OREANDA-NEWS. August 16, 2011. NOVATEK reported its 2Q11 financial results which came in slightly above consensus. Revenue increased 46% YoY to RUB40.5bn on the back of higher gas, condensate and LPG prices and an increase in sales volumes. The reason behind the QoQ deterioration in the financials was a seasonal drop in gas demand, which was expected by the market. 

EBITDA increased by 30.9% YoY to RUB19.8bn, lagging revenue growth due to increased expenses related to purchases of natural gas and liquid hydrocarbons (USD 932mn in 2Q11 vs USD 21mn in 2Q10), net impairment expenses (USD 619mn in 2Q11 vs USD 9mn in 2Q10) and taxes other than income tax (plus79% YoY). The growth in taxes was the result of a 61.2% MET increase that came into force on 1 Jan 2011.

Net income grew by 29% YoY but decreased 23.5% QoQ to RUB14.4bn, mainly reflecting a 69% reduction in interest income and 88% growth in the share of losses in equity investments for the same period.

Bottom line

We expect the results to have no impact on the stock as the numbers only slightly exceeded market expectations.