In 2018, Romgaz recorded a 9% YoY increase in revenue, a decrease in EBITDA of 7% and a decrease in net income of 22%.

Romgaz published their FY 2018 preliminary results on Friday, showing a 9% YoY increase in revenue which amounted to RON 5bn. The increase can be attributed to the 17.7% YoY increase in revenue from sales of internally produced gas and of gas purchased for resale as well as gas from joint ventures. However, this was somewhat offset by the 30.6% YoY decrease of revenue from electricity sales and 41.1% YoY decrease in revenue from storage services. The drop-in revenue from storage services can be directly linked to the reduced storage tariffs approved by ANRE. In 2018, Romgaz’s EBITDA amounted to RON 2.2bn (-7% YoY), while the EBITDA margin decreased 7.8 p.p. to 44.9%. Finally, the bottom line fell 22% YoY as a result of higher tax obligations and impairment of assets. Namely the cost of petroleum royalties went up 51% YoY to RON 445m, while the windfall tax went up 43% to RON 164m. Furthermore, the company impaired RON 103.6m worth of gas field assets after conducting an internal analysis regarding their profitability. The company also recorded a RON 54m impairment of assets representing the current Iernut powerplant which is set for termination of its activity in 2020

Romgaz’s Key Financials (RON bn)

Source: Romgaz, InterCapital Research

Turning our attention to the balance sheet, Romgaz remains to operate as a debt free company with a large cash pile which amounts to RON 566.8m. However, note that if we include other current financial assets the cash pile would reach a whopping RON 1.4bn.  

Investments doubled in 2018, reaching RON 1.2bn but were mostly related to the construction of the new power plant Iernut. Meanwhile exploration expenses rose 33.7% YoY to RON 247m, mainly due to a growing number of 3D seismic activities studies.