Uzbekneftegaz's profits plunge despite revenue growth

The significant decline in Uzbekneftegaz's profit in 2023, despite increased revenue, is evident from the consolidated financial statements of the state company.

Throughout the year, the holding company sold products worth 27.4 trillion UZS, marking an 11.4% increase from the previous year. Key factors contributing to this growth were increased production at the Uzbekistan GTL plant and an autumn increase in natural gas tariffs for businesses.

Operating income for Uzbekneftegaz reached 13.5 billion UZS (+21%) due to stabilized production costs, and the operating margin rose to 29%. A similar growth trend is expected for the first half of the current year.

However, the group's net profit plummeted by 78% compared to the previous year. One of the key reasons was increased financial losses due to rising interest rates in the global markets.

The SOFR rate rose by a quarter in 2023, and EURIBOR by 79.3%. The company's financial expenses increased by 1.73 trillion UZS primarily due to higher costs of servicing loans.

Additionally, losses of 3.02 trillion UZS were incurred due to financial exchange differences caused by the depreciation of the national currency. Over the past year, the dollar appreciated against the UZS by 9.9%, and the euro by 14.8%.

Current assets exceeded current liabilities by 1.04 trillion UZS, whereas the previous year showed liabilities exceeding assets by 7 trillion UZS. The company's net financial debt decreased by 742 billion UZS in the second half of 2023.

Plans for the current year include optimizing production costs by 1 trillion UZS. Measures will be taken to restructure debts owed to partners in the Uz-Kor Gas Chemical joint venture, expected to positively impact Uzbekneftegaz's credit rating.