GAZPROM: 3Q 2018 IFRS RESULTS DECEMBER 3, 2018 1 3Q2018 IFRS RESULTS
Alexander Ivannikov Head of Department 2 3Q2018 IFRS RESULTS
DISCLAIMERS This presentation has been prepared by PJSC Gazprom (the “Company”), and comprises the slides for a presentation to investors concerning the Company. This presentation does not constitute or form part of any offer or invitation to sell or issue, or any solicitation of any offer to purchase or subscribe for, any shares or other securities representing shares in the Company, nor shall it or any part of it nor the fact of its presentation or distribution form the basis of, or be relied on in connection with, any contract or investment decision. Any viewer of this presentation considering a purchase of such securities is hereby reminded that any such purchase should be made solely on the basis of the information contained in the prospectus or other offering document prepared in relation thereto and will be subject to the selling restrictions set out therein. The information in this presentation should not be treated as investment advice. Care has been taken to ensure that the facts stated in this presentation are accurate, and that the opinions expressed are fair and reasonable. However, the contents of this presentation have not been verified by the Company. Accordingly, no representation or warranty, express or implied, is made or given by or on behalf of the Company or any of its members, directors, officers or employees or any other person as to the accuracy, completeness or fairness of the information or opinions contained in or discussed at this presentation. None of the Company or any of their respective members, directors, officers or employees nor any other person accepts any liability whatsoever for any loss howsoever arising from any use of this presentation or its contents or otherwise arising in connection therewith. The information in this presentation includes forward-looking statements, such statements may also occur during the Q&A session. These forward-looking statements include all matters that are not historical facts, statements regarding the Company’s intentions, beliefs or current expectations concerning, among other things, the Company’s results of operations, financial condition, liquidity, prospects, growth, strategies, and the industry in which the Company operates. By their nature, forward-looking statements involve risks and uncertainties, including, without limitation, the risks and uncertainties to be set forth in the prospectus, because they relate to events and depend on circumstances that may or may not occur in the future. The Company cautions you that forward looking statements are not guarantees of future performance and that its actual results of operations, financial condition and liquidity and the development of the industry in which the Company operates may differ materially from those made in or suggested by the forward- looking statements contained in this presentation. In addition, even if the Company’s results of operations, financial condition and liquidity and the development of the industry in which the Company operates are consistent with the forward-looking statements contained in this presentation, those results or developments may not be indicative of results or developments in future periods. The information and opinions contained in this presentation are provided as at the date of this presentation and are subject to change without notice. No person is under any obligation to update or keep current the information contained herein. By attending the presentation you agree to be bound by the foregoing limitations. 3 3Q2018 IFRS RESULTS
KEY HIGHLIGHTS: STRONG FINANCIAL RESULTS IN 3Q2018 Key fa fact ctor ors: s: • Seasonally weakest quarter in a year USD bn • Record high gas exports to Europe 40 +81% 35.7 • Gas, oil and oil products price growth 35 31.7 • High level of cost control, optimization 28.6 30 25.1 25.0 23.7 and prioritization of CAPEX schedule 25 21.5 19.8 • Ruble weakening 20 15 • Oil business growth 10 2016 1q17 2q17 3q17 2017 1q18 2q18 3q18 EBITDA LTM Key highl hlights: ights: • 3q18 EBITDA growth +86% y-o-y in Rubles (+62% in 9m18) 7 consecutive quarters of LTM EBITDA growth in dollar terms • Marginally positive Free cash flow RUB 3 bn * in 3q (vs. RUB -166* bn in 3q 2017), RUB 369 bn * in 9m (vs. RUB -53.2* bn in 9m 2017) • Reduction of leverage continues: Net debt * /EBITDA decreased to 0.9 q-o-q (1.0 in 2Q2018)* *Adjusted for bank deposits 4 3Q2018 IFRS RESULTS
