DTEK Energy reports 2017 adjusted EBITDA rose 30%

Ukraine’s leading coal and power holding DTEK Energy
(DTEKUA) generated USD 905 mln in adjusted EBITDA (29.8% yoy higher) and USD
5,330 mln in net revenue (6.3% yoy higher) in 2017, according to its presentation
published on Apr. 27. Its net loss amounted to USD 110 mln. The company’s CapEx
amounted to USD 316 mln, or 31.7% more yoy.

The key factor of EBITDA growth was improved profit of
its coal & power segment (USD 164 mln out of a total USD 208 mln yoy
increase), which the company attributed to higher power exports and better
prices of power supplied by thermal power plants.

The company reported its end-2017 debt amounted to USD
2,215 mln while its Net Debt-to-EBITDA ratio decreased to 2.44x from 3.13x a
year ago. About 88% of the company’s debt is repayable in 2023-2024, the
company claimed. In a Apr. 27 conference call, the company’s management
reported it has no plans to restructure its debt in the short term, referring
to unfavorable market conditions.

Alexander Paraschiy:  The company’s 2017 financials are slightly better than were
implied by its abridged report released in late February. The key improvement in the company’s EBITDA stems from beneficial
pricing of the electricity of its thermal power plants, as has become apparent
now. So far, the prices are beneficial for DTEK Energy in 2018 too (average
power prices of Ukrainian thermal power plants were 17% higher yoy in local currency
terms in 1Q18), which sets the stage for the holding’s operating profit to
remain strong this year as well. So far, however, we expect DTEK Energy will
report slightly smaller EBITDA in 2018 as compared to 2017. And we remain
neutral on DTEKUA bonds.