking statements, such statements may also occur during the Q&A session.
These forward-looking statements include all matters that are not historical facts, statements regarding the Company’s intentions,
beliefs or current expectations concerning, among other things, the Company’s results of operations, financial condition, liquidity,
prospects, growth, strategies, and the industry in which the Company operates. By their nature, forward-looking statements involve risks
and uncertainties, including, without limitation, the risks and uncertainties to be set forth in the prospectus, because they relate to
events and depend on circumstances that may or may not occur in the future. The Company cautions you that forward looking
statements are not guarantees of future performance and that its actual results of operations, financial condition and liquidity and the
development of the industry in which the Company operates may differ materially from those made in or suggested by the forward-
looking statements contained in this presentation. In addition, even if the Company’s results of operations, financial condition and
liquidity and the development of the industry in which the Company operates are consistent with the forward-looking statements
contained in this presentation, those results or developments may not be indicative of results or developments in future periods.
The information and opinions contained in this presentation are provided as at the date of this presentation and are subject to change
without notice. No person is under any obligation to update or keep current the information contained herein.
By attending the presentation you agree to be bound by the foregoing limitations.
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43.7
54.1
42.0
52.9
0
20
40
60
2016 2017
BRENT URALS
MAJOR 2017 AND RECENT EVENTS
Source: Company data. Bloomberg. Bank of Russia website 1 OC - Other countries: including LNG sales
67,0
58,4 60.7 57.6
0
20
40
60
80
2016 2017
USD/RUB AVERAGE RATE
USD/RUB AS OF THE END OF PERIOD
USD/RUB USD/bbl
Market environment in 2017 vs 2016
Jan
2018
-
Apr
2018
• Construction of the TurkStream pipeline continues, first
string is expected to approach Turkish coast in May 2018
• Construction of the Power of Siberia pipeline continues,
over 75% of the first phase laid
• Germany and Finland granted all required approvals to
build the Nord Stream-2 pipeline, additional €0.4 bn
received from European Energy Companies
• Moody's and S&P upgraded Gazprom’s ratings to
investment grade
• Management Committee proposed RUB 8.04 per share
dividend for 2017
USD/mcm
176.0
200.2
0
50
100
150
200
2016 2017
AVERAGE GAZPROM GAS SALES
PRICE IN EUROPE & OC
3,816 3,808
0
1,000
2,000
3,000
4,000
2016 2017
AVERAGE GAZPROM GAS PRICE IN
RUSSIA
RUB/mcm
1
2017
Major
events
• Record-high exports to Europe +8% YoY at 194.4 bcm
• Crude oil production growth +4% YoY at 59.5 mt (incl. JV)
• Supplementary Agreement with CNPC signed to supply
gas via Power of Siberia starting December 20, 2019
• Nord Stream 2: €1.6 bn received from European Energy
Companies
• Access to OPAL pipeline broadened
• BoD approved 50/50 JV with BOTAS for the construction
and operation of the onshore transit gas pipeline in Turkey
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6,546
1,467
714
1,406 1,187
-219
2,068
-300
0
300
600
900
1,200
1,500
1,800
2,100
2,400
2,700
3,000
3,300
3,600
Total net sales Adj. EBITDA Net profit Capex Operating CF FCF Net debt1 2 3 4
1 EBITDA adjusted for changes in impairment provisions 2 Profit for the period attributed to shareholders of PJSC Gazprom 3 Cash capital expenditures 4 Compared to Net debt as of December 31, 2016
SUMMARY OF 2017 IFRS FINANCIAL RESULTS
7%
-24%
18%
11%
2016 vs 2017
RUB bn
RUB bn
-25%
3%
Adjustments needed
for analytical purposes*
*In order to reflect the effects of the bank deposits (reported as part of Other current and
non-current assets) increase
6,600
6,300
6,000
5,700
5,400
Liabilities in accordance
with the court decisions in
favor of Naftogaz were
included in other expenses
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+3%
-5% +3% 420.1
472.1
134.1 131.4
0.0
200.0
400.0
600.0
2016 2017 4q16 4q17
Natural gas Crude oil Gas condensate
Gazprom Group’s volumes produced in Russia
Calculations may diverge due to rounding.
