AVDK net loss increases fourfold in 2012

Avdiivka Coke’s (AVDK UK) net loss widened 4.2x yoy to USD 137 mln in 2012, the company reported on March 7 in announcement of its AGM, which is scheduled for Apr. 24. The agenda contains an item approving significant deals.

Roman Topolyuk: The reasons aren’t apparent for such a drastic worsening of Avdiivka’s bottom line. On the one hand, AVDK decreased its coke production 4.4% yoy to 4.3 mmt in 2012. But that could have been offset by the lower decline in coke prices, as compared to the coking coal price drop. Domestic coke prices fell 18% yoy vs. a 25% yoy decrease in domestic coal prices in 2012, creating the prerequisites for better operating margins of coke producers. If anything, the plunge indicates that Avdiivka relied more on the pricier U.S. coal imports provided by its parent company, Metinvest.

The significant deals item in the AGM agenda gives shareholders, voting against such deals, an option to sell shares to the issuer at a price no less than UAH 3.34 per share, based on our estimates.