State-owned Russian gas firm Gazprom saw its net profits drop a hefty 70 percent last year, according to Russian Accounting Standards. As Bloomberg reports, that’s bad news for the company’s investors:
Net income according to Russian accounting standards sank to 189 billion rubles from 628 billion rubles a year earlier, Gazprom said Monday in a regulatory filing. That may translate into a payout of about 2 rubles a share, compared with 7.2 rubles a year earlier as the Moscow-based company usually pays out 25 percent of domestic profit. […]The government in Moscow, Gazprom’s controlling shareholder, estimates its dividend may drop to about 5.2 rubles a share, according to the country’s revised budget submitted to the parliament March 16. The company may see dollar revenue in Europe sink to the lowest in a decade this year, according to a February government forecast.
Gazprom bought shares in the now-defunct South Stream pipeline, and a large offshore gas project in the Barents Sea also went belly-up. All in all, 2014 was not a good year for the firm, and 2015 doesn’t look much better. A weak ruble isn’t helping Gazprom’s situation, either, and its investors are being treated to lower dividends as a result.So much is made about Europe’s dependence on Gazprom for natural gas, and that’s as true today as it was before these profit numbers were released. But what these data do show is that the Russian firm needs its European customers, and must be sweating bullets as Western policymakers work to find ways to diversify away from Gazprom. Moscow is making contingency plans with its huge new contracts with China, but it will take time to build the necessary pipelines to start eastward gas flows.And in the meantime, Gazprom looks set to continue to struggle.