DTEK Energy adjusted EBITDA surges 3.2x in 1H17

Ukraine’s leading coal and power holding DTEK Energy
(DTEKUA) generated UAH 10.30 bln in adjusted EBITDA in 1H17, which is 3.2x
higher yoy, according to its presentation released on Sept. 15. This is 7% more
than implied by the holding’s preliminary 1H17 financialsreleased in late August. Its 1H17 revenue amounted to UAH 67.73 bln, up 19% yoy
and 0.2% more than in its preliminary results. Its net loss was UAH 1.0 bln, in
line with its preliminary results. The holding did not provide detailed
financial statements for 1H17. In dollar terms, its revenue was USD 2.54 bln
and EBITDA was USD 385 mln in 1H17.

According to its presentation, its end-1H17 total debt
amounted to UAH 59.09 bln (USD 2.26 bln) and its net debt was UAH 54.65 bln
(USD 2.09 bln). Its net debt to LTM EBITDA was 2.2x as of end-1H17, down from
3.1x as of end-2016 and 10.1x as of end-1H16. Out of its total debt, the
holding has still not restructured USD 292 mln in banking loans (about the same
amount as at the end of 1Q17). In August, the holding reportedly restructured
USD 27 mln in a loan from Ukrsotsbank. Among its unrestructured loans is a debt
from the Russian state bank, the company explained in a conference call.

The holding’s 1H17 CapEx amounted to USD 133 mln, a
56% yoy jump, compared to about USD 480 mln of the total allowed CapEx level
for 2017.

Alexander Paraschiy: The holding’s 1H17 adjusted EBITDA is a bit closer to what we initially estimated (UAH 10.7 bln), while we are still looking forward
to see its detailed financials to check this figure. Otherwise, DTEK’s P&L
brought little surprise to us. What remains worrying is that DTEK made little
progress in restructuring its banking debt in 2Q17, but we do not expect it
will lead to any negative consequences for the holding. Our view on DTEKUA
bonds remains bullish.