RusEnergy

The company's figures for the third quarter of 2004 offer hope for high dividends, experts say

LUKoil achieved its best ever financial performance in the third quarter of 2004. It posted figures for July-September and January-September 2004 on Tuesday, reporting a record high net profit of $1.4 billion for the third quarter. Revenue data also beat expectations, and costs were stable. LUKoil has even got some spare cash, something that has not happened for a long time. Though, half of this success should be attributed to high oil prices, not the company's management. LUKoil reported a further rise in transportation costs, now accounting for more than 50 percent of total expenses, taxes not included. The company does not expect a turnaround before the end of 2005. However, this is unlikely to prevent YUKOS from paying high dividends for 2004. Analysts say LUKoil shareholders could receive RUR 25 to RUR 27.5 per share. LUKoil's net profit for January-September 2004, calculated in accordance with US GAAP, rose 1 percent on the year to $3.095 billion, while revenue for the nine months of 2004 jumped 50 percent to $24.431 billion. The company's Q3 revenue was up from $6.014 billion to $9.822 billion, and its net profit jumped from $701 million to $1.399 billion. Crude output in January-September climbed 8.2 percent to 64.1 million tons, and the production of oil products was 30.4 million, up from last year's 29.4 million. LUKoil's crude exports increased 25 percent to 34.6 million tons, and its export of oil products rose 7.3 percent to 11 million tons. Domestic retail sales of oil products increased 175,000 tons, or 9.3 percent on the year. LUKoil's capital costs in January-September rose 7.4 percent to $2.242 million. The company's financial performance in the third quarter of 2004 beat expectations. Its net profit remained almost unchanged but this is due to the 2003 sale of LUKoil's share in the Azeri project Azeri-Chirag-Guneshli. Without regard to this deal, LUKoil's net profit jumped 72 percent compared with the same period of 2003. "The results were even better than we expected, which is due to a higher revenue," Zarko Stefanovsky, analyst at ATON, told RBC Daily.

Small Rain Lays Great Dust: Lukoil

12.01.2005 12:05 [Neftegaz.ru] Russian oil giant Lukoil posted a 1% rise in net profit for the first nine months of 2004 despite a 50.1% jump in sales. Using US accounting norms, Lukoil reported net profit for the first three quarters of 2004 of 3.095 billion dollars compared with 3.065 billion for the same period in 2003. It said that in 2003 it had benefited from a 1.130-billion-dollar gain from the exceptional sale of a 10% interest in a project in Azerbaijan, which boosted its results for that year. The company said it had sales of 24.431 billion for the first nine months of 2004, surging 50.1% from the 16.274 billion euros recorded in the same period in 2003He stressed that LUKoil had achieved its best quarterly performance in the third quarter. "Net profit beat expectations," agrees Alexander Razuvayev at Megatrastoil. Though, half of this rise was due to high oil prices, not to effective management. The average price of Brent crude was up 43 percent on the year, and it was 17 percent higher compared with the second quarter of 2004. Prices for Urals and Med crude climbed 35 and 14 percent, respectively. "Most likely, LUKoil's financial performance in the fourth quarter will be weaker," says Alexander Mikhailov of GUTA Bank. For their part, LUKoil officials admitted that the impressive performance reflected not only favorable economic conditions, but also slow wage rises. Stefanovsky at ATON agrees: "It is good that the company's capital costs almost did not rise compared with the corresponding period last year. LUKoil reduced costs for Caspian region, but this is not too bad; its costs in the area are highly volatile." Thanks to reductions in working capital and capital investment, the oil company achieved positive cash flows. "Despite its high profits in 2003-2004, LUKoil used all operational cash flows for capital investment and acquisitions (at the same time paying comparatively high dividends of 20-25 percent). Though LUKoil's investments helped raise its market value, the market will welcome LUKoil's spare cash," Stefanovsky said. As for the company's Q3 transportation costs, they were lower than in the previous quarter. But LUKoil managers said it was due to changes in the cost basis. In the first nine months of 2004, the company's transportation costs climbed 40 percent. "I would not be overly optimistic about it. Some improvement could be expected by the end of 2005, due to putting into operation new pipeline facilities,- says Andrei Gaidamaka, LUKoil's director for strategic planning and investment analysis. However, this is unlikely to prevent the company from paying high dividends for 2004. "We might expect a reduction in dividend payments for 2004 compared with the previous year, when the company sold a large stake in the Azeri project Azeri-Chirag-Guneshli. But we expect LUKoil to pay dividends at the same level as last year,- Megatrastoil's Razuvayev said. "The company paid RUR 24 per share for 2003, and it could pay RUR 25 to RUR 27.5 for 2004." "We can expect that LUKoil will pay some $700 million in dividends, or about $0.9 per share,- Lev Snykov, analyst with investment company Sovlink, told RBC Daily. http://www.rbcnews.com/komment/komment.shtml