DTEK Energy revenue rises 23%, EBITDA 30% in 1H18

Ukraine’s leading coal and power holding DTEK Energy
(DTEKUA) generated UAH 83.18 bln in net revenue in 1H18, according to its
non-audited preliminary report released on Aug. 30. Its EBITDA rose 30% yoy to UAH
12.56 bln, according to our estimates, and operating cash flow before working
capital changes improved 21% yoy to UAH 13.22 bln. The holding’s bottom line
amounted to UAH 5.40 bln in 1H18, up from negative UAH 1.00 bln a year before.

The company’s 1H results imply that in 2Q18, its
revenue increased 23% yoy to UAH 36.84 bln and EBITDA improved 47% yoy to UAH
5.49 bln.

DTEK Energy’s total debt decreased 6.3% YTD to UAH
65.80 bln as of end-1H18, solely due to the appreciation of the local currency
(most of the company’s debt is denominated in foreign currency). Year-on-year,
its debt increased 1.1%. Its net debt dropped 9.2% YTD to UAH 58.70 bln and net
debt-to-LTM EBITDA ratio improved to 2.27x as of end-1H18, down from 2.81x as
of end-2017 and 2.50x as of end-1H17.

Alexander Paraschiy: We attribute DTEK’s P&L improvement solely to higher prices for
its outputs (recall, its coal mining fell 1.2% yoy, while power generation
improved 3.7% yoy and power distribution gained 1.5% yoy in 1H18). These
interim results are in line with our view that DTEK Energy will improve its
profits in 2018, so we retain our neutral view on DTEKUA Eurobonds.