DTEK power output falls 13%, coal mining rises 10% in 4M16

Power generation at Ukraine’s leading coal and utility holding DTEK Energy (DTEKUA) was 12.42 TWh in 4M16, according to Concorde Capital calculations based on sector data provided by Energobiznes. Comparable electricity production by DTEK (net of Zuyivska TPP, located in the Donbas occupied zone, for which there is no official data since May 2015) decreased 13% yoy in 4M16. DTEK’s power plants burning anthracite boosted their power generation by 73% yoy to 3.20 TWh, while output at DTEK’s other thermal power plants (net of Zuyivska) declined 25% yoy in 4M16.

Power generation by all Ukrainian thermal power plants (net of those located in the war zone) was flat yoy at 15.32 TWh in 4M16. Total power generation in Ukraine (excluding the occupied zone) decreased 2% yoy to 52.04 TWh.

In April alone, DTEK generated 2.60 TWh of electricity (an 8% yoy drop, on a comparable basis). Total power generation in Ukraine reached 11.43 TWh in April (a 6% yoy drop, on a comparable basis).

The Ukrainian mines of DTEK Energy produced 9.30 mmt of coal in 4M16, we estimated based on sector data provided by Interfax-Ukraine. In particular, DTEK’s mines producing anthracite and lean coal (all located in the occupied zone of Donbas) boosted their output 129% yoy to 2.38 mmt, while its other Ukrainian mines produced 6.92 mmt of coal, which is a 7% decrease yoy. Interestingly, the statistics imply that DTEK’s Komsomolets Donbasa mine (located in the occupied part of Donetsk region of Ukraine) mined 0.37 mmt of coal in April 2016 (vs. zero mining in April 2015), thus having reached its maximum levels observed in 2013-early 2014, before the war started.

Alexander Paraschiy: We are sticking to our forecast that DTEK Energy will reduce its total power generation by 5% yoy and will keep coal mining in Ukraine flat yoy in 2016 (refer to our May 12 report on DTEK Energy). However, taking into account that the prices of DTEK Energy’s Eurobonds have nearly reached our target of 60% of par, we now see their upside potential as limited.