KEY EVENTS AND MARKET ENVIRONMENT Market environment in 3q18 vs 3q17 USD/bbl USD/RUB 75.3 80 74.3 80 65.6 65.5 • Gas production increased by 7.2% YoY to 365 bcm as of 59.0 58.0 60 60 52.1 9M2018 50.9 40 40 • Exports to Europe increased by 6.7% YoY to 185.4 bcm 20 20 • Over 96% of the first phase of the Power of Siberia pipeline laid 0 0 Jan 3q17 3q18 3q17 3q18 2018 2018 • Offshore part of the TurkStream completed. BRENT URALS USD/RUB AVERAGE RATE - Gazprom and Turkey agreed on the onshore section of the USD/RUB AS OF THE END OF PERIOD Nov second string of the TurkStream 2018 2018 USD/mcm RUB/mcm • Germany, Sweden, Finland and Russia granted all required 250.8 3,831 3,692 250 4,000 approvals to build the Nord Stream-2 pipeline. More than 300 km of the pipeline built. 194.6 200 3,000 Financing was received from European energy companies 150 according to the agreements. 2,000 100 • Moody's and S&P upgraded Gazprom’s ratings to 1,000 50 investment grade 0 0 3q17 3q18 3q17 3q18 1 AVERAGE GAZPROM GAS SALES AVERAGE PRICE IN RUSSIA PRICE IN EUROPE & OC Source: Company data, Bloomberg, Bank of Russia website 1 OC - Other countries: including LNG sales 5 3Q2018 IFRS RESULTS
GAS SALES Russia Europe & OC 2 FSU RUB/mcm USD/mcm USD/mcm bcm bcm bcm 3,974 3,942 3,823 3,831 3,692 100 300 181 251 20 200 100 4000 238 165 232 157 155 219 149 250 80 195 15 150 75 3000 200 60 150 50 2000 10 100 88 40 73 72 100 14 68 57 57 55 11 25 1000 5 50 20 41 50 7 33 33 7 6 0 0 0 0 0 0 3Q17 4Q17 1Q18 2Q18 3Q18 3Q17 4Q17 1Q18 2Q18 3Q18 3Q17 4Q17 1Q18 2Q18 3Q18 VOLUMES AVERAGE PRICE IN RUSSIA VOLUMES AVERAGE PRICE IN EUROPE & OC VOLUMES AVERAGE PRICE IN FSU +5% +48% +48% +35% +35% RUB bn RUB bn RUB bn 758 729 111 400 800 351 674 653 91 288 100 300 600 494 69 56 51 200 158 400 128 121 50 100 200 0 0 0 3Q17 4Q17 1Q18 2Q18 3Q18 3Q17 4Q17 1Q18 2Q18 3Q18 3Q17 4Q17 1Q18 2Q18 3Q18 3,4 1 3,4 NET SALES TO FSU NET SALES TO RUSSIA NET SALES TO EUROPE & OC Calculations may differ due to rounding. 1 Net of value added tax (VAT) 2 OC - other countries: including LNG sales 3 VAT is not charged on export sales 4 Net of custom duties and excise tax on gas exports 6 3Q2018 IFRS RESULTS
OIL AND UTILITIES BUSINESS Net Sales 1 3Q2017 3Q2018 55% 54% CRUDE OIL AND GAS CONDENSATE; REFINED PRODUCTS GAS BUSINESS AND OTHER REVENUES 39% ELECTRICITY AND HEAT 6% 41% 5% Crude oil and gas condensate; refined products sales Electricity and heat sales +43 +43% +1 +1% RUB bn RUB bn 1,000 200 175 800 154 717 800 150 612 620 561 600 99 88 86 100 400 50 200 0 0 3Q2017 4Q2017 1Q2018 2Q2018 3Q2018 3Q2017 4Q2017 1Q2018 2Q2018 3Q2018 Calculations may differ due to rounding. 1 Net of value added tax (VAT), excise tax and custom duties. 7 3Q2018 IFRS RESULTS
SUMMARY OF 3Q2018 IFRS FINANCIAL RESULTS RUB bn 3Q2017 vs 3Q2018 RUB bn +7% +7% 2,300 +35% 5% 1,800 1,300 2,204 1,930 +86% +86% +93% +93% +19% +19 +137% 37% 800 664 664 300 403 403 386 386 401 401 3 -200 4, 5 1 2 3 5 5 Total net sales Adj. EBITDA Net profit Capex Adj. Operating Adj. FCF Adj. Net debt CF 1 EBITDA adjusted for changes in impairment provisions 5 In order to reflect the effects of the bank deposits (reported as part of Other current and 2 Profit for the period attributed to shareholders of PJSC Gazprom non-current assets). See page 14 3 Cash capital expenditures 4 Compared to Adj. Net debt as of December 31, 2017 8 3Q2018 IFRS RESULTS
9M2018 ADJUSTED FREE CASH FLOW BREAKDOWN * FCF adjusted ed for chang nges es in bank Reported as a part depos osit its remains ins positi tive e at of Changes in Changes in RUB 369 bn RU bn ($6 bn bn) in 9M2018 RUB bn working capital bank deposits 2,000 134 134 1,800 205 205 1,600 213 213 1,400 1,200 1,000 1,978 1,192 800 1,426 600 400 134 134 200 369 369 235 235 0 Net working OCF before Adjustment for capital and Tax paid OCF FCF FCF working capital Capex increase in operating items reported reported adjusted changes ST deposits changes * Free Cash Flow adjusted for changes in the ST bank deposits 9 3Q2018 IFRS RESULTS –
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