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Transneft Publishes Condensed Consolidated Interim Financial Statements for 9 Months Ending 30 September 2020

Date of publication: 2 December 2020

Transneft, the world's largest oil pipeline company, has published condensed consolidated interim financial results under IFRS for 3Q 2020 and 9M 2020 in the For Investors and Shareholders section of its official website.

A significant impact on the negative dynamics of the financial and operational indicators of Transneft Group for 9 months of 2020 had a decrease in Russian oil production and, as a consequence, in transportation volumes via the Transneft system in the aftermath of the OPEC+ deal enacted from 1 May 2020.

Find below Transneft Group’s key performance indicators in 3Q 2020:

Crude oil transportation in 3Q 2020 declined by 21.3 MMT or 17% y-o-y, and by 3.4 MMT or 3% q-o-q, and amounted to 105.6 MMT.

Petroleum products transportation in 3Q 2020 declined by 0.1 MMT or 1% y-o-y and q-o-q, and amounted to 9.2 MMT.

The adjusted revenue of Transneft Group (excluding revenue from sales of commercial oil for export) reduced by RUB 39 billion or 17% y-o-y, mainly due to declining revenues from oil and petroleum products transportation services by RUB 32 billion and from stevedoring, additional port services and fleet services by RUB 3 billion. On q-o-q basis, the adjusted revenue declined by RUB 16 billion or 8%, mainly due to declining revenues from oil and petroleum products transportation services by RUB 13 billion and from stevedoring, additional port services and fleet services by RUB 2 billion.
Transneft Group's EBITDA decreased by RUB 36 billion or 28% y-o-y, and by RUB 23 billion or 20% q-o-q.

Profit attributable to the Transneft shareholders remained at the level of 3Q 2019 and amounted to RUB 38 billion, mainly due to the reserve for reimbursement to shippers of losses caused by the Druzhba pipeline incident reflected in 3Q 2019 in the amount of RUB 23 billion. On q-o-q basis, profit attributable to the Transneft shareholders increased by RUB 23 billion or by 2.5 times, mainly due to the loss from asset impairment associated with the under-capacity of some sections of petroleum product pipelines reflected in 2Q 2020 in the amount of RUB 21 billion.

The total debt as of 30 September 2020 was RUB 646 billion, or 1% higher than the same indicator on 31 December 2019.

Due to the decrease in Russian oil production and crude oil transportation via the Transneft system in the aftermath of the OPEC+ deal, the Company is implementing measures for additional cost reduction and postponement of part of the expenses to later periods. In the medium term, Transneft aims to maintain the same scope of technical revamping and facilities renovation works.

In September 2020, at the annual general shareholders’ meeting of the Company, a decision was made to allocate RUB 84 billion for the 2019 dividends, which is 8% higher than the dividends for 2018. Dividends were paid in November 2020.

For the detailed analysis of the Group’s financial standing and performance as well as its condensed consolidated interim financial statements in accordance with IFRS for 9 months ending 30 September 2020, see here and here.

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