Centrenergo, Zakhidenergo report 9M09 results

Ukrainian electricity generators Centrenergo (CEEN) and Zakhidenergo (ZAEN) reported their 9M09 financial results in company filings this week. In 9M09, Centrenergo decreased its net revenues by 11.8% yoy to UAH 3.1 bln, and posted a net loss of UAH 216.5 mln (vs. net income of UAH 94.1 mln in 9M08). In 3Q09, Centrenergo recorded net revenues of UAH 1.2 bln (down 18.1% yoy), and a net loss of UAH 63.4 mln, up 9.8x yoy. In 9M09, Zakhidenergo’s net revenues decreased 7.3% yoy to UAH 3.2 bln, and it had a net loss of UAH 339.1 mln, up 16.7x yoy. In 3Q09, Zakhidenergo reported net revenues of UAH 1.1 bln (down 17.9% yoy), and a net loss of UAH 93.6 mln (up 61.1% yoy). Yegor Samusenko: Though the profitability of Ukrainian electricity generators has been kept bounded by low wholesale electricity tariffs on the revenue side and high coal prices on the cost side, all GenCos slightly improved their EBITDA margins in 3Q09. Centrenergo posted 1.5% EBITDA (up 3 pp qoq) in 3Q09, Zakhidenergo – minus 3% EBITDA (up 10 pp qoq). We expect zero EBITDA for Centrenergo and close to minus 5% EBITDA for Zakhidenergo in 2009E. As with other GenCos, we forecast Centrenergo and Zakhidenergo improve EBITDA by 9 pp in 2010E on the back wholesale electricity price increases expected after presidential elections in January 2010.