DTEK Renewables doubles P&L in 2019

DTEK Renewables (DTEREN), the green energy subsidiary
of DTEK Group, reported net revenue of UAH 4.89 bln (up 96% yoy) and gross
profit of UAH 3.25 bln (up 85% yoy) in 2019, according to its annual results
published on May 29. Its operating profit gained 60% yoy to UAH 2.50 bln and
net profit jumped 119% yoy to UAH 2.85 bln. The company’s EBITDA advanced 111%
yoy to UAH 3.88 bln, according to Concorde Capital estimates.

The firm’s end-2019 debt amounted to UAH 21.67 bln,
implying a total debt/EBITDA ratio of 5.6x (down from 6.5x a year before).

In euro terms, DTEK Renewables’ revenue advanced 118%
yoy to EUR 168.8 mln, EBITDA jumped 134% yoy to EUR 134.1 mln and its bottom
line surged 143% yoy to EUR 98.3 mln.

During 2019, the company provided net loans to related
parties in the amount of UAH 1.53 bln, and its net lending to related parties amounted
to UAH 3.26 bln as of end-2019.

In 2019, the company boosted its installed capacity of
green energy sites to 950 MW (from 210 MW) and generated 1.4 GWh of electricity
(2.45 GWh on an annualized basis).

The company also complained about increased
receivables from a guaranteed electricity buyer, whose payment discipline
deteriorated since March 2020. As of May 29, the state operator owes EUR 61.3
mln to DTEK Renewables (about UAH 1.8 bln).

Alexander Paraschiy: Worsened
payment discipline on the market is not the biggest threat to DTEK Renewables
as of today. With the situation on Ukraine’s energy market having deteriorated
since March, the government is actively seeking to reach an agreement with
renewable energy companies to reduce green feed-in tariffs. The latest offer
from the government was to cut solar power rates by 15% (from EUR 150/MWh
enjoyed by DTEK Renewables) and wind power rates by 7.5% (from average EUR
106/MWh enjoyed by DTEK Renewables).

If the government is successful in implementing new
rates, DTEK Renewables’ EBITDA in 2020 could reach EUR 175 mln, compared to
about EUR 250 mln that the company could generate from the current feed-in
tariffs. Even if that happens, DTEK Renewables will be able to generate enough
cash flow to service and repay on schedule its debts, providing it won’t invest
in new projects and ceases lending to related parties.