Rosneft's results exceeded the expert consensus forecast

Rosneft’s financial results for the second quarter and first half of 2020 showed that the company “outperformed” the analysts’ consensus forecast. In the second quarter, Rosneft recorded a net profit of 43 billion rubles ($0.7 billion) - while experts surveyed by Interfax, on average, expected that Rosneft's net profit in the second quarter would be at the level 10.6 billion rubles.

Rosneft's revenue in the second quarter reached 1.04 trillion rubles ($14.9 billion), in the first half of the year - 2.8 trillion rubles ($42.5 billion). EBITDA in the reporting period amounted to 170 billion ($2.5 billion) and 479 billion rubles ($7.4 billion), respectively.

“As prices for oil and petroleum products recovered, the company’s financial reporting indicators showed upward dynamics during the second quarter of 2020. This gives us reason to look into the future with confidence and expect improved financial performance in the coming periods,” said the head of Rosneft, Igor Sechin.

Generating cash flow allowed the company, even in such difficult conditions, to timely and fully service its debt obligations. In the first half of the year, the amount of financial debt and trade obligations decreased by $4.3 billion or 5.3%. The reduction in interest expenses amounted to 21% or RUB 22 billion. compared to the first half of 2019, in dollar terms the decrease was 25%.

“The company maintained low operating costs and demonstrated significant positive free cash flow in the first half of the year. This allowed us, even in such difficult conditions, to fulfill our obligations to shareholders, as well as to continue to fulfill the strategic goal of reducing financial debt and trade obligations,” Sechin said.

Rosneft's capital expenditures in the first half of the year amounted to 367 billion rubles ($5.3 billion), decreasing by 15.8% in annual terms. In dollar terms, the figure decreased by almost 21%. The decrease is due to the optimization of the company’s investment program, taking into account the negative environment on world markets and the agreements reached in April 2020 by oil producing countries to limit oil production volumes.

“Given the dramatic state of the global oil market as a whole and in connection with the decisions made to reduce production, we will, of course, have to optimize some of the capital costs. We will try to maintain our investment program (for 2020) at approximately 750 billion,” Igor Sechin reported to President Vladimir Putin in May. Optimization is necessary in order to maintain financial and economic stability for the company, he said.

Finally, on July 14, Rosneft completed the payment of dividends approved at the annual general meeting of shareholders in June 2020. Taking into account the payment of interim dividends for the first half of 2019, the total amount of payments for the past year amounted to a record 354 billion rubles for the company. The company fully fulfilled its obligations to shareholders in full accordance with the adopted dividend policy and strictly adhered to deadlines. At the same time, Rosneft continues to fulfill its obligations to buy back shares. At the same time, a number of the largest oil companies previously suspended their own buy back programs, in particular: Chevron, Shell, Equinor, ENI, Total, Repsol.