DTEK Energy adjusted EBITDA rises 27% yoy in 1H18

Ukraine’s leading coal and power holding DTEK Energy (DTEKUA)
generated UAH 83.18 bln (USD 3.11 bln) in net revenue in 1H18, according to its
presentation of semi-annual non-audited results released on Sept. 28. The
holding’s adjusted EBITDA for 1H18 amounted to UAH 13.10 bln (USD 490 mln), or
27% more yoy. It attributed higher average prices for its goods (less higher
costs) to two-thirds of its EBITDA improvement, attributing the rest to its
higher volumes of goods and services sold.

Its bottom line reached UAH 5.40 bln (USD 202 mln) as
of end-June vs. negative UAH 1.00 bln a year before.

DTEK’s capital expenditures decreased 7% yoy to USD
124 mln, keeping its focus on coal segment, where expenditures reached USD 74
mln, or 5% less yoy.

The holding’s total debt stood at USD 2.28 bln (1% less
yoy) as of end-June, with 60% of it maturing in 2023-2024. As of end-June, DTEK
reported USD 262 mln in debt that had not been restructured, stating that of
this amount, USD 217 mln was restructured in September 2018.

Its net debt was UAH 52.55 bln (USD 2.01 bln) as of
end-June 2018, which is 10% less YTD (4% less YTD in USD terms). DTEK’s net
debt-to-LTM EBITDA ratio improved to 1.96x as of end-June, from 2.44x as of
end-December.

Alexander Paraschiy: DTEK’s 1H18
top and bottom line corresponded to preliminary results published on Aug. 30, while its
1H18 adjusted EBITDA appeared to be 4% higher than our initial estimate.

There are little surprises in DTEK Energy’s
presented financials, so we remain positive about the holding’s ability to
significantly improve its P&L in 2018. We retain a neutral outlook on its
Eurobonds.