PRODUCTION
bcm mln ton mln ton
+12%
-2% 15.9 15.9
4.2 4.3
0.0
10.0
20.0
2016 2017 4q16 4q17
47.2 48.6
12.5 11.9
0.0
20.0
40.0
60.0
2016 2017 4q16 4q17
Electricity Heat
bn kWh mln Gcal
156.7 155.5
45.7 42.5
0
40
80
120
160
2016 2017 4q16 4q17
128.8 126.5
47.4 43.0
0
50
100
150
2016 2017 4q16 4q17
+1%
-1%
-7%
-2%
-9%
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820 876
289 288
0
200
400
600
800
1000
2016 2017 4q16 4q17
NET SALES TO RUSSIA
+7%
-1%
228 242
67 68
176 200
178
219
0
100
200
0
100
200
300
2016 2017 4q16 4q17
VOLUMES AVERAGE PRICE IN EUROPE & OC
GAS SALES
215 230
75 73
3,816 3,808 3,848 3,942
0
1000
2000
3000
4000
0
100
200
300
2016 2017 4q16 4q17
VOLUMES AVERAGE PRICE IN RUSSIA
RR/mcm bcm
RR bn
Calculations may diverge due to rounding. 1 Net of value added tax (VAT) 2 OC - Other countries: include LNG sales 3 VAT is not charged on sales 4 Net of custom duties and excise tax
2,140 2,221
593 674
0
600
1200
1800
2400
2016 2017 4q16 4q17
NET SALES TO EUROPE & OC
RR bn
bcm
33 35
11 11
154 158 152 157
0
100
200
0
10
20
30
40
50
2016 2017 4q16 4q17
VOLUMES AVERAGE PRICE IN FSU
310 293
95 91
0
100
200
300
400
2016 2017 4q16 4q17
NET SALES TO FSU
bcm USD/mcm USD/mcm
1
Russia Europe & OC2 FSU
3,4 3, 4
RR bn +4%
+14%
-5%
-5%
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31%
61%
8%
OIL AND ENERGY BUSINESS
Calculations may differ due to rounding. 1 Net of value added tax (VAT), excise tax and custom duties.
Net Sales1
542 533 522 561
612
0
200
400
600
800
4Q2016 1Q2017 2Q2017 3Q2017 4Q2017
159 160
103 86
154
0
50
100
150
200
4Q2016 1Q2017 2Q2017 3Q2017 4Q2017
RUB bn
-3%
2016 2017
+13%
Electricity and heat Crude oil and gas condensate; refined products
34%
58%
8%
CRUDE OIL AND GAS CONDENSATE; REFINED
PRODUCTS
GAS BUSINESS AND OTHER REVENUES
ELECTRICITY AND HEAT
RUB bn
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According to Gazprom 2017 IFRS report1:
BANK DEPOSITS
Key features of bank deposits2:
• Early withdrawal clause
• Deposit term of over 3 months
• Are NOT included in Сash and cash equivalents
Impact of substantial increase in bank deposits:
• Decrease in Cash and cash equivalents
• Increase in Net Debt and Net Debt/EBITDA
• Reduction in Cash flows from operating activities3
(changes in working capital)
• Decrease in Free cash flow3
127 144
328 5
42
2
0
100
200
300
400
2015 2016 2017
LT DEPOSITS
ST DEPOSITS
RUB bn
186
132 XX
TOTAL DEPOSITS
1 Source: Gazprom 2017 IFRS report, page 33 2 Reported as a part of Other current assets and Other non-current assets
In 2017 Gazprom substantially increased
bank deposits volumes
Increase in LT and ST bank deposits is aimed at improving the efficiency of liquidity management
3 Affected by ST deposits
330
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28
243
1,458
243
1,187 1,406
-219
24
-300
-150
0
150
300
450
600
750
900
OCF before
working capital
changes
Working
capital
and operating items
changes, tax
OCF
reported Capex
FCF
reported
Adjustment for
increase in
ST deposits
FCF
adjusted
2017 ADJUSTED FREE CASH FLOW BREAKDOWN*
1 Free Cash Flow = Net Cash from operating activities – Cash Capex 2 Free Cash Flow adjusted for changes in the ST bank deposits
FCF adjusted for changes in bank
deposits remained positive at
RUB 24 bn in 2017
Changes in bank
deposits
* Free Cash Flow adjusted for changes in the ST bank deposits
1,300
0
-300
0
150
0
0
1,450
1,150
RUB bn
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3,267
869
2,398
328 2
2,068
1.7
1.4
0
0.6
1.2
1.8
0
500
1,000
1,500
2,000
2,500
3,000
3,500
Total Debt Cash &
equivalents
Net Debt
reported
ST deposits LT deposits Net Debt
adjusted
NET DEBT ADJ./ADJ.EBITDA
RUB bn
KEY DEBT METRICS
2017 adjusted Net Debt structure1
Total Debt breakdown
by currency
Cash, cash equivalents,
bank deposits
breakdown by currency
1 Net Debt adjusted for the bank deposits reported as a part of Other current and non-current assets (see Slide 9 for details)
RUB
19%
USD
37%
EUR
37%
Other
7%
Rating Outlook
Fitch * BBB–
(investment grade) positive
Moody's Baa3
(investment grade) positive
S&P * BBB–
(investment grade) stable
Dagong AAA stable
ACRA AAA (RU) stable
Credit ratings of Gazprom
1,952 1,747 2,068
1,491 1,083
1,199
0.9
1.5 1.4
0.0
0.5
1.0
1.5
0
2000
4000
6000
2015 2016 2017
CASH&CASH EQUIVALENTS (INCL. DEPOSITS)
NET DEBT ADJ.
