Russia’s Lukoil Beat Forecasts With 45.5% Surge In Q1 Profit

Higher oil prices and higher sales volumes helped Russia’s second-biggest oil producer Lukoil to post a 45.5 percent annual jump in net profit for the first quarter of 2017, beating analyst projections by a wide margin.

Lukoil’s profit rose to US$1.1 billion (62.3 billion rubles), which represented a 33.7-percent increase from the fourth quarter of 2016.

Analysts surveyed by Reuters had expected Lukoil’s profit to have increased by 16 percent on the year in Q1, to US$884.5 million (50 billion rubles).

Lukoil’s Q4 2016 profit was US$824 million (46.6 billion rubles)—slightly higher than analyst expectations, but 15 percent lower compared to the third quarter. The fourth-quarter profit decline compared to the third quarter was the result of volatility in the exchange rates, the company said in March.

In Q1 2017, Lukoil’s sales rose by 2.2 percent on the quarter and 21.6 percent on the year, to US$25.3 billion (1.432 trillion rubles). The yearly increase in sales was mostly attributed to “the higher sales prices, as well as higher sales volumes of crude oil and refined products internationally resulting from the increase in trading volumes,” Lukoil said in its results release on Tuesday.

Earnings before interest, tax, depreciation, and amortization (EBITDA) rose by 13.3 percent sequentially and by 8.2 percent annually, to US$3.67 billion (207.6 billion rubles). The higher EBITDA in Q1 2017 was the result of growth of high-margin volumes in overall production, improvement in the refined product slate at refineries, and lowered selling, general, and administrative expenses. The ruble appreciation, higher excise taxes on refined products, and higher transportation tariffs partially offset the EBITDA result, Lukoil said.

Capital expenditures dropped by 6.8 percent on the quarter and rose 3.5 percent year-on-year. Lukoil’s free cash flow before changes in working capital was US$1.187 billion (67.1 billion rubles), up 16.8 percent on the year and up 74.8 percent quarter-on-quarter.

By Tsvetana Paraskova for Oilprice.com

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