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. Last Updated: 07/27/2016

LUKoil Profits Lower Than Expected

bloombergWorkers operating machinery at a LUKoil field in east Siberia. A rise in income was partly put down to hikes in output.
LUKoil reported a 16 percent rise in its 2006 net profits on Tuesday due to increased production, but the figure slightly missed a forecast by analysts.

The company said its profits rose to $7.48 billion from $6.44 billion in 2005. Analysts had expected the firm to report a profit of $7.87 billion.

Revenues rose 21 percent to $68.11 billion -- in line with the forecast -- on the back of stronger oil and gas output, which LUKoil said had risen by 12.2 percent last year to 2.15 million barrels of oil equivalent.

"The increase in net income was due to favorable market conditions, increases in hydrocarbon production and refinery throughputs, cost control and refining margins growth," said LUKoil, which is 20 percent controlled by U.S. ConocoPhillips.

"The net income growth was held back by strengthening of the ruble against the dollar and growth of the tax burden. The company's tax expenses totaled $24.4 billion, up 30.4 percent year on year," LUKoil said in a statement.

It also said earnings before interest, tax, depreciation and amortization rose 18 percent to $12.3 billion, slightly missing a forecast of $12.62 billion.

"We think the results came weaker than expected due to a significant increase in quarterly selling, general and administrative expenses and operating expenses costs," said Igor Kurinny from ING Bank.

Also Tuesday, LUKoil deputy CEO Leonid Fedun said the company's new refinery projects in the Middle East and Asia might make the oil-product market larger than crude oil trading as early as 2015.

"Colossal capacity" is being built, with combined throughput of about 6 million barrels per day, Fedun said. The new capacity will force some companies to sell their refineries, if they cannot get enough crude.

Reuters, Bloomberg