Gazprom reports 12% drop in first-half profit

• Second-quarter profit jumped 60% to 518.6 billion roubles thanks to higher oil and gas prices, offsetting weak first-half performance
• A stronger rouble negatively impacted financial results since many sales are paid in international currencies, making rouble-reported earnings comparatively weaker
• Gazprom expects 6-7% growth in core earnings this year driven by increased domestic supplies and exports to China, as the company has lost most European customers since 2022

Gazprom Reports 12% Drop in First-Half Profit

Key Financial Results:

Russian gas giant Gazprom reported first-half 2025 net profit of 864 billion roubles ($10 billion), representing a 12% year-over-year decline. However, second-quarter profit surged more than 60% to 518.6 billion roubles compared to Q2 2024, driven by higher oil and gas prices.

Primary Factor Behind Decline:

The company attributed the first-half profit decrease primarily to a stronger rouble. Since Gazprom receives payments in international currencies, rouble appreciation reduces reported earnings when converted to local currency for financial statements. The exchange rate stood at 86.15 roubles per dollar.

Company Overview:

The results reflect performance across the Gazprom Group, which encompasses oil and gas production as well as power generation assets. The company forecasts 6-7% growth in core earnings for full-year 2025, supported by increased domestic supplies and rising exports to China.

Market Context:

Gazprom has experienced significant structural challenges since 2022, losing most of its European customer base following Russia's military actions and subsequent economic rifts with Western nations. Once Europe's dominant natural gas supplier, the company has pivoted toward Asian markets, particularly China, to offset lost European revenue.

Implications:

The mixed results highlight Gazprom's ongoing transition period—strong quarterly performance demonstrates operational resilience and benefit from favorable commodity prices, while currency headwinds and lost European markets continue to pressure overall profitability. The company's strategic shift toward China appears central to its recovery trajectory, though geopolitical tensions remain a persistent risk factor for investors.