NET DEBT ADJ./ADJ.EBITDA
RUB bn
Net Debt adjusted on bank deposits1
RUB
59%
USD
24%
EUR
14%
Other
3%
*
* In USD terms
*
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1,641
1,369 1,406
300
418
0
600
1200
1800
2015 2016 2017 4Q2016 4Q2017
Cash Capex
1 CapEx breakdown as provided in Management Report
CAPITAL EXPENDITURES
+39%
RUB bn
33%
22%
20%
15%
4% 6%
TRANSPORT
PRODUCTION OF CRUDE OIL AND GAS CONDENSATE
PRODUCTION, DISTRIBUTION AND STORAGE OF NATURAL GAS
REFINING
ELECTRICITY AND HEAT
OTHER CAPEX
The Group’s 2017 Capex breakdown1
+3%
(17%)
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KEY GAS BUSINESS INVESTMENT PROJECTS
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0.36
2.39
3.85
8.97
5.99
7.2 7.2
7.89 8.0397 8.04
1% 7% 9% 16%
12% 15%
107%
24% 20% 27%
5% 9%
25% 24% 26% 27%
90%
46% 46%
190%
0%
40%
80%
120%
160%
200%
0
2
4
6
8
10
2008 2009 2010 2011 2012 2013 2014 2015 2016 2017
DIVIDENDS AS % OF IFRS NET INCOME RAS BASED DIVIDEND PAYOUT RATIO
RUB/ Share
DIVIDEND PAYOUT
Dividend
per share
1 As proposed by the Management Committee
1
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High competiveness
of Gazprom’s gas.
Record exports
Outstanding resource base and
infrastructure Low cost base
UNIQUE
FUNDAMENTALS
Strategic transformative projects
(capex peaking
in 2018 - 2019)
Improving gas markets
outlook.
Spare production and export
capacity
Business growth
in gas and oil
segments; further
growth potential
BUSINESS
GROWTH
STRONGER FINANCIAL
OUTLOOK
Conservative
financial policy,
cost control
Balanced
dividend policy
Improving
FCF profile
BUSINESS GROWTH, ENHANCING SUPPLY SECURITY
INVESTMENT CASE
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ADDITIONAL INFORMATION
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RUSSIAN NATURAL GAS BALANCE
Bcm 2016 2017 4Q2016 4Q2017
Natural gas resources 718.20 770.29 219.75 214.09
Domestic gas production 640.40 691.19 190.99 188.29
Other sources including Central Asian and Azerbaijani gas 22.97 25.33 6.66 6.13
Gas withdrawn from underground storage in Russia, Latvia and Europe 50.98 50.45 21.23 19.05
Decrease in the amount of gas within the gas transportation system 3.85 3.31 0.87 0.61
Natural gas distribution 718.20 770.29 219.75 214.09
Domestic consumption 456.68 468.01 147.19 140.81
including needs of the gas transportation system
and underground storages 32.29 37.81 11.22 11.11
Gas pumped into underground storages 28.54 53.02 2.06 4.13
Gas for LNG production 14.70 15.46 4.24 4.16
Foreign supplies 181.68 197.40 53.64 53.50
FSU supplies 32.11 32.88 10.81 10.58
Increase in the amount of gas within the gas transportation system 4.49 3.52 1.82 1.02
Source: Company Operating Data
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THANK YOU!