• NIS three-month consolidated net income 261 million dinars
  • Ebitda falls 48 percent on low global oil prices, sales down

Naftna Industrija Srbije, majority owned by Russia’s Gazprom Neft PAO, extended profits in the first quarter as increased refining volume and cost cuts helped offset the low prices of crude.

January-March consolidated net income was 261 million dinars ($2.4 million), compared with 4.7 billion dinar loss a year ago, as cost savings of 1.3 billion dinars helped avoid a loss, the Novi Sad, Serbia-based company said in an e-mailed statement on Wednesday. Earnings before interest, taxes, depreciation and amortization fell 48 percent to 3.8 billion dinars on cheap fuel and sales dropped 24 percent to 35.2 billion dinars, it said.

“Despite expectations that our results will be weaker than last year because of unfavorable trends on the global market, that didn’t happen,” Chief Executive Officer Kirill Kravchenko said in the statement. “The crisis in the oil and gas sector isn’t over yet and the first quarter confirms that 2016 will be a year of great business challenges.”

Oil and gas production by the vertically-integrated company fell 5 percent to 377,000 tons of oil and gas equivalent in the first three months, while refining rose 13 percent to 776,000 tons, NIS said. January-March capital expenditures fell to 4.6 billion dinars from 7 billion dinars a year ago, which helped expand proven resources by 3.7 percent. Low global crude prices almost halved NIS’s 2015 profit.

This year’s annual result is seen above the 2015 level on an expected increase in oil prices and a 7.5 billion-dinar payment by the government to NIS to cover the debt of state-owned Srbijagas for gas deliveries, Nenad Gujanicic, an analyst at Belgrade-based brokerage Wisebroker, said in a note.

NIS shares fell 0.3 percent to 616 dinars at 3 p.m. in Belgrade. The price is up 2.6 percent this year.

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