Kyivenergo unveils 1Q09 results

Vertically integrated electricity company Kyivenergo (KIEN) reported its 1Q09 results: the company increased its net revenue in 1Q09 by 16% yoy to UAH 2.07 bln, and decreased its EBITDA to negative UAH 120 mln (vs. positive UAH 30 mln in 1Q08). The company disclosed a UAH 168 mln net loss for 1Q09 (9.7x growth yoy). Alexander Paraschiy: The key reason for Kyivenergo’s losses was low heating tariffs that covered only about 1/3 of the company’s costs for heat production. Still, we expect the company to show a positive bottom line in 2009. Kyivenergo is pursuing two avenues to increase efficiency: applying to the city of Kyiv for compensation for last year’s losses from the company’s heating business (the city agreed to pay about UAH 1 bln compensation), and requesting an upward revision in heating tariffs for the city. The latter, we expect, could be approved by the city only in fall 2009, when the new heating season starts and the problem of heat supplies becomes urgent again.