Kyivenergo announces USD 56 mln losses in 9M08

Yesterday at a press conference, Kyivenergo’s (KIEN: HOLD) new management announced preliminary 9M08 results: net losses of USD 56 mln (11.1x yoy growth) and net revenue of USD 822 mln (+31% yoy). According to CFO Mykhailo Utkin, Kyivenergo’s losses were result of low heating tariffs (which cover only slightly more than 50% of heat production costs) and increased bad debt provisions due to the more than USD 200 mln growth in Kyivenergo’s receivables YTD. Alexander Paraschiy: We expect Kyivenergo’s losses to decrease by end-2008, mainly due to expected compensation of the lion’s share of the company’s heat losses from the Kyiv city budget. As experience shows, with the start of the heating season in Kyiv, i.e. when stable heat supply is in the forefront of everyone’s minds, the city council is more prone to increase the company’s subsidies from the budget.