DTEK Energy improves P&L in 9M21

Ukraine’s leading coal and power holding DTEK Energy
(DTEKUA) increased net revenue 14% yoy to UAH 35.94 bln, according to its
abridged financials released on Nov. 19. Its 9M21 operating profit reached UAH
0.095 bln, up from UAH  7.48 bln losses a year ago. Its net loss decreased
90% yoy to UAH 1.98 bln. Its unadjusted EBITDA decreased 8% yoy to UAH 4.91 bln
in 9M21, Concorde Capital estimates.

DTEK Energy generated UAH 4.35 bln of operating cash
flow before working capital changes in 9M21 (down 24% yoy) and UAH 2.79 bln of
net cash flow from operations (up 26% yoy). Its investments into PP&E
increased 50% yoy to UAH 3.09 bln. Its net debt decreased 30% yoy to UAH 40.00
bln and net debt to LTM EBITDA reached 4.5x as of end-September 2021 (down from
8.7x a year ago).

The holding’s thermal power plants increased power
generation 12% yoy to 17.72 TWh in 9M21, while decreasing coal mining 13% yoy
to 12.27 mmt (down 4% yoy on like-to-like basis).
Its coal import for own use increased 3.2x yoy to 1.64 mmt as its marketable
coal output decreased 6% yoy and coal consumption by its thermal power plants
increased 16% yoy. Its average electricity price improved 20% yoy to UAH 1.52 /
kWh in 9M21.

In 3Q21, DTEK Energy’s average achieved electricity
price increased reached UAH 1.69 / kWh (up 29% yoy and up 18% qoq). Its revenue
increased 11% yoy and 37% qoq to UAH 12.43 bln, and EBITDA increased 3.5x qoq
to UAH 2.55 bln (flat yoy) in 3Q21.

Alexander Paraschiy: The
improvement of P&L in 3Q is in line with our expectations, based on
electricity prices growth, which is outpacing the increase of DTEK’s production
costs. In 4Q21, we expect the company to further improve its operating profit
on exceptionally high electricity prices, even though the holding will have to
increase the share of imported coal in its fuel mix to about 20% (from about
16% in 9M21). We expect DTEK Energy’s full-year 2021 EBITDA will reach UAH 10.5
bln (up 22% yoy) and keep our bullish view on DTEKUA bonds.