Dniproenergo posts 5% EBITDA margin in 1Q

Dniproenergo (UX: DNEN UK) reported its 1Q10 financial results in a filing with the State Securities and Exchange Commission: its EBITDA margin was 5% in 1Q10, vs. 2% in 1Q09. The company’s net revenue reached UAH 1.41 bln during the period, up 37% yoy. Yegor Samusenko: Dniproenergo’s results are so far the best in the sector in 1Q10. Contrary to other state-owned GenCos, Dniproenergo does not purchase coal just from state mines; the majority of its supplies delivered are by minority shareholder DTEK. In 1Q10, Dniproenergo used coal purchased at prices as of end-2009, which were 10% cheaper than those delivered to other GenCos from state mines. Given that DTEK increased its price for coal supplied to Dniproenergo in 1Q10, we expect Dniproenergo’s margin premium to squeeze in upcoming quarters. We forecast Dniproenergo’s EBITDA margin to reach 6% in FY2010.