Healthy profits for gas giant

The joint-stock gas utility Latvijas Gaze earned €30.5 million in profit last year, the company said on April 22.

Latvijas Gaze management informed that 2015 saw a substantial price drop on the global oil markets, which influenced both the average natural gas purchase price and the annual income of the company. In 2015, consumers were sold natural gas and provided services for €445 million.

Although in 2015, Latvijas Gaze's EBITDA remained at the previous year's level of €68.5 million, a decrease in turnover enabled an increase in the EBITDA margin to 15.4 percent, compared to 13.7 percent in 2014.

Latvijas Gaze's natural gas sales in Latvia totaled 1.32 billion cubic meters in 2015, up 2 percent on 2014.

The transmission segment - which the company is currently doing its best to defend against competition - earned income from both natural gas consumption in Latvia and international natural gas deliveries, as well as from natural gas movement upon injection into or withdrawal from the Incukalns underground gas storage facility.

In 2015 it was the only segment where a decrease in the EBITDA margin was registered. This occurred because there was less natural gas transmitted in international transactions, including injections into Incukalns facility, the company explains.

The transmission segment's EBITDA in 2015 amounted to €15.6 million, accounting for 23 percent of the company's total EBITDA. The transmission segment is the second largest in terms of carrying value of assets. Amounting to €193.6 million, the segment's assets accounted for 26 percent of the company's total assets at the end of 2015.

The storage segment saw a 13 percent decrease in net turnover against the year 2014 as there was less natural gas injected and withdrawn. Still, the decrease did not undermine the segment's profitability. In 2015 the segment's EBITDA totaled €15.9 million, making it the second largest by this criterion.

The natural gas trade segment is the largest in terms of revenues. The segment revenue was €342.4 million, which makes up 77 percent of the company's total revenues. Following a drop in the natural gas sale price, the segment's revenues fell 13 percent against 2014. The segment's EBITDA, however, increased €2.9 million from 2014, mainly due to lower provisions for doubtful debts and accruals for expenses included in the results of 2014.

Latvijas Gaze major shareholders are Gazprom (34 percent), Marguerite Gas I.S.a.r.l. (28.97 percent), Uniper Ruhrgas International GmbH (18.26 percent) and Itera Latvija (16 percent).

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