Ukrnafta’s net income declines 1.9x y-o-y in 1H11

Ukrnafta (UX: UNAF UK) decreased its net income by 1.9x y-o-y to UAH 792 mln in 1H11. Net revenues were up by 75.3% y-o-y to UAH 13 bln, and its gross margin dropped -39.4% y-o-y to UAH 1.4 bln. In 2Q11, net income decreased by 16.5% y-o-y to UAH 762 mln and net revenue was up by 61.9% y-o-y to UAH 6.6 bln. Antonina Davydenko: Ukrnafta’s 1H11 results come as no surprise given the disappointing 1Q11 financials, when earnings dropped to UAH 28.8 mln, down by 20x y-o-y due to transfer pricing, continuing decreases in production figures and a hike in rent payments. However, we saw earnings recovering in 2Q11, up 26x q-o-q, and we expect 2011E net income of UAH 2.5 bln.