DTEK Energy power generation falls 2.3% yoy in 7M19

The power plants of DTEK Holding, Ukraine’s leading
coal and power producer, generated 20.19 TWh of electricity in 7M19, Concorde
Capital calculated based on sector-wide data provided by Energobiznes. This is
10.6% less yoy and 2.3% less yoy on like-to-like basis (excluding the output of
Kyiv-based power plants that DTEK stopped operating in August 2018). DTEK’s
thermal power plants generated 20.02 TWh in 7M19, or 2.2% less yoy.

In July 2019 alone, DTEK Energy generated 2.64 TWh of
electricity, which is 10.6% less yoy (on a like-to-like basis) and 22.4% less
compared to June (on an average daily basis).

Alexander Paraschiy: The results
are in line with DTEK management’s plan to reduce electricity output of its
thermal power plants by about 3.4% yoy in 2019.

The key uncertainty for 2H19 will be the achieved
price of electricity sold by DTEK’s power plants, as the establishment of a
free market in the sector as of July 1 do not allow for monitoring such prices.
Recall that before this reform, thermal power plants sold most of their
electricity to a single state-controlled buyer at transparent prices. Now they
are selling over 75% of their power by confidential bilateral contracts. So
far, we expect some decline in DTEK’s profitability in 2019, which will result
in about a 15% yoy decline in its EBITDA for the year, in local currency terms.