Uzbekneftegaz sees declining profits despite increasing revenue
Uzbekneftegaz, the state-owned oil and gas company of Uzbekistan, reported a notable 11% increase in revenue in 2023. Despite this growth, the company also faced challenges in the form of increased loan repayments, leading to a significant decline in profit.
The company’s financial statements revealed that Uzbekneftegaz generated sales of 27.4 trillion UZS throughout the year, with key drivers being higher production at the Uzbekistan GTL plant and a rise in natural gas tariffs for businesses. Operating income saw a 21% increase, reaching 13.5 billion UZS, thanks to stable production costs and an improved operating margin of 29%.
However, the company experienced a sharp 78% drop in net profit compared to the previous year. This was primarily due to higher financial losses caused by a surge in global interest rates. Financial expenses increased by 1.73 trillion UZS, mainly driven by the rising costs of servicing loans. In addition, losses of 3.02 trillion UZS were attributed to financial exchange differences resulting from the depreciation of the national currency against the dollar and euro.
Despite these challenges, Uzbekneftegaz managed to reduce its net financial debt by 742 billion UZS in the latter half of 2023. The company aims to optimize production costs by 1 trillion UZS in the current year and restructure debts owed to partners in the Uz-Kor Gas Chemical joint venture to improve its credit rating.
Overall, while Uzbekneftegaz saw impressive revenue growth in 2023, it also grappled with increased loan repayments and financial losses. The company’s strategic plans for the future indicate a focus on cost optimization and debt restructuring to strengthen its financial position.
