KIEN To Enjoy Strong Profits Despite Drop In Heating Revenues?

According to Kievenergo’s (KIEN: BUY) management, the company will report USD 90 mln in losses from heat generation and supply in 2007 unless tariffs are revised. Alexander Paraschiy: According to KIEN’s press service the company’s losses from supplying heat were about USD 150 mln in 2006.  This means the company could potentially decrease losses from supplying heat by USD 60 mln in 2007. Also note that despite the huge loss of the heating segment in 2006, the company was able to increase its net income to nearly 5-times to USD 8.6 mln. Additionally, we expect the bulk of the losses KIEN sustains in 2007 to be subsidized by the government. We are sticking with our net income forecast of USD 58 mln for 2007. For details refer to our report of January 24.