REUTERS
Low demand, gas prices, and bad debts were behind such results, the company says.
National Joint-Stock Company Naftogaz of Ukraine says it received UAH 19 billion (US$684.2 million) in losses in 2020 against UAH 2.6 billion (US$93.6 million) in net profit in 2019.
"For the full year, reported loss was UAH 19.0 billion, compared with a profit of UAH 2.6 billion for 2019, reflecting lower demand and gas prices, and material provisions for bad debts," the company's press service said in a statement on April 27.
Read alsoNatural gas suppliers publish annual prices for households in Ukraine from May 1
The underlying profit in 2020, excluding provisions for bad debts and other unusual items, was UAH 3.2 billion (US$115.3 million). Reported losses for the fourth quarter (Q4) of 2020 were UAH 2.0 billion (US$72 million), compared with UAH 10.3 billion (US$370.9 million) in losses in Q4 2019, the report said.
In the period before the gas market was launched in Ukraine on August 1, the intermediaries supplying gas failed to pay the company for gas supplies on time, which resulted in UAH 23.2 billion (US$835.4 million) in bad debts, which, in turn, affected the profitability and operating cash flow, the press service said.
"Despite a challenging environment with low prices and demand, we are showing a robust underlying performance after our swift and decisive action to reduce operating costs and capital expenditure. Gas customers not paying for deliveries negatively impacts our bottom line. Our operating cash flow is strong and we remain focused on capital discipline. We continue to strengthen the efficiency of our operations," the press service quoted Naftogaz Chief Financial Officer Peter van Driel as saying.
In 2020, the Naftogaz Group paid UAH 39.6 billion (US$1.4 billion) in dividends and UAH 8.5 billion (US$306.1 million) in interim dividends in 2019.
The Naftogaz group of companies in the first half of 2020 posted UAH 11.5 billion (US$414.1 million) in net losses against UAH 24.7 billion (US$889.4 million) in net profit year-over-year (y-o-y).
The day before the disclosure of information on losses, Naftogaz raised the wholesale price of natural gas for heat producers, to whom it supplies gas under Ukraine's public service obligations (PSOs), to UAH 5,183 (US$186.64) per cubic meter, which was 45% up against the price set in the previous month.
The rise in gas prices for heat producers, who are obliged to buy gas exclusively from Naftogaz until May 1, 2021, will surely lead to an increase in heating and hot water tariffs.
The Naftogaz Group for the nine months of 2020 posted UAH 17 billion (US$612.2 million) in net losses against UAH 12.9 billion (US$464.5 million) in net profit y-o-y.