Gazprom 2Q 20 - Probably the worst quarter with expectedly weak results

Today, Gazprom published its 2Q 20 results, which came in line with our forecasts on revenue, EBITDA and net income. However, EBITDA adjusted on impairment provisions was slightly above our prediction due to lower than expected operating expenses (excl. impairments). As compared to the market expectations, the results came in close to estimates on revenue and EBITDA, while net income exceeded projections due to higher than expected FX gain. Besides, Gazproms FCF (adj. on changes in ST deposits) turned out to be stronger than our estimates thanks to lower than expected cash outflow from WC changes as well as lower than projected income tax paid, though the latter might have a reversal effect in further periods. Anyway, as we expected, the companys FCF was deeply negative in 2Q 20. We should also note that Gazproms 1H 20 adjusted net income accounted for USD 3.1 bn, which translates into DPS of RUB 3.65 or close to our estimate of RUB 3.8. However, the final amount of DPS for 2020e will depend on the further dynamics of companys earnings. We treat results as neutral, as they were generally in line with our estimates.