DTEK public subsidiaries improve P&L in 3Q16

Six open joint stock companies controlled by DTEK Energy (DTEKUA), which are responsible for more than 70% of the holding’s coal and electricity production and distribution, reported their 9M and 3Q16 financials on Oct. 25-26. Based on the results, three companies of DTEK’s coal and power segment (Zakhidenergo, Dniproenergo and Pavlohradvyhillia) reported cumulative revenue of UAH 12.18 bln (+23% qoq) and cumulative EBITDA of UAH 1.86 bln (+57% qoq) in 3Q16. Three companies of DTEK’s power distribution segment (Kyivenergo, Dniprooblenergo and Donetskoblenergo) reported cumulative revenue of UAH 11.14 bln and cumulative negative EBITDA of UAH 0.61 bln (a 44% qoq drop) in 3Q16. Aggregate EBITDA of the six subsidiaries amounted to UAH 1.26 bln in 3Q16, which is an 11.6x hike qoq.

Alexander Paraschiy: The subsidiaries’ results cannot be directly used to assess DTEK’s 3Q16 financials as many non-public intermediaries are involved in DTEK’s operating cycle. However, the results in all segments illustrate a relative improvement in the health of DTEK’s key companies. Thus far, we are sticking to our vision that DTEK Energy will be able to generate EBITDA of USD 475 mln in 2016, an increase from USD 125 mln in 1H16. As we highlighted in the news above though, there is an upside risk to our forecast.