In 2019, the company recorded a decrease in operating revenues of 2% YoY, a decrease in EBIT of 29.3% and a net profit of RON 349.5m (-29.5%).

As Transgaz published their preliminary FY 2019 report, we are bringing you key takes from it. In 2019, the company recorded operating revenue before the balancing and construction activity, according to IFRIC12 of RON 1.58bn, representing a decrease of 2%. Of that, revenue from the domestic transmission activity accounts for 76%. The operating revenue was down as the commodity component revenue was lower by RON 61.29m.

The company notes that the decreasing of the tariffs in 2019 as compared to 2018 is mainly due to:

• a lower approved revenue in gas year October 2018- September 2019 (RON 882.98m) as compared to the revenue approved in gas year October 2017 – September 2018 (RON 954.3m) mainly because of the differences for the adjustment of the revenue in gas year 2018-2019.
• the commodity tariff is lower according to Order 10/2017 of the ANRE President on the amending and supplementing of Order 32/2014 of ANRE President on the approval of the Gas Transmission Regulated Revenue, Total Revenue and Regulated Tariffs Methodology, which establishes the increasing by 5% per year of the percentage by which the approved revenue is recovered by the application of the capacity booking tariff, up to 85%, and the decreasing of the percentage by which the approved revenue is recovered by the application of the commodity tariff. In gas year 2018-2019 the variable component of the total revenue at the basis of the commodity tariffs is 30% of the total revenue and in gas year 2019-2020 it decreased to 25% of the total revenue.

Turning our attention to operating costs, they observed a solid increase of 12.6% YoY, amounting to RON 1.18bn.  Such an increase can be attributed mostly to higher other operating expenses by 56.3% and higher taxes and other amounts owed to the state (+42.2%).

Going further down the P&L, as a result of the above mentioned, Transgaz recorded a solid decrease of operating profit by 29.3% YoY, amounting to RON 396.7m. In 2019, the company recorded a net financial result of RON 19.5m, which further boosted the bottom line, however such result is by RON 1.88m lower compared to 2018.

Net profit in 2019 amounted to RON 349.5m, representing a decrease of 29.5%. Such a result translates into RON 29.68 EPS.