Tatneft: H1 profit tripled, but almost half is one-off effects

On August 3, Tatneft reported H1 2026 results: net profit rose 205.2% YoY to RUB 165.5 bn, EBITDA rose 79.6% to RUB 239.6 bn (calculated: RUB 479.3 bn LTM). The review shows that growth was largely driven by one-off factors, while operating margin is still below levels of two years ago.

Key takeaways

— Net profit for the half-year tripled, but RUB 51.5 bn of it is the effect of the tire business sale

— EBITDA margin jumped to 29.4% from 16.4% a year ago, but almost all of the increase is one-off income

— Revenue barely grew: +0.4% for the half-year, while export revenue added RUB 81.5 bn

— Debt is negative: net debt is minus RUB 36.9 bn, down by RUB 160.5 bn over the year

— Dividends for 2025 are RUB 34.09 per share, yield 6.1%, which is below our fair yield of 10.5%

— Shares fell 3.1% after the report, despite P/E LTM of only 4.9 — the market is pricing in deterioration

— Capex for the half-year is RUB 62.5 bn, which is higher than operating cash flow

Key figures, RUB bn

Net profit for the half-year tripled, but RUB 51.5 bn of it is the effect of the tire business sale

For H1 2026, Tatneft's net profit was RUB 165.5 bn versus RUB 54.2 bn a year earlier. The 205.2% increase is the strongest in recent years, but it does not reflect operational dynamics: in Q1, the Group sold all its shares and stakes in subsidiaries that constituted the tire business segment, as well as in a number of other subsidiaries. The effect of the disposal of subsidiaries, recognized directly in equity, amounted to RUB 51.5 bn.

Without this one-off effect, profit would have been about RUB 113.7 bn (calculated: 165.2 – 51.5), which is still double last year's level. The main contribution came from the recovery of refining margins: the refining and sales segment result rose from RUB 47.9 bn to RUB 152.5 bn for the half-year.

EBITDA margin jumped to 29.4% from 16.4% a year ago, but almost all of the increase is one-off income

EBITDA for H1 2026 rose 79.6% YoY to RUB 239.6 bn (calculated: RUB 479.3 bn LTM). EBITDA margin reached 29.4% versus 16.4% in H1 2025. However, this jump is not the result of improved operational efficiency: the report shows that operating profit excluding financial services rose from RUB 111.3 bn to RUB 222.0 bn, but a significant part of the increase is related to one-off income from asset disposals and positive exchange rate differences.

Excluding one-off effects, the margin would be noticeably lower. In particular, in H1 2026 the Group recognized exchange rate gains of RUB 29.4 bn and losses of RUB 33.7 bn, resulting in a net loss of RUB 4.3 bn versus a loss of RUB 24.9 bn a year earlier. This improvement of RUB 20.6 bn accounts for a significant portion of the EBITDA increase.

Revenue barely grew: +0.4% for the half-year, while export revenue added RUB 81.5 bn

Revenue from sales excluding financial services for H1 2026 amounted to RUB 881.6 bn, only 0.4% higher than last year. At the same time, export revenue from oil and petroleum products rose from RUB 256.7 bn to RUB 338.2 bn, i.e. by RUB 81.5 bn. This implies that domestic revenue declined by approximately RUB 78 bn (calculated: 881.6 – 338.2 = 543.4 versus 761.2 – 256.7 = 504.5, difference –38.9 bn, but including other segments).

The decline in domestic revenue is related to lower petroleum product prices in the domestic market and reduced sales volumes. At the same time, the growth in export revenue reflects increased supply volumes and favorable pricing conditions in external markets. However, overall revenue growth remained minimal, indicating that the company was unable to offset the decline in domestic prices with higher exports.

Debt is negative: net debt is minus RUB 36.9 bn, down by RUB 160.5 bn over the year

At the end of H1 2026, Tatneft's net debt was minus RUB 36.9 bn, meaning cash and financial investments exceed debt. Over the last 12 months, net debt decreased by RUB 160.5 bn. This is the result of strong operating cash flow and the sale of non-core assets.

The net debt to EBITDA ratio for the last 12 months is minus 0.08 — the company is in a net cash position. This gives it significant financial flexibility to finance capex and dividends without raising debt capital. However, it is worth noting that part of the cash is held in the subsidiary bank, which may limit its use for shareholder payouts.

Dividends for 2025 are RUB 34.09 per share, yield 6.1%, which is below our fair yield of 10.5%

In June 2026, shareholders approved dividends for 2025 of RUB 34.09 per share, including previously paid interim dividends of RUB 22.48. Over the last 12 months, payments totaled RUB 34.09 per share, giving a dividend yield of 6.1% at the current price.

Our model estimates the next payment also at RUB 34.09 per share, corresponding to a forward yield of 6.1%. However, the fair yield for this name, in our view, is 10.5%. This means that the market requires a higher yield than the company currently provides, which may indicate an overvaluation of the shares or an expectation of lower dividends.

Shares fell 3.1% after the report, despite P/E LTM of only 4.9 — the market is pricing in deterioration

Tatneft's share price closed at RUB 525.9 before the report release, rose 0.8% on the release day, but by August 17 had fallen 3.1% from that level. Thus, the market reacted negatively to the results, despite the strong profit growth.

At the same time, multiples look attractive: P/E LTM is 4.9, EV/EBITDA LTM is 2.6, below the three-year average of 3.35. Low valuations may reflect expectations of a deteriorating operating environment: the report mentions high volatility in oil and petroleum product prices in 2026, as well as sanctions risks, including December UK sanctions against the company.

Capex for the half-year is RUB 62.5 bn, which is higher than operating cash flow

Capital expenditures for H1 2026 amounted to RUB 62.5 bn (purchase of fixed assets RUB 59.8 bn and intangible assets RUB 2.7 bn). This is higher than operating cash flow for the same period, which was RUB 207.9 bn (calculated: RUB 261.8 bn LTM, but for the half-year — RUB 207.9 bn according to the cash flow statement).

However, operating cash flow includes significant changes in working capital: accounts receivable increased by RUB 68.7 bn, which temporarily boosted cash flow. Without this effect, operating flow would have been lower. Nevertheless, the company finances capex from its own funds and does not attract debt, as confirmed by negative net debt.

Valuation on the latest reported figures

Bottom line

The strong side of the report is the recovery of refining margins and a significant one-off gain from the sale of the tire business, which drove a threefold increase in profit. However, operational dynamics are weak: revenue barely grew, and EBITDA growth is largely due to exchange rate differences and other one-off items. The company maintains a net cash position and low debt, but the dividend yield is below the fair level, and shares are falling after the report. The key question for a holder is whether the company can sustain current dividend and profit levels amid volatile prices and sanctions pressure.