Donbasenergo reports strong P&L, weak CF in 1Q16

Power generator Donbasenergo (DOEN UK) reported a 54% yoy increase in net revenue to UAH 1,741 mln in 1Q16, according to its April 25 filing. The increase was a result of higher electricity sales (+32% yoy to 1.9 TWh) and 17% yoy growth in average rate per unit sold (to UAH 912/MWh). Increased revenue enabled the company to post 32% yoy higher EBITDA (UAH 418 mln) and 19% better bottom line (UAH 308 mln) in the quarter.

The company’s reported cash flow statement for the quarter shows a less optimistic picture. In particular, its operating cash flow was just UAH 12 mln in 1Q16 (-80% yoy), mostly due to increased trade receivables by UAH 1,184 mln. Weak collections for its power were almost offset by UAH 468 mln in advances received and UAH 538 mln in increased payables. The company’s cash balance decreased 37% YTD to UAH 86 mln as of end-1Q16. The company’s debt increased 9% YTD to UAH 485 mln.

In other Donbasenergo news, the liga.net news site reported on April 25 that the company’s key owners are seeking to sell their stakes.

Alexander Paraschiy: Increased receivables may suggest Donbasenergo got payments only for only 1/3 of electricity sold in 1Q16. Recall, its biggest power plant Starobesheve, which account for about 60% of its total power output, is located in the occupied territory of Donbas. This power plant is working outside of the official Ukrainian power market and has to sell its electricity to the occupied territory by itself. Clearly, Donbasenergo isn’t an attractive asset for any strategic investor.