Donbassenergo Announces Strong 1H07 Results.

Despite a decrease of electricity output (-8.1% yoy), Donbassenergo (DOEN: BUY) showed a 10% yoy increase of revenues, due to an increase in electricity tariffs. The increase in fuel efficiency, reduction of gas use and drop in social expenses allowed the company to significantly increase its bottom line.

Sales, USD mln            EBITDA, USD mln                  Net Income, USD mln

1H07        YoY            1H07    YoY     margin             1H07       YoY      margin

139.9     +10%         21.98  +10.22   16%               8.53     +11.86       6%

Alexander Paraschiy: The company’s 1H07 margins are higher than our 2007 forecast (EBITDA 8%, net margin 0.6%). We believe the full-year results will be higher than we previously forecasted.