Centrenergo doubles bottom line in 2013

State-controlled power GenCo Centrenergo (CEEN UK) generated a 2013 bottom line of UAH 487 mln, a 108% jump yoy, according to the company’s AGM announcement on March 21. At its AGM scheduled for Apr. 25, shareholders will consider the distribution of dividends.

Alexander Paraschiy: The company’s full-year income was expectedly lower than for 9M13 (UAH 526 mln), mainly because state-controlled companies tend to minimize their bottom line to avoid paying dividends. As a company with a significant state stake, Centrenergo has to pay at least 30% of its profit as dividends, which the company’s management usually treats as an additional tax. Centrenergo will have to pay UAH 2.8 DPS this year, implying a 7% dividend yield.

At the same time, we believe there is a risk that the company will avoid paying dividends this time. Recall a year ago, the company suffered severe damage to one of its three power plants, which demanded significant cash outflow for its reconstruction. For this reason, Centrenergo could ask the government for permission not to pay dividends.