DTEK Energy updates 2019 financial, operating data

Ukraine’s leading coal & power holding DTEK Energy
(DTEKUA) released its updated abridged financials on Feb. 28, reducing its
estimate of 2019 operating and net profit, while raising its operating cash
flow estimate from its initially published financials on Feb. 5.

The company’s net revenue reached UAH 76.80 bln in
2019, a 15.4% yoy drop. Its 2019 operating profit was UAH 0.54 bln, or 95% less
yoy (vs. 85% decline reported earlier), and net profit was UAH 1.84 bln, a 62%
yoy decline (vs. a 47% drop reported earlier). At the same time, its operating
cash flow before working capital changes was UAH 17.61 bln in 2019, which is a
33% decline yoy (vs. a 38% fall reported earlier).

The company also provided its update on operations in
4Q19, which are generally in line with our estimates for 2019.
Namely, based on the company reports, we calculate DTEK Energy produced 22.3
mmt of ROM coal in 2019, or 7.1% less yoy. It produced net 28.4 TWh of
electricity, or 12.4% less yoy.

Alexander Paraschiy: Despite
DTEK Energy now reporting weaker net profit, its updated financial results look
more encouraging. Based on the fresh data, we estimate the company’s 2019
adjusted EBITDA reached UAH 17.5 bln (down 38% yoy and more than we previously
estimated). With such numbers, the company’s net debt-to-EBITDA ratio is 2.6x
as of end-2019. In 2020, DTEK Energy will likely post weaker profits, or
between UAH 14 and 16 bln at the EBITDA level. We are keeping our neutral view
on DTEKUA bonds.