Dniproenergo reports 32% EBITDA margin in 3Q12

DTEK Dniproenergo (DNEN UK) reported significant improvement in its IFRS-based profitability in 3Q12, which more than covered operating and net losses for the two preceding quarters. The company increased revenue 30% qoq on 40% qoq growth in power production. That spectacular growth barely affected the company’s COGS, which advanced just 6% qoq and generated an abnormal bottom line for the quarter. The company’s 3Q12 EBITDA reached UAH 860 mln (32% EBITDA margin), which is 14x more than for 1H12. Dniproenergo’s profit of UAH 550 mln covered UAH 294 mln in losses for the first half of the year. Net revenue improved 7% yoy in 9M12, on a 4% yoy increase in power production for the period.

Alexander Paraschiy: As we expected, it is increasingly hard to predict Dniproenergo’s bottom line, as now the company is a part of DTEK’s operating cycle. The 3Q result suggests DTEK was selling coal to the company at a new, decreased price. Meanwhile, there is no guarantee that this spectacular quarter would not be a one-off.