Ukrnafta decreases bottom line 7.5x yoy in 2013

Ukraine’s leading oil producer and oil products retailer Ukrnafta (UNAF UK) reported a 2% yoy increase in its revenue to UAH 21.1 bln in 2013. This result diverges with the company’s revenue from sales of key products, crude oil (-24% yoy) and oil products (-2% yoy). The company’s full-year EBITDA fell 36% yoy to UAH 2.33 bln, mostly due to an increase of net “other operating expenses” by 32% yoy to UAH 8.4 bln. The company’s bottom line was killed by an unexpected 5x increase of financial costs (to UAH 1.3 bln, which have nothing to do with interest expenses) and amounted to UAH 190 mln in 2013 (vs. UAH 1,428 mln profit in 2012). The company’s end-2013 debt amounted to UAH 40 mln, while cash balance was UAH 147 mln.

Alexander Paraschiy: Ukrnafta’s full-year report is clearly disappointing as in 9M13 the company had demonstrated a comparable to full-year EBITDA (UAH 2.1 bln) and a much higher net profit (UAH 764 mln). We understand that severe manipulations with the company’s P&L were made to decrease a possible dividend payout. As you may recall, this year Ukrainian government is demanding that companies with a state’s stake pay 50% of their 2013 income as dividends.

The company has not distributed dividends to its shareholders over the last three years and it did not schedule a shareholder meeting. This year is no exception so far, but there is some probability that an AGM will take place in 2014. At least this is what the new CEO of Naftogaz, holder of 50%+1 stake in Ukranfta, told journalists on April 1, saying he would call the AGM soon.  In case the AGM happens this year, Ukrnafta will have to pay at least UAH 1.18 bln in dividends (30% of its 2011, 2012 profits, and 50% of its 2013 profit), which would imply a UAH 21.7 DPS (9% dividend yield).