Russia’s Gazprom posts first annual loss in 20 years as sales to Europe collapse

Moscow — Kremlin-owned gas giant Gazprom plunged to a net loss of 629 billion rubles ($6.9 billion) in 2023, its first annual loss in more than 20 years, as sales to Europe plummeted in the wake of Russia’s war in Ukraine.

The earnings, announced Thursday, highlight the dramatic decline of Gazprom, one of Russia’s most powerful companies.

Analysts had expected net income of 447 billion rubles ($4.9 billion) in 2023, according to Interfax news agency. The company made a net profit of 1.2 trillion ($13.1 billion) rubles in 2022, the year Russia launched its full-scale invasion of Ukraine.

According to Reuters’ analysis, it was Gazprom’s first annual loss since the late 1990s or early 2000s, around the time Alexei Miller, an ally of President Vladimir Putin, took over the company in 2001.

The company, now headquartered in St. Petersburg, made heavy losses in the late 1990s after it racked up foreign-currency debt, inflated in ruble terms by the financial crisis of 1998.

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Russia’s gas exports to Europe, once its primary export market, have slumped largely because of the political fallout from the conflict in Ukraine. Gazprom, which enjoys a monopoly on piping gas abroad and has an oil unit, has also been the highest-profile target of sweeping Western sanctions.

According to Reuters’ calculations, the company’s natural gas supplies to Europe plummeted 55.6% to 28.3 billion cubic meters last year.

Gazprom has not published its own export statistics since the start of 2023.

The company’s core profit, or earnings before interest, taxes, depreciation and amortization known as EBITDA, dropped to 618.38 billion rubles ($6.7 billion) last year from 2.79 trillion rubles ($30.4 billion) in 2022, according to Reuters’ calculations.

The EBITDA was the worst in 22 years, said Ronald Smith from Moscow-based brokerage BCS Global Markets

SOURCE: CNN