22 Feb 2017 07:03
Financial results for 4Q and 12M of 2016*
· EBITDA growth by 25% to RUB 365 bln in 4Q 2016
· EBITDA margin improvement by 0.7 p.p. in 4Q 2016 with annual profitability reaching 25%
· Doubling net income to RUB 52 bln in 4Q 2016
· Maintaining adequate financial leverage: 1.5x Net Debt / EBITDA in USD terms with Bashneft consolidation
· Solid upstream cost control (RUB 163/boe in 2016) excl new acquisitions' effect
· Positive free cash flow for last 19 quarters despite the worst annual crude oil RUB price in 5 years
Consolidated IFRS financial results for 4Q and 12M of 2016:
| 4Q 2016 | 3Q 2016 | Change, % | 12M 2016 | 12M 2015 | Change, % |
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Financial results | RUB bln (except %) |
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Revenues and equity share in profits of associates and joint ventures | 1,485 | 1,223 | 21.4% | 4,988 | 5,150 | (3.1)% |
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EBITDA | 365 | 292 | 25.0% | 1,278 | 1,245 | 2.7% |
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EBITDA margin | 24.0% | 23.3% | 0.7 p.p. | 25.0% | 23.8% | 1.2 p.p. |
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Net income attributable to Rosneft shareholders | 52 | 26 | 100% | 181 | 355 | (49.0)% |
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Net income margin | 3.5% | 2.1% | 1.4 pp | 3.6% | 6.9% | (3.3) pp |
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Adjusted operating cash flow | 259 | 251 | 3.2% | 1,011 | 1,339 | (24.5)% |
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Capital expenditures | 234 | 167 | 40.1% | 709 | 595 | 19.2% |
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Free cash flow (RUB equivalent) | 25 | 84 | (70.2)% | 302 | 744 | (59.4)% |
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Upstream operating expenses/boe1 | 170 | 164 | 3.7% | 163 | 159 | 2.5% |
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USD bln2 (except %) |
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Revenues and equity share in profits of associates and joint ventures | 24.1 | 19.4 | 24.2% | 77.2 | 86.9 | (11.2)% |
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EBITDA | 5.8 | 4.5 | 28.9% | 19.3 | 20.8 | (7.2)% |
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Net income attributable to Rosneft shareholders | 0.8 | 0.4 | 100% | 2.8 | 6.1 | (54.1)% |
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Adjusted operating cash flow | 4.1 | 3.9 | 5.1% | 15.2 | 21.9 | (30.6)% |
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Capital expenditures | 3.7 | 2.6 | 42.3% | 10.7 | 9.7 | 10.3% |
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Free cash flow | 0.4 | 1.3 | (69.2)% | 4.5 | 12.2 | (63.1)% |
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Upstream operating expenses/boe1 | 2.7 | 2.5 | 8.0% | 2.5 | 2.6 | (3.8)% |
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For reference |
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Average Urals price, USD per bbl | 48.3 | 44.0 | 9.7% | 42.1 | 51.4 | (18.2)% |
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Average Urals price, th. RUB per bbl | 3.05 | 2.85 | 7.0% | 2.82 | 3.14 | (10.0)% |
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* Data are presented including Bashneft consolidation in 4Q 2016 (unless otherwise stated)
1 Net of the effect of Bashneft consolidation
2 Calculated using average monthly Central Bank of Russia exchange rates for the reporting period
Commenting the results for 4Q 2016, Rosneft Chief Executive Officer Igor Sechin said:
"Rosneft 4Q 2016 financial results were impacted by a series of market-moving events. The execution of the Government decree on the Company privatization led one of the largest international investment fund, Qatar Investment Authority and a major oil trading company, Glencore to become Rosneft's shareholders. The Company also acquired control of Bashneft. The strategic partnership with new shareholders offers the opportunities in the global trading of hydrocarbons and other projects' development. The seasonality patterns in the investment program take into account, resulting in the growth of capital expenditures by 40.1% q-o-q. 2016 Upstream capex increased by more than one-third y-o-y, or in line with our targets. A 10% oil price growth, efficient cost control and production increase led to EBITDA growth by 25% and a twofold net income increase in 4Q 2016 vs. 3Q while maintaining positive free cash flow. The Company proceeds with the efficient integration of the new assets. We expect to realize the synergy at about RUB 40 bln this year."
Financial performance
Revenues and equity share in profits of associates and joint ventures
4Q 2016 revenues increased by 21.4% and amounted to RUB 1,485 bln (USD 24.1 bln) with a 7.0% oil price growth in RUB terms. The efficient marketing and Bashneft consolidation supported positive revenues dynamic.
Despite a 10% decline in average RUB oil pricing, revenue decreased by only 3.1% in 2016.
EBITDA
Oil price recovery and positive effect from export duty lag contributed to EBITDA increase by 25% to RUB 365 bln in 4Q 2016. EBITDA organic growth (excl Bashneft consolidation impact) was at 15.1% in 4Q 2016.
EBITDA amounted to RUB 1,278 bln (USD 19.3 bln) in 12M 2016, rising by 2.7% y-o-y. Excluding Bashneft consolidation impact, EBITDA remained flat year-on-year (+0.3%) despite a significant negative impact from the external factors: lower oil pricing - RUB 30 bln, additional tax burden mainly related to the tax maneuver - RUB 165 bln. Strong upstream cost control (RUB 163/boe, excl. new acquisitions) make a material contribution to the financial performance of the Company.
4Q EBITDA margin improved by 0.7 p.p. to 24% with 2016 EBITDA margin reaching 25%.
Net income attributable to Rosneft shareholders
Net income attributable to Rosneft shareholders doubled to RUB 52 bln in 4Q 2016 driven by improvement in operating profit. Adjusted net income (net of one-offs and FX) amounted to RUB 113 bln in 4Q 2016 vs RUB 93 bln in 3Q 2016.
Net income is the base for the dividend payments. The approved changes in the Company's dividend policy assume the dividends payments at least twice a year. Therefore, this year dividend payments might include not only the distribution of 2016 profit, but also interim dividends for 2017.
Capital expenditures
Taking into account the seasonality, capital expenditures increased by 40.1% in 4Q 2016. The growth in spending reached 19.2% in 2016 mainly driven by the development of the greenfields and the fields infrastructure construction, including the large-scale oil treatment facility construction at the Russkoe field, building the pipeline from the Srednebotuobinskoe field and launching the 1st oil treatment unit at the Suzun field and the Suzun-Vankor pipeline.
Free cash flow
Despite significant capex increase, EBITDA growth and the efficient working capital management allowed sustaining the free cash flow generation, remaining positive during last 19 quarters.
Net debt / EBITDA
The Company maintains an adequate level of financial leverage. As of the end of 2016 Net debt / EBITDA ratio remained flat at 1.5x3 in USD term (including Bashneft consolidation). Improved operating efficiency and synergy effect from the new assets integration secures the fulfillment of all obligations resulted from the strategic acquisitions.
3 Calculated based on 2016 Bashneft results
Rosneft Information Division
Tel.: +7 (495) 411 54 20
Fax: +7 (495) 411 54 21
February 22, 2017
These materials contain statements about future events and expectations that are forward-looking in nature. Any statement in these materials that is not a statement of historical fact is a forward-looking statement that involves known and unknown risks, uncertainties and other factors which may cause actual results, performance or achievements expressed or implied by such forward-looking statements to differ. We assume no obligations to update the forward-looking statements contained herein to reflect actual results, changes in assumptions or changes in factors affecting these statements.