DTEK boosts anthracite supply 26%, power exports 25% in 1H16

Ukraine’s leading coal and utility holding DTEK Energy (DTEKUA) reported on Aug. 8 its official operating results for 1H16, which are broadly in line with results that we earlier calculated based on official sources. Namely, the holding’s total coal mining decreased 1% yoy to 13.90 mmt, while supply of generated power to the market decreased 7% yoy to 17.57 TWh in 1H16. Other important statistics include a 1% yoy decrease in power transmission (to 22.84 TWh) and 25% yoy growth in power exports (to 2.18 TWh). DTEK exported 0.80 mmt of coal (mostly from its Russian mines, as we understand), which is 5% growth yoy. The holding imported no coal to Ukraine in 1H16 (vs. 0.40 mmt in imports a year ago). The holding also highlighted that it managed to boost supplies of anthracite coal produced in the occupied regions of Ukraine to its power plants by 26% yoy to 1.9 mmt in 1H16.

Alexander Paraschiy: Overall, the results bring little surprise, except the excellent performance of DTEK’s power distribution segment – it significantly outperformed the -5% yoy power consumption statistics for Ukraine in 1H16. The results also imply DTEK produced 1.0 mmt of coal at its Russian assets in 1H16, or 0.6 mmt in 2Q16, which is about a 1.6x increase qoq. As we highlighted earlier, we expect a much better yoy performance in coal and power generation in 3Q16, and the already available data for July supports this view. As before, we confirm our neutral view on DTEK Energy’s Eurobonds.