DTEK Energy EBITDA plunges 63% in 9M20

30 November 2020

Revenue at Ukraine’s leading coal and power producer DTEK Energy (DTEKUA) dropped 56% yoy in 9M20 to UAH 31.61 bln, according to its abridged financial report released on Nov. 27. The decline was a result of a smaller volume of electricity sold to the market by its thermal power plants (by 30% yoy) and lower (by 26% yoy) average electricity price. As a result of the falling revenue, DTEK's gross profit plummeted 82% yoy to UAH 2.08 bln in 9M20. The company’s operating loss amounted to UAH 7.48 bln (vs. UAH 5.30 bln operating profit a year before), mostly driven by increased losses on impairment of operating assets (most likely, receivables) to UAH 4.86 bln. ForEx losses of UAH 6.90 bln and financial costs of UAH 5.10 bln resulted in DTEK Energy’s negative bottom line of UAH 19.12 bln.


The company’s EBITDA plunged 63% yoy to UAH 5.32 bln in 9M20, according to Concorde Capital estimates. Its operating cash flow before working capital changes dropped 61% yoy to UAH 5.72 bln, while net cash from operation slid 27% yoy to UAH 2.20 bln. Its net debt climbed 28% YTD to UAH 57.40 bln as of end-September, with net debt to LTM EBITDA reaching 8.7x, according to our estimates.


In 3Q20 alone, the company’s revenue was UAH 11.17 bln (up 46% qoq, down 41% yoy) and estimated EBITDA was UAH 2.54 bln (up 2.8x qoq, down 23% yoy).


Alexander Paraschiy: The company’s quarterly results look slightly better than we expected, meaning its cost-cutting measures are working efficiently. This, as well as an improvement of electricity prices on the wholesale market (the average price for the fourth quarter is currently 6% higher than in 3Q20), allows us to expect that DTEK Energy will be able to beat its July guidance on 2020 EBITDA of UAH 8 bln. Meanwhile, as uncertainty remains about the prospects of the wholesale market, we see low chances for DTEK Energy to agree upon debt restructuring with its creditors soon.

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