DTEK coal mining falls 11% m/m in May

Ukraine’s leading
coal and power holding DTEK Energy (DTEKUA) produced 1.85 mmt of coal in May
2018 (59.7 kt per day), according to Concorde Capital’s estimates based on
sector-wide data provided by the Energy Ministry. This is 10.6% less compared
to April, in average daily terms, and 4.2% less yoy. The decline was led by
DTEK’s biggest mining asset, Pavlohradvuhillia, whose daily output fell 11.8%
m/m to 49.1 kt.

In 5M18, DTEK mined
9.61 mmt of coal (1.0% less yoy), with Pavlohradvuhillia mining being
2.3% less yoy (8.03
mmt). Ukraine’s total mining of steam coal increased 2.1% yoy to 11.20 mmt in
5M18.

Alexander Paraschiy: DTEK’s coal mining results are disappointing and fall short of its earlier
announced plan to
mine 24.6 mmt, or 7% more yoy. To reach this target, DTEK should
mine 70.0 kt per day in the year’s remainder, which is 17% higher than May’s
result and exceeds any historical monthly high reached. That said, we see
DTEK’s coal mining will fail to reach its initial 2018 plan and will reach
23.5-23.9 mmt, or 3%-4% more yoy. We are keeping our neutral view of DTEKUA
Eurobonds.