DTEK Energy posts UAH 5.2 bln profit for 2018

Ukraine’s leading coal and power holding DTEK Energy
(DTEKUA) reported its 2018 net revenue at UAH 90.79 bln, according to its unaudited
financials released on March 4. This is 36% less yoy – primarily because the
holding stopped publishing revenue from its power distribution business and
from the operations of its Kyiv-based power plants in its top line. Its gross
profit decreased 1.3% yoy to UAH 19.27 bln, while operating profit advanced 43%
yoy to UAH 11.43 bln in 2018. Its bottom line turned to positive UAH 5.20 bln
in 2018, after UAH 2.92 bln in losses a year before.

The company’s operating cash flow before working
capital changes rose 20% yoy to UAH 26.18 bln, while net cash flow from
operations improved 44% yoy to UAH 19.47 bln. Its net purchase of property,
plant and equipment climbed 4% yoy to UAH 8.12 bln, and net repayment of
borrowings was UAH 7.11 bln, or 46% higher yoy. The holding’s net debt
decreased 11% yoy to UAH 52.42 bln.

Alexander Paraschiy: We conclude that the holding’s EBITDA reached UAH 25.0 bln in 2018,
which is 4% higher yoy and close to the bottom range of our estimate (UAH 25-26 bln). That suggests that the holding’s net
debt-to-EBITDA ratio reached 2.10x as of end-2018, which is slightly better
than 2.44x reported as of end-2017. It’s worth noting that DTEK was able to
improve its EBITDA even after spinning off its power distribution business, as well as halting the operations of two power
plants in the city of Kyiv. We are
keeping our forecast of DTEK Energy’s 2019 EBITDA in the range of UAH 25-26
bln, confirming our neutral view on DTEKUA bonds.