DTEK Energy decreases coal mining 7% in 2019

Ukraine’s leading coal and power holding DTEK Energy
(DTEKUA) produced 22.4 mmt of ROM steam coal in 2019, Concorde Capital
calculated based on sector-wide data provided by Interfax-Ukraine on Jan. 20.
This is 7.1% less yoy. In December alone, DTEK Energy mined 2.01 mmt of steam
coal, which is 4.4% less yoy and 1.4% less m/m (on a daily average basis).

Ukraine’s total production of ROM steam coal decreased
9.4% yoy to 24.9 mmt in 2019, with DTEK’s share in the sector raising to 90%,
from 88% a year ago.

Alexander Paraschiy: DTEK’s 2019
coal mining results do not look encouraging, but they reflect the holding’s
decreased power generation in the year: we estimate its thermal power plants
reduced power output 13% yoy to 28.4 TWh in 2019. Its power plants burning hard
steam coal decreased power generation by 9%, we estimate. Therefore, even with
decreased coal mining, the holding remained self-sufficient in hard steam coal
with consumption of about 14.4 mmt (ROM coal data implies DTEK produced 16.1
mmt of marketable hard steam coal).

We estimate DTEK Energy generated UAH 15.5 – 16.0 bln
EBITDA in 2019 and keep our neutral view on DTEKUA bonds.