Romanian gas company Romgaz boasts 52% stronger earnings in 2021

Romanian state-controlled gas company Romgaz (BVB: SNG) posted a strong RON 1.90 bln (EUR 380 mln) net profit in 2021, 52% stronger compared to 2021 and 74% higher than 2019, according to the preliminary financial results released by the company.

The company’s market capitalisation is RON 14.7 bln (EUR 3 bln) after the price of its shares rose by 3.11% on the day the 2021 FY results were released.

Last week, BRK Financial Group (BVB: BRK), the only brokerage house listed on the Romanian Stock Exchange (BVB), initiated coverage for the shares of the natural gas producer Romgaz (SNG) with the recommendation Buy and a target price of RON 47.1 per unit, compared to RON 38.15 currently.

The company’s revenues increased by 43% YoY but only by 15% compared to 2019. The performance was entirely driven by the soaring price of natural gas, as the gross output (hydrocarbon) increased by only 11% YoY to 5.03 bln cubic meters while lagging by 5% behind the production achieved in 2019.

And yet, the robust increase in sales prices was mostly offset by the rise of costs, especially of costs with petroleum royalty and windfall tax. The windfall tax tripled in 2021 compared to 2020, to RON 1.26 bln. The petroleum royalty soared 3.8 times YoY to RON 738 mln.

Overall, the windfall tax and the royalty accounted for 42% of total revenues in 2021 - compared to 18.2% in 2020.

(Photo source: Facebook/Romgaz)