July 3, 2008

Analysts Expect Transneft to Boost Ifrs Net Profit 350% in Q407

MOSCOW. July 3 (Interfax) - Analysts from investment companies and banks polled by Interfax have predicted Russian pipeline operator Transneft (RTS: TRNF) increased net profit under International Financial Reporting Standards (IFRS) by 350% to 17 billion rubles in the fourth quarter of 2007 compared to the same period of 2007.

The six analysts predicted, however, that the company's sales revenue fell 2% to 54.34 billion rubles, while EBITDA (earnings before interest, taxes, depreciation and amortization) soared 76% to 27.64 billion rubles.

Troika Dialog analysts said Transneft "by all appearances had certain difficulties [in the fourth quarter of 2007]: oil production in Russia and oil exports via the company's pipeline network dropped slightly to the level of the previous quarter. The reduction in production reduced the volume of supplies, while a reduction in the distance over which oil was transported should have had an impact on revenue."

The analysts said it was difficult to predict how the reshuffling in the company's top management in October 2007 impacted the construction rates of the East Siberia-Pacific Ocean (ESPO) oil pipeline and, accordingly, expenditures in the fourth quarter. "Be that as it may, considering the lack of information, we aren't including such a slowdown in our model and are maintaining a conservative approach while expecting to see growth in core costs, particularly on personnel and materials," Troika Dialog said.

They also noted that any contributions made by Transnefteproduct to Transneft's financial results would only be seen starting from the first quarter of 2008.

Transneft is expected to publish its IFRS results in the near future.

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