Higher-Than-Expected Costs
Hit Yukos Results in Quarter
By GEOFFREY T. SMITH
DOW JONES NEWSWIRES
MOSCOW -- Russia's largest oil producer, OAO Yukos, dealt investors a blow Monday, saying higher-than-expected costs resulted in a shortfall for fourth-quarter operating profit.
Yukos, which initiated Russia's largest-ever corporate takeover last month with its agreed acquisition of rival OAO Sibneft, nonetheless met forecasts for net profit by booking a one-time gain.
Net income for the fourth quarter was $988 million, compared with $423 million in the year-earlier period. For the full year, net income was $3.06 billion, compared with $3.16 billion in 2001. Both results were broadly in line with analysts' forecasts, but earnings before interest, taxes, depreciation and amortization fell short. Full-year Ebitda was $3.99 billion, compared with analysts' forecasts for $4.34 billion.
Analysts noted that the company only made good on its guidance by booking a non-cash deferred tax gain -- it revised down estimates of how much tax it would have to pay on behalf of its foreign subsidiaries.
"If this isn't good old-fashioned financial engineering, I don't know what it is," said Steven Dashevsky, chief strategist with Aton Capital in Moscow, calling the figures "the worst disappointment in years" from the company.
Yukos' American Depositary Receipts ticked up 2.4% after the announcement, but later fell back to close 0.4% lower at $189.25.
The investment community has long touted Yukos as the model of all that Russian capitalism can be, and Mr. Dashevsky conceded that investors may have allowed themselves to get carried away with their own optimism. "People have gotten used to a no-clouds horizon," he said. "You could be as optimistic as you wanted and still not have risked much."
Increased lifting and transportation costs, as well as higher electricity prices and wages, combined to offset the effect of strong crude prices in the fourth quarter. While revenues broadly matched expectations, lifting costs rose to $1.67 a barrel from $1.45 a barrel in the previous quarter.
There is a strong seasonal element in such calculations, and Yukos noted that its fourth-quarter costs were still down 7.2% from a year earlier. However, given that production rose over 20% in the same time frame, analysts had expected a better performance.
Operating expenditures in the quarter rose 61% from a year earlier, compared with production growth of 24% in volume terms.
Analysts said the company will have the chance to make up for any disappointment Tuesday with the planned announcement of an extraordinary dividend related to the Sibneft merger. The dividend, which is part of a plan to reduce excess cash and create a moderate degree of leverage on the new company's balance sheet, will be paid out of a cash pile in excess of $4 billion.
Write to Geoffrey T. Smith at geoffrey.smith@dowjones.com1 |
