March 7, 2022 [Bloomberg] – Last year’s net income rose 50-fold to 773 billion rubles. Higher free cash flow could signal hike in shareholder returns.
Lukoil PJSC reported its highest annual net income in at least seven years following a surge in energy prices.
Russia’s second-largest oil producer follows domestic rivals Rosneft PJSC and Gazprom Neft PJSC in reporting strong earnings, signaling a potential hike in shareholder returns. Robust results were also supported by higher output after OPEC+ eased production curbs.
Lukoil’s net income reached 773.4 billion rubles ($6.9 billion) in 2021, 50 times more than the previous year. Fourth-quarter profit was 233.8 billion rubles, a record high, the company said in an earnings report Wednesday, a day earlier than planned.
Free cash flow — the basis for calculating dividends — reached 693.6 billion rubles in 2021, the second-highest in at least seven years.
Lukoil has pledged to pay out the equivalent of at least 100% of its adjusted free cash flow. Total free-cash flow suggests a dividend for the full year in the range of around 915 rubles a share, BCS Global Markets analyst Ron Smith said in an emailed note, following the report. Lukoil has already agreed to an interim dividend of 340 rubles a share.
Oil surged more than 50% last year as demand recovered from the pandemic and supply wasn’t able to keep up. Prices have continued to climb, with crude in London topping $113 a barrel on Wednesday.
The earnings performance will not reflect in share prices. Trading has been halted in Moscow after a crushing decline of Russia’s financial markets following international penalties for the war in Ukraine. BCS Global Markets doesn’t expect the company to host a related conference call in the near future given the current environment.
On Feb. 28, the last day the shares traded, Lukoil’s stock closed 4.5% lower at 4,921 rubles. The shares had slumped as much as 50% on Feb. 24, the most in two decades, after Russian troops invaded its neighboring country.
Pro Trial: Access 10,390 Tank Terminal and Production Facilities
10,390 tank storage and production facilities as per the date of this article. Click on the button and register to get instant access to actionable tank storage industry data