OREANDA-NEWS. November 23, 2009. We expect mixed results with deteriorating profitability. Rosneft is due to publish its 3Q09 US GAAP results on 25 November, reported the press-centre of VTB Capital.

We expect revenues to drop 37% YoY to USD 13,094mn, with EBITDA down 32% YoY to USD 3,606mn and net income falling 61% YoY to USD 1,346mn. While it was clear that the numbers would be down YoY, the company might demonstrate positive QoQ dynamics, led by an overall improvement in the macro environment.

Strong top line, backed by the Vankor launch. The launch of the Vankor field in September 2009 resulted in Rosneft’s crude output growing 4% YoY in 3Q09. This helped to offset a 40% YoY decline in international crude prices.

Transportation costs and taxes are a concern. Despite the QoQ increase in oil prices in 3Q09, crude netbacks were down 7% QoQ to USD 34/bbl, primarily due to the hike in oil taxes. This, together with an increase in transportation costs after the Vankor launch, and a 4% increase in Transneft tariffs in July 2009, are likely to be the main cost drivers in 3Q09.

FX loss and higher effective tax rate to hurt bottom line. In 2Q09, Rosneft reported an FX loss of USD 391mn on the back of rouble strengthening. In 3Q09, the rouble continued to strengthen against the USD and the EUR, which we believe will result in a USD 275mn FX loss. We also expect to see an increase in the effective income tax rate on the back of FX accounting, with net income at USD 1,346mn, and the net margin deteriorating from 15% in 2Q09 to 10% in 3Q09.