Ukrnafta slightly reduces payables to the state in 1Q16

Ukraine’s leading oil producer and gasoline retailer Ukrnafta (UNAF UK) reported a 61% yoy decrease in net revenue to UAH 3,122 mln in 1Q16, according to its filing last week. Its revenue from crