Ukrainian Naftogaz: Net profit down 70% in 2018

Kiev, June 28 - Neftegaz.RU. According to Ukrainian Unian, Naftogaz of Ukraine in 2018 received UAH 11.6 billion ($0.4 billion) of net profit, which is 70% lower than the figures recorded for 2017, the company press service wrote with reference to independent auditors from Deloitte.

"In 2018, Naftogaz generated revenues of UAH 256.3 billion ($9.3 billion), operating profit of UAH 26.4 billion and net profit of UAH 11.6 billion ($0.4 billion). The group's net profit has decreased by UAH 27.9 billion compared to 2017, mostly due to the effects of reflecting the Stockholm arbitration decisions in both 2017 and 2018," the report says.

In 2017, Naftogaz recognized UAH 12.6 billion of net positive effect of the Stockholm arbitration decisions on the group’s operating profit. In March 2018, Naftogaz recognized expenses of UAH 4.8 billion related to the additional VAT paid by the group in relation to the awards. The transit contract arbitration award resulted in UAH 43.9 billion inflows from Naftogaz to the state budget of Ukraine in 2018.

In addition to the one-off effects of the arbitration awards, the following factors have influenced the group’s results for 2018. The allowance for impairment of receivables increased by UAH 7.0 billion compared to 2017 due to a weaker collection of payments for balancing services.

The group has also recognized expenses amounting to UAH 10.6 billion related to the adoption of the IFRS 9 standard and to creation of a litigation reserve. "The auditor made no qualifications regarding Naftogaz’ financial data for 2018," the statement notes. "In 2018, the companies consolidated within Naftogaz group contributed UAH 138.6 billion ($5 billion) to the state budget, having accounted for nearly 19% of the Ukrainian budget revenues (UAH 110.0 billion and 15% in 2017, respectively)."

This amount includes UAH 29.5 billion of dividends paid by Naftogaz as a 100% state-owned company (2017: UAH 13.3 billion). As UNIAN reported earlier, Naftogaz of Ukraine in 2017 received UAH 39.4 billion of net profit, which is 2.2 times more than the figure for 2016. The victory in the arbitration proceedings vs Gazprom became the main factor in the group's profitability in 2017.