MOSCOW—Russian state-controlled gas giant PAO Gazprom said its first-quarter net profit slipped 5% to 362 billion rubles ($5.6 billion) despite an increase in revenue, as operating expenses rose.

Gazprom said revenue increased by 5% to 1.74 trillion rubles. Gas sales volume to the company's most-lucrative European market jumped 49% to 58.1 billion cubic meters, but sales revenue from the region rose only 22% as the average price fell. Sales revenue in Russia rose 2% to 292 billion rubles, even though sales volume slipped 6%.

Operating expenses for the quarter were up 24% to 1.45 trillion rubles. The company said this rise was mainly caused by increased expenses for gas relating to an asset-swap agreement between Gazprom and Wintershall AG, a unit of German conglomerate BASF SE. Gazprom's bottom line was also hit by a foreign-exchange loss of 25 billion rubles as the ruble weakened compared with a year earlier.

Write to James Marson at james.marson@wsj.com

(END) Dow Jones Newswires

August 10, 2016 04:35 ET (08:35 GMT)

Copyright (c) 2016 Dow Jones & Company, Inc.
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