Yukos Beats Expectations With $995M Quarter

Top oil producer Yukos posted forecast-beating second-quarter profits Monday, and analysts said increased exports helped counteract higher tariffs and a quarterly decline in oil prices.

Net profit rose 25 percent from the second quarter 2002 to $955 million, beating a consensus forecast of $871 million. A decline of 25 percent from $1.27 billion in the first quarter was less than expected.

"These are good, strong results. They exceeded our EBITDA [earnings before interest, tax, depreciation and amortization] forecast by 9 percent and our net profit forecast by 22 percent," Deutsche Bank analyst Leonid Mirzoyan said.

"This is due mainly to higher revenues, which increased with higher export sales and sales prices [of oil products]."

Yukos, which has largely completed a merger with smaller rival Sibneft, may be a takeover target for U.S. major ExxonMobil.

Russian officials have said the two sides are in talks, though the company has not commented.

Yukos said international sales of oil and oil products rose 41 percent on the year to 15.6 million metric tons.

Yukos stock, however, closed down 1.4 percent at $15.63.

"The key factor for Yukos right now is a potential deal to sell a stake to a big Western company, not its fundamentals," one trader at a Russia-dedicated fund said.

"It's also risen faster than other shares in the sector and is trading fairly high."

In the second quarter to June 30 Yukos was expected to take a double blow, as oil prices fell from the previous quarter, depressing revenues, and as export tariffs rose.

That was expected to produce a sequential quarterly decline on all headline numbers.

However, Yukos outdid expectations by containing costs and posting EBITDA of $1.24 billion, where analysts had expected them to be roughly flat year on year at $1.06 billion. First-quarter 2003 EBITDA was $1.66 billion.

"Management has been able to counteract a rise in uncontrollable expenses, [transport costs, power tariffs and export tariffs] with control of operating costs for extraction and refining," Pavel Kushnir of United Financial Group said.

Revenues came in at $3.83 billion, compared with a forecast of $3.57 billion. That marked a 2 percent quarter-on-quarter decline and a 50 percent rise from a year earlier.