Kyivenergo Reports Preliminary 2007 Results

According to preliminary 2007 financial results released yesterday, the net sales of electricity company Kyivenergo (KIEN: HOLD) amounted to USD 916 mln (+41% yoy) last year. The company’s EBITDA decreased 12% yoy to USD 34 mln (margin of 3.7%), while net income dropped three times to USD 1.2 mln (margin of 0.1%). Alexander Paraschiy: The company’s 2007 revenue is 12% lower than our forecast, as its level of electricity production was under what we expected. Kyivenergo’s EBITDA is USD 26 mln lower than we estimated, mainly due to unexpected expenses of USD 28 mln in the last quarter of 2007 (reclassification of receivables as bad debt provision). These expenses are one-off, and hence do not affect our forecasts for 2008 or our recommendation on the stock.