Donbasenergo ups revenue 8% yoy, losses 24% yoy in 1Q12

Donbasenergo (DOEN UK), the Ukrainian power generator, reported expectedly weak financials for 1Q12 yesterday. Net revenue increased 8% yoy to USD 136 mln, mainly on a 10% increase in power tariffs. Electricity output was down 2% yoy to 2.57 TWh. Coal input costs grew faster than achieved power tariffs, which resulted in deepened operating losses (negative EBITDA increased 1.2x yoy to USD 8 mln) and net losses (up 24% yoy to USD 13 mln).

Alexander Paraschiy: While weak results for the quarter were broadly expected (all the other GenCos’ extremely poor financials were released a day before), Donbasenergo’s financials look much better than its peers. The company showed just a minor decline in its EBITDA margin (0.7 pp yoy) vs. its peers’ 5–14 pp drop. We explain the relatively small growth in operating losses by a much more moderate increase in coal costs for the company. Unlike Dniproenergo and Zakhidenergo, the company is not integrated into DTEK’s coal-power chain and buys coal at the market price. We therefore expect Donbasenergo will improve its financials in the next quarters, when the regulator will traditionally allow for better power pricing. On the flipside, we do not expect any improvement in the company’s financials for the full-year compared to 2011.