Naftogaz 9M20 EBITDA remains negative
26 November 2020
Naftogaz of Ukraine (NAFTO) reported a 6% yoy decrease
in net revenue to UAH 104.5 bln in 9M20, according to its unaudited accounts
released on Nov. 26. The decline in revenue happened in all segments except for
a small segment of gas storage. The company’s EBITDA was negative at UAH 1.2
bln in 9M20 (vs. positive UAH 26.0 bln a year before) and the bottom line was
negative at UAH 17.0 bln (vs. positive UAH 12.9 bln a year before). A key
contributor to the company’s negative EBITDA was the provisioning of
receivables for UAH 10.9 bln.
Meanwhile, the company’s operating cash flow before
working capital changes was UAH 15.0 bln (78% decrease yoy) and net operating
cash flow was UAH 16.1 bln (less 61% yoy) in 9M20. Its CapEx for the period was
UAH 11.8 bln (47% less yoy) and dividend paid was UAH 39.6 bln (up 3.2x yoy).
With such spending, Naftogaz decreased its cash position by 41% (or UAH
31.8 bln) YTD to UAH 45.8 bln. Its end-September net debt was UAH 19.7 bln, up
from end-2019 net cash of UAH 16.9 bln.
In 3Q20 alone, Naftogaz generated UAH 32.6 bln of net
revenue (up 57% yoy and 20% qoq) and positive EBITDA of UAH 0.5 bln (vs.
negative results a quarter and year before).
Alexander Paraschiy: The company’s 3Q results improved from an awful 2Q20, but that was not
enough to bring YTD EBITDA to a positive level. Given that for Naftogaz,
historically 2Q and 3Q are the weakest, and taking into account that natural
gas prices are getting stronger in Europe, we expect the company will report
much better operating profit in 4Q20 and therefore will further improve its
EBITDA as a result for the full year. Meanwhile, it is very likely that
Naftogaz’ bottom line will remain negative, which in fact is not a disaster for
Naftogaz (recall, dividends from its high profits of 2017-2019 have eaten away
cash from the company in the amount of UAH 90 bln, or over USD 3.5 bln, in
2018-1H20). All in all, Naftogaz thus far remains a stable and cash-rich
company, which allows us to remain neutral on its Eurobonds.
