Ukrnafta 1H06 Financials Released.

In 1H06 Ukrnafta (UNAF: HOLD) reported gross sales growth of 83.9% yoy (to $1,253.0m) and a 76.3% increase in net revenue ($827.2m). UNAF’s net income, $224.5m, was 60.0% higher than in 1H05. No other figures were released. Vladimir Nesterenko: We attribute Ukrnafta’s strong 1H06 results mostly to the unexpectedly high prices for domestic oil (36.8% yoy increase) and oil products (29.8% yoy growth), and to the company’s expansion in the downstream (the number of its filling stations increased in 1H by 32.5%, to 518 – in line with our forecasts). Ukrnafta’s 1H net margin amounted to 27.1%, which is well above our forecast for 2006 of 21.2%. Though the company’s higher than expected profitability may be due to high crude oil prices, it may also mean that the removal of tolling schemes in 2006 has hurt Ukrnafta’s earnings by less than we initially estimated. We’ll provide further analysis of Ukrnafta’s 1H06 results once we get full 1H reports.