By the end of 2023, Romgaz recorded a revenue decline of 33% YoY, an EBITDA increase of 19%, and a net income of RON 2.8bn, an increase of 10% YoY.
Starting off with the revenue, in total it amounted to RON 9bn, decreasing by 33% YoY during 2023. This was influenced by lower revenues from natural gas sales, which recorded a 31% decrease YoY to RON 7.7bn. Romgaz noted that the obligation enforced by GEO no. 27/2022 had a significant impact on this category, as Romgaz sold most of its production at the price of RON 150/MWh (86.4% of all deliveries). Furthermore, electricity revenue dropped by 69% YoY to RON 407m, also due to the same obligation, as Romgaz sold almost all electricity production at RON 450/MWh.
On the other hand, revenue from underground storage activities increased by 17.7% YoY to RON 552.2m, mainly due to the increase of capacities booked by clients of underground gas storage. In other words, the drop in revenue came from the regulatory environment, rather than the deterioration in the business operations/performance of the Company.
In terms of expenses, they decreased by 54.8% YoY to RON 4.3bn. This came mainly due to the lower windfall tax from gas sales, which decreased from RON 4.9bn to RON 889m in 2023, as the situation with the gas prices stabilized during the year. Furthermore, lower royalty expenses were paid, at RON 600m vs. RON 1.64bn in 2022. To better understand this, we have to look at the ordinance GEO No. 27/2022. According to this ordinance, natural gas quantities sold at RON 150/MWh are exempted from payment of windfall tax, and royalty is calculated and paid at this price, and not at the reference price communicated monthly by the National Agency for Mineral Resources.
With the reduced expenses outpacing the drop in revenue, Romgaz recorded a 19% improvement in the EBITDA, as it amounted to RON 5.37bn. As both revenue and OPEX decreased, the EBITDA margin improved significantly, increasing by 25.8 p.p. to 59.7%. Moving on, net income growth was not as significant, growing by 10% YoY to RON 2.8bn. This was influenced by the solidarity contribution (extra profit tax), which amounted to RON 1.69bn in 2023 (2022: RON 684.6m). As such, the net income margin improved by 12.2 p.p., to 31.2%.
Romgaz key financials (Preliminary 2023 vs. 2022, RONm)
Source: Romgaz, InterCapital Research
Moving on to the balance sheet, total assets grew by 13.5% YoY to RON 16.3bn. An increase was recorded in both non-current and current assets. In the non-current assets, a 9.4% increase to RON 11.4bn came as a result of the investments made in 2023 into well rehabilitation and investments in the Neptun Deep Project. RON 535.4m was invested in this project.
Current assets meanwhile, grew by 24.3% YoY, this came mainly as a result of higher other financial assets (+24x YoY to RON 2.5bn), and this included bank deposits and purchased state bonds, which saw large collections in 2023. Furthermore, Romgaz received RON 46.3m from the National Investment Plan for investment in the new power plant from Iernut and RON 94.2m following the conclusion of a grant agreement with the European Climate, Infrastructure and Environment Executive Agency, to increase daily withdrawal capacity at Bilciuresti UGS.
On the other hand, cash and cash equivalents decreased by 71.6% YoY to RON 535m, mainly as a result of investments into said bank deposits/bonds.
On the flip side, total liabilities grew by 10.5% YoY to RON 4.69bn, mainly as a result of higher current tax liabilities, which grew by 50% YoY to RON 1.76bn. This includes the profit tax liability of RON 79.7m (2022: RON 174.7m) as well as the liability related to the solidarity contribution of RON 1.69bn (2022: RON 1bn). Total equity meanwhile, grew by 14.7% YoY to RON 11.6bn, as a result of higher reserves (+39%), and higher retained earnings (+1.5%).
