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. Last Updated: 07/27/2016

Gazprom Posts 15% Profit Drop

Gazprom on Tuesday blamed low international gas prices for poor first-half results, which disappointed analysts who said they wanted more details from the world's largest gas company.

Gazprom said in a statement its net profit to international accounting standards fell 15 percent to 9.8 billion rubles ($310 million) in the first half from 11.5 billion in the same period of 2001.

Sales were down to 288.8 billion rubles from 377.8 billion rubles in the first six months of 2001.

"The change ... is mainly due to lower export prices for gas," the statement said. "This is first of all due to the price-setting mechanism typical of European consumers [excluding former Soviet states]."

The results had also been influenced by an adjustment for inflation for the corresponding period last year.

Gazprom first-half output rose to 302.741 billion cubic meters from 295.212 bcm in the same period last year. Exports, which account for about 75 percent of Gazprom's sales, were up 3.5 percent.

Domestic prices did not seem to have helped Gazprom despite state approval of a 20 percent tariff hike.

"We've only seen sketchy results but ... they're looking bad, very bad. They are below our expectations," said Paul Collison, an analyst at Brunswick UBS Warburg. "It looks like their pricing was much weaker than expected, and ... it looks like they have not done a good job on the costs side either."

Gazprom said operational costs fell to 216.1 billion rubles from 249.2 billion rubles for the same period last year.

Bulat Karimov, an analyst at Aton, said that for a clearer picture he needed to see what kind of noncash and nonmonetary items -- such as profit or loss from exchange rate differences and deferred taxes -- Gazprom would discount from its net profit.

He also said he wanted a breakdown of sales destinations to understand why figures were lower than expected.

Despite the poor set of results, Gazprom said it expected "a positive trend in financials in the interim financial report for the first nine months of 2002 and in the full 2002 report."