Capital expenditures for 1H2019 decreased by 9.6% (to 205bn rubles) due to a reduction in investment in gas projects in Uzbekistan and the completion of major construction work at the Korchagin and Filanovsky fields.
Free cash flow amounted to 308.3bn rubles, an increase of 68.4%.
| Fig. 1. Financial indicators | ||||
| bn rub | 1H2018 | 1H2019 | yoy | HF estimates 2019FY |
| Revenue | 3 687 | 3 976 | 8% | 7 325 |
| EBITDA, incl. | 515 | 630 | 22% | 925 |
| Exploration and production segment | 412 | 470 | 14% | 690 |
| Refinery and tradind segment | 118 | 173 | 46% | 231 |
| Net profit | 277 | 332 | 20% | 487 |
| Capital expenditures | 227 | 205 | -10% | 415 |
| Free cash flow | 183 | 308 | 68% | 422 |
| Source: Company data | ||||
Our view
Estimating the results of Lukoil in 1H2019 as expectedly strong relative to 1H2018, we continue to note the growth potential for LKOH as high. In addition to short-term growth drivers, we are positive with regard to the stability of cash flows generated by a company with the same degree of stability even under adverse conditions for oil companies. We maintain our Buy recommendation on Lukoil with 12M TP of 6792rub/share.
