Transneft (pref): revenue grows, but EBITDA falls — tariffs lag costs

On August 28, Transneft reported Q2 2026 results: revenue rose 5.8% YoY to RUB 378.8 bn, but EBITDA fell 5.7% to RUB 140.3 bn. Net profit gained 3.8% to RUB 80.2 bn. We examine why tariff growth fails to offset rising operating costs, and what it means for dividends.

Key takeaways

— Revenue rose 5.8%, but EBITDA fell 5.7% — margin compressed by 4.5 pp

— Operating expenses excluding depreciation rose 14.2% — faster than revenue

— Net profit grew 3.8% thanks to other income and share of associates

— Debt burden remains negative: net debt of minus RUB 228.6 bn

— Capex for H1 was RUB 157.7 bn, almost unchanged YoY

— Dividend for 2025 is RUB 204.17 per share, forward yield 19.3%

— Valuation: EV/EBITDA of 1.08 — below the 3-year average of 1.52

Key figures, RUB bn

Revenue rose 5.8%, but EBITDA fell 5.7% — margin compressed by 4.5 pp

In Q2 2026, Transneft's revenue reached RUB 378.8 bn, up 5.8% YoY. The main driver was oil transportation: revenue from core activities rose to RUB 338.0 bn from RUB 321.3 bn in Q2 2025. Other revenue also grew: RUB 19.2 bn vs RUB 16.1 bn.

EBITDA, however, fell 5.7% to RUB 140.3 bn, and the EBITDA margin dropped from 41.5% to 37.0%. The reason: operating expenses excluding depreciation rose 14.2% to RUB 238.8 bn, significantly outpacing revenue growth. As a result, operating profit declined 6.4% to RUB 83.6 bn.

Operating expenses excluding depreciation rose 14.2% — faster than revenue

The main margin pressure comes from labour costs, insurance premiums and social expenses: in Q2 they reached RUB 98.9 bn vs RUB 85.0 bn a year earlier, up 16.4%. This reflects wage indexation and rising social contributions — a structural, not one-off, factor for a company with a 100,000-strong workforce.

Material costs rose 22.3% to RUB 29.5 bn, cost of goods sold increased 13.7% to RUB 79.6 bn. Other expenses grew a modest 2.7%. Thus, cost growth is broad-based, and tariffs, even increased, do not fully compensate.

Net profit grew 3.8% thanks to other income and share of associates

Net profit for Q2 reached RUB 80.2 bn, up 3.8% YoY. The growth was driven not by operations but by items below operating profit: other income rose from RUB 2.3 bn to RUB 8.3 bn, and the share of profit of associates and joint ventures increased from RUB 5.2 bn to RUB 12.9 bn.

Financial income, in contrast, fell from RUB 34.2 bn to RUB 29.6 bn, due to lower interest rates and reduced deposit volumes. The effective tax rate declined from 38.4% to 35.6%, also supporting net profit.

Debt burden remains negative: net debt of minus RUB 228.6 bn

At the end of Q2 2026, Transneft's net debt stood at minus RUB 228.6 bn — the company remains a net creditor. During the quarter, net debt increased by RUB 14.9 bn, but over the last 12 months it decreased by RUB 36.3 bn. The net debt to EBITDA ratio for the last 12 months is minus 0.42.

Cash and deposits on the balance sheet are RUB 122.4 bn and RUB 320.1 bn, respectively. Loans and borrowings total RUB 157.4 bn, of which RUB 78.1 bn are short-term. Interest expenses in Q2 were RUB 9.9 bn, covered by financial income.

Capex for H1 was RUB 157.7 bn, almost unchanged YoY

In H1 2026, capex amounted to RUB 157.7 bn vs RUB 159.4 bn a year earlier. The bulk is acquisitions of property, plant and equipment and intangible assets. In Q2, capex was RUB 81.0 bn, close to last year's RUB 80.4 bn.

Operating cash flow for H1 rose to RUB 136.0 bn from RUB 129.2 bn, but free cash flow remains negative: minus RUB 21.7 bn for H1. The company finances the shortfall from its accumulated liquidity cushion, not by increasing debt.

Dividend for 2025 is RUB 204.17 per share, forward yield 19.3%

The AGM approved dividends for 2025 of RUB 204.17 per share, 3% higher than the previous year (RUB 198.25). Payments on preferred shares totalled RUB 31.7 bn. Dividends were already transferred in July-August 2026.

Our model forecasts the next dividend at RUB 198.25 per share, implying a forward yield of 19.3% at the current price. This is significantly above our fair yield of 10.5%, reflecting both the high base yield and the risk embedded in the quotes.

Valuation: EV/EBITDA of 1.08 — below the 3-year average of 1.52

Transneft trades at an EV/EBITDA of 1.08 for the last 12 months, well below the three-year average of 1.52. P/E for the last 12 months is 3.13. Market capitalisation is RUB 742.4 bn.

The low valuation reflects structural risks: dependence on tariff regulation, rising costs, and sanctions uncertainty. However, with a forward dividend yield of 19.3% and negative net debt, the market is effectively paying nothing for the business beyond the dividend stream.

Valuation on the latest reported figures

Bottom line

In Q2 2026, Transneft showed revenue growth, but operating efficiency deteriorated: EBITDA and margin declined due to faster cost growth. Net profit rose only thanks to one-off and non-operating items. At the same time, the company maintains a huge liquidity cushion and negative net debt, and the dividend yield remains double-digit. The key question for shareholders is whether the company can sustain margins amid cost inflation, or whether tariffs will rise too slowly.