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Financial results for Q4 2015 and 12M 2015
31 March 2016- 17.8% growth in EBITDA to RUB 1,245 bln and an improvement in EBITDA margin achieved on the back of cost control and saving program
- Keeping low operating expenses at 159 RUB/boe in conditions of 10.7% growth in producer price index in 12M 2015
- 2.0% increase in net income up to RUB 355 bln in 2015
- Decrease in net debt by 47.0% to USD 23.2 bln in 2015
Consolidated IFRS financial results for Q4 2015 and 12M 2015:
| 12M 2015 | 12M 2014 | Change, % | Q4 2015 | Q3 2015 | Change, % | |
|---|---|---|---|---|---|---|
| Financial results | RUB bln (except %) | |||||
| Total revenues and equity share in profits/(losses) of associates and joint ventures | 5,150 | 5,503 | (6.4)% | 1,196 | 1,296 | (7.7)% |
| EBITDA | 1,245 | 1,057 | 17.8% | 278 | 297 | (6.4)% |
| EBITDA margin | 24.2% | 19.2% | 5.0 p | 23.2% | 22.9% | 0.3 p. |
| Net income attributable to Rosneft shareholders | 355 | 348 | 2,0% | 53 | 112 | (52,7)% |
| Net income margin | 6.9% | 6.3% | 0.6 p | 4.4% | 8.6% | (4.2) p |
| Free cash flow1 | 657 | 596 | 10.2% | 140 | 177 | (20.9)% |
| Upstream operating expenses/boe | 159 | 147 | 8.2% | 165 | 156 | 5.8% |
| USD bln2 (except %) | ||||||
| Total revenues and equity share in profits/(losses) of associates and joint ventures | 86.9 | 146.7 | (40.8)% | 18.6 | 21.1 | (11.8)% |
| EBITDA | 20.8 | 29.0 | (28.3)% | 4.3 | 4.7 | (8.5)% |
| Net income attributable to Rosneft shareholders | 6.1 | 9.3 | (34.4)% | 0.8 | 1.8 | (55.6)% |
| Gross debt | 45.6 | 60.5 | (24.6)% | 45.6 | 47.5 | (4.0)% |
| Net debt | 23.2 | 43.8 | (47.0)% | 23.2 | 24.5 | (5.3)% |
| Free cash flow | 12.2 | 15.8 | (22.8)% | 2.5 | 3.0 | (16.7)% |
| For reference | ||||||
| Average Urals price, USD per bbl | 51.4 | 97.6 | (47.3)% | 41.9 | 49.4 | (15.1)% |
| Average Urals price, th.RUB per bbl | 3.14 | 3.75 | (16.3)% | 2.76 | 3.11 | (11.1)% |
1 Excluding the effect of interest expense and one-off effect from prepayments under long-term supply oil agreements.
2 Calculated using average monthly Central Bank of Russia exchange rates for the reporting period. Gross debt and net debt are estimated using the closing exchange rate of Central Bank of Russia as of December 31, 2015, December 31, 2014 and September 30, 2015, respectively.
Commenting the results for 12M 2015, I.I. Sechin, Chairman of Rosneft Management Board, said:
“The company continues to improve its efficiency responding to the challenges of the global market. In Q4 2015 upstream operating expenses per boe and maintenance expense of the Russian refinery in RUB terms slightly increased in comparison with Q4 2014, despite of the growth in industry prices by 10.7%. Increase in earnings before interests, tax and depreciation by 17.8% in 2015, in terms of significant decline in RUB and USD denominated oil prices show an effective control over operating costs that allowed the Company to reduce its debt burden considerably, significantly increasing the sustainability of the business in challenging macroeconomic environment”
Financial performance
Total revenues and equity share in profits/(losses) of associates and joint ventures
In 12M 2015 revenue amounted to RUB 5,150 bln (USD 86.9 bln), declining by 6.4% compared to 12M 2014. Despite deteriorating market environment the Company increased high-margin sales volumes of crude oil to eastern direction (+18.5%), increased sales volumes of gas (+3.8%) and petroleum and petrochemical products (+1%). Rosneft managed to reduce the negative impact of decline in crude oil prices by 16.3% in RUB terms and 47.3% in USD terms.
In Q4 2015 revenue amounted to RUB 1,196 bln (USD 18.6 bln), declining by 7.7% compared to Q3 2015 due to decline in oil prices in RUB terms and decrease in sales volumes of petroleum products.
The Company is fully complied with obligations under long-term supply oil agreements and over-fulfills obligations for petroleum products sales in domestic market. The output of Euro 4/5 motor fuels in Russia increased by 30% compared to 2014.
EBITDA
Increased control over expenses resulted in growth in earnings before interests, tax and depreciation (EBITDA) by 17.8% to RUB 1,245 bln (USD 20.8 bln) in 12M 2015 compared to 12M 2014. Higher EBITDA y-o-y was achieved despite of negative impact from tax maneuver (RUB -71 bln) and lower oil prices, which was just partially offset by RUB/USD exchange rate changes. Control over expenses, effective management of sales structure, improvement in quality of petroleum products basket and decrease in a negative effect of export duty lag contributed to EBITDA growth.
Thanks to management efforts upstream operating expenses per unit in 2015 amounted to 159 RUB/boe (2.6 USD/boe) which is the lowest cost in industry. Output of light petroleum products increased from 54.8% up to 55.3% in 2015 and oil refining efficiency increased from 65.3% to 66.5% in 2015 due to the increase in vacuum gasoil production and optimization of accompanying processes.
EBITDA decreased by 6.4% up to RUB 278 bln (USD 4.3 bln) in Q4 2015 compared to Q3 2015 due to accelerating decrease in oil prices (-11.1% in RUB terms). In 2015 the level of EBITDA margin increased up to 24.2% thanks to decrease in negative effect of export duty lag.
Net income attributable to Rosneft shareholders
In terms of challenging macroeconomic environment net income amounted to RUB 355 bln, increasing by 2.0% compared to 12M 2014 enhancing the base for dividend payment.
Capital investments
In 12M 2015 capital expenses amounted to RUB 5951 bln (USD 9.7 bln) which is 11.6% up compared to 2014. Increase in capital expenses was due to increased investments in Brownfields and Greenfields to ensure high rate of production in the future. Given the volatility of the external environment and limited sources of funding the Company optimized investment program of 2015 keeping the strategic goals unchanged and preventing the decline of the total hydrocarbon production level.
Upstream capital expenses per unit amounted to 261 RUB/boe (4.3 USD/boe ) in 2015.
In Q4 2015 capital expenses seasonal increase amounted to 32.9% up to RUB 186 bln (USD 2.8 bln) compared to Q3 2015.
Free cash flow
Maximization of profit at operational level and efficient working capital management limited the cash flow (excluding prepayments) decline to 26.3% in USD terms in 12M 2015 despite of 47.3% drop in oil prices. Generated cash flow provides sources for dividend payments, reduction of debt burden and provision of required liquidity level to finance the investment program.
Debt burden
In 2015 net debt was down by 47.0% in USD terms and amounted to USD 23.2 bln as of the end of the year. The reduction was due to repayment of a substantial part of short-term debt as a result of stable operating cash flow generation, prepayments under long-term oil supply contracts.
Despite challenging market environment the financial position of the Company remains stable with Net Debt/EBITDA ratio at level of 1.12 in USD terms as at the end of 2015.
Rosneft Information Division
tel.: +7 (495) 411 54 20
fax: +7 (495) 411 54 21
March 31, 2016
1 Investment volume including equity project financing exceeded RUB 600 bln
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.