Cost cutting helped Russian oil company Rosneft beat both low crude prices and analyst expectations to post sharply higher third quarter earnings on November 25. Adjusted net profit of the government-controlled company rose to 113 billion rubles ($1.8 billion, 1.6 billion euros) in July through September, beating expectations of analysts surveyed by Russian Interfax news agency.
It had posted a loss of a billion rubles during the same period last year as global oil prices plunged and the West slapped sanctions on Moscow and top Russian companies over the Ukranian crisis "Despite a challenging economic environment, the company keeps improving its efficiency," said Rosneft's chief executive Igor Sechin.
"This is demonstrated by keeping operating costs in ruble terms at a sustainable level" despite a 12.0 percent increase in industrial prices in the Russian economy, he added.
It squeezed operating expenses by 6 percent 1.14 trillion rubles despite a small increase in production costs. Sales fell 8 percent to 1.27 trillion rubles, which was slightly below expectations. The plunge in the ruble has shielded Russian oil companies from most of the financial pain from the drop in the price of dollar-denominated crude, which has fallen by more than 50 percent in the past 18 months.
However the weak ruble has made it more costly for Russian companies to service debt denominated in foreign currencies, and Rosneft took on lots of debt to swallow its Russian rival TNK-BP in 2012. Sechin said Rosneft had improved is credit structure and that "the debt burden was reduced to the target level".
The company said its net debt had fallen to $24.5 billion compared with $39.9 billion in the second quarter.