DTEK coal and power output swells in 2016, update says
17 March 2017
Coal and power output at DTEK Energy (DTEKUA) swelled in 2016, according to its March 16 operating update. Its coal mining grew 7.1% yoy to 30.74 mmt, power supply from power plants rose 4.8% yoy to 39.46 TWh, and electricity transmission by its power DisCos improved 1.6% yoy to 45.81 TWh.
DTEK also boosted electricity exports by 12.1% yoy to 3.98 TWh in 2016, while coal exports fell 24% yoy to 1.05 mmt and imports dropped 45% yoy to 0.22 mmt.
Alexander Paraschiy: The results offer no surprises, given they include only minor additional information (coal mining in Russia at the mines that DTEK Energy spun off in September, and power produced by the Zuyivska power plant, located on the occupied territory). As we reported earlier, DTEK boosted its coal mining in Ukraine 9.3% yoy to 29.21 mmt, as well as increased power generation by its power plants located outside the occupied territory by 4.5% yoy to 40.49 TWh. Based on its operational results, we estimated DTEK Energy generated about USD 550-570 mln in EBITDA in 2016.
This year, the holding’s EBITDA will most likely be smaller. Earlier we estimated DTEK Energy would be able to generate about USD 470 mln in EBITDA in 2017 on flat yoy output of coal and power, and a minor (+5% yoy) increase in the average price for electricity generated. With the recent developments, including the trade blockade and asset seizure, we see DTEK’s coal and electricity output dropping significantly this year. The 2017 EBITDA drop could be exacerbated by higher fuel costs at DTEK’s power plants, as some of them will have to import expensive coal. At the same time, we expect the power sector regulator will adjust significantly power prices for DTEK’s thermal power plants to compensate these higher costs. Ultimately, we see DTEK being able to generate about USD 400 mln in EBITDA this year. Provided the company will significantly limit its CapEx appetites (the cap was approved at the level of USD 475 mln in 2017), we expect DTEK will be able to smoothly service all its debts this year. We remain neutral on DTEKUA notes.
