Galnaftogaz Releases 9M07 UAS Results

Galnaftogaz (GLNG: HOLD) released its 9M07 financials today based on Ukrainian accounting standards (UAS). The company posted a 20.6% yoy increase in net revenues, to USD 443.6 mln. The company’s EBITDA margin increased from 4.0% to 4.8%, while net income margin halved, to 0.8%, from 1.6% in 9M06. Net income dropped from USD 5.9 mln in 9M06 to USD 3.8 mln in 9M07. CapEx amounted to USD 58.3 mln. Galnaftogaz’s 9M07 results suggest mixed performance against our 2007 full-year forecast. Although direct comparison of UAS accounts and our IFRS-based forecasts would be incorrect, 9M07 dynamics indicates about 21% yoy growth of net sales in 2007, which is 5.4 p.p. below our forecast of 26.0%. EBITDA is likely to fall short our forecast by around 5%, while EBITDA margin closely approaches our estimate of 6.1%. Full-year net income will certainly lag our projection of USD 13.2 mln, due to higher than expected financial expense. 9M CapEx figure is in line with our forecast of USD 74.1 mln.