LVON, ZOEN increase bottom lines 9x-11x yoy in 2008

According to preliminary results, distribution company Lvivoblenergo’s (LVON) EBITDA in 2008 grew 2.5x yoy, beating our forecast of 1.9x growth. Meanwhile, Zakarpatoblenergo’s (ZOEN) 2008 EBITDA grew 4.5x yoy, outperforming our forecast of 2.3x yoy.

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                                         Net revenue         EBITDA             Net income
                                   USD mln  yoy  USD mln  yoy    mgn  USD mln  yoy   mgn
————————————  ——————-  ——————
Lvivoblenergo        LVON  239.6    30%  29.9    150%  12.5%  13.5    998%  5.6%
Zakarpatoblenergo ZOEN   93.6    23%  16.0    354%  17.1%   4.9    818%  5.3%
————————————  ——————-  ——————

Alexander Paraschiy: More than 2/3 of ZOEN’s annual EBITDA came in the last quarter of 2008 (usually the least profitable quarter for Oblenergos), which signals that the company’s high 2008 EBITDA is a one-off event. We expect a 2%-4% decrease in LVON’s EBITDA in local currency in 2009, and about a 35% decrease in ZOEN’s EBITDA (in local currency).