Rosneft Swings To 2nd Quarter Net Loss Of RUB8 Billion

08/01/2012| 02:14pm US/Eastern

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--Rosneft falls to net loss of 8 billion Russian rubles in second quarter

--Company cites lower crude prices and higher taxes

--Analysts predicted profit of RUB32 billion

(Updates with analyst comments beginning paragraph six, adds net debt figures in paragraph 12)

 
   By James Marson 
 

MOSCOW--Russian state-controlled oil producer OAO Rosneft (>> Rosneft' NK OAO) Wednesday announced an unexpected second-quarter net loss of 8 billion Russian rubles ($248 million) on the back of lower crude prices, the ending of tax breaks for its giant Vankor field, and foreign exchange losses because of exchange rate volatility.

A Dow Jones Newswires survey of five analysts had forecast a net profit of RUB32 billion.

Rosneft Chief Executive Igor Sechin said in a statement that the results "reflect the current economic situation" and that the company had "launched efforts to improve our corporate structure and boost efficiency in marketing and procurement" in order to minimize the negative impact of external factors.

Rosneft, which said July 15 it is in talks with BP PLC (>> BP plc) to buy the U.K. major's stake in its troubled TNK-BP (>> TNK-BP Holding OAO) venture, also blamed higher transportation costs and the negative effect of a time lag in export duties for the net loss.

Rosneft has switched to International Financial Reporting Standards reporting in rubles from Generally Accepted Accounting Principles reporting in U.S. dollars in the second quarter of 2011. The company didn't provide adjusted figures for comparison. A year ago, Rosneft reported net profit of $2.83 billion.

"These are weak results," said Ildar Davletshin, an analyst at Renaissance Capital. "To report a loss is unexpected."

The company unusually reported its results at 1600 GMT after markets in London and Moscow had closed.

Ronald Smith, an analyst at Citigroup, said the weak results for the second quarter had been foreseen because of the lower oil price and time lag in taxation. "It's going to be tough for the whole industry," he said.

TNK-BP, Russia's No. 3 crude producer, last week reported a drop in net profit to $808 million from $2.19 billion one year earlier.

Rosneft's revenue for the second quarter of 2012 was at RUB718 billion, helped by increased sales volumes and higher prices for refined products. Analysts had expected revenue at RUB740 billion. Earnings before interest, taxes, depreciation and amortization, or Ebitda, was at RUB89 billion.

In the second quarter last year, Ebitda was at $5.33 billion and revenue was $23.3 billion.

The company said its net debt increased to RUB658 billion as of June 30 compared with RUB527 billion at the end of the first quarter, citing the ruble's depreciation against the dollar, the implementation of the company's corporate investment program and purchases of its own shares.

Rosneft said it produced 2.62 million barrels of oil equivalent a day during the quarter.

--Alexander Kolyandr contributed to this article.

Write to James Marson at james.marson@dowjones.com

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