DTEK power generation falls 14% yoy in 1Q16

Electricity generation at Ukraine’s leading coal and utility holding DTEK Energy (DTEKUA) decreased 18% yoy to 9.82 TWh in 1Q16, according to Concorde Capital calculations based on sector data provided by Energobiznes. Comparable electricity production by DTEK (net of Zuyivska TPP, located in the Donbas war zone, for which there is no official data for 1Q16) decreased 14% yoy in 1Q16. DTEK’s power plants burning anthracite and lean coal boosted their power generation by 79% yoy to 2.56 TWh, while DTEK’s other thermal power plants (net of Zuyivska) reduced their output by 32% yoy in 1Q16.

All Ukrainian thermal power plants (TPPs) (net of those located in the war zone) increased their power generation 3% yoy to 11.95 TWh. Total power generation in Ukraine (excluding the war zone) decreased 1% yoy to 40.61 TWh.

Alexander Paraschiy: DTEK’s result is in line with what we estimated for 1Q16 (refer to our report on DTEK from May 12, 2016). We are sticking to our vision that DTEK will reduce its total power generation by 5% yoy in full year 2016, accompanied by a significant increase in power generated by its anthracite-burning TPPs. More important for DTEK Energy is the recent revision of its coal pricing methodology in Ukraine, which should drive its operating profit in 2016 and allow us to view optimistically the price performance of its Eurobonds.