Miller: “we’re s***TSE”! The monetary stream “Gazprom” has dried up 84%

The financial position of “Gazprom” continues to deteriorate amid falling revenues from gas sales abroad and expenditures on mega-projects for the construction of pipelines to China, Turkey and the European Union.

In the first quarter gas holding again spent more than it earned, burning accumulated in Bank accounts, the reserves, follows from the company report under IFRS.

Operating cash flow of Gazprom (the difference between revenues and expenses) fell by 84% to of 105.4 billion roubles, informs

Another 34.5 billion roubles, “Gazprom” has received from financial transactions. But the final amount is still not enough to cover all capital investments, although their volume has been reduced by almost a third (up to 327 billion rubles).

The financial reserves of “Gazprom” fell 23%, and their volume as at 31 March 696 billion – was the lowest since 2012. Of this amount, 190 billion rubles will be spent on the payment of dividends. Balance 506 billion, only 16% higher than short-term debt that must be paid within the next year.

According to reports, Gazprom burns cash for the fifth quarter in a row, and the speed with which the money – a record for all time covered is available on the website of the holding data (1998). During the year the reserves “national treasure” lost 878 billion, or 2.2 times.

The first quarter is traditionally strong for “Gazprom”, in the same year, the result on the cash flow was the worst in 7 years, says analyst IK “Veles the Capital” Dmitry Zatravkin.

Revenue growth holding fixed only in Russia (7.2%). Revenues from gas sales to Europe fell by 10% in the countries of the former Soviet Union – 12%.

Before year-end cash flow “Gazprom” will remain negative, analysts predict Russia’s Raiffeisenbank: on the construction in the current year, the company plans to spend 1.8 trillion rubles.

Shares of “Gazprom” on the Moscow stock exchange on Thursday fell by 1.8% – to 118 million rubles. Below the “national treasure” over the past three years falling in the “black Tuesday” in December 2014. Since January, the holding’s capitalization has fallen by 30%, and its shareholders were poorer by 1.2 trillion rubles.

“Shares of “Gazprom” currently, it is difficult to call it attractive, taking into consideration reduced the company’s ability to generate cash from operating activities,” explains Zatravkin.

The wave of LNG supplies to Europe will force Gazprom to reduce prices by selling gas below the break-even point on the cash flow, the analyst says Goldman Sachs Geydar Mamedov.

Low prices hit revenue, leaving opportunities for growth in free cash flow, and the more dividends. Goldman 12 APR recommend to sell shares of Gazprom, lowering target to $4 from $5, 8 per ADR, traded in London and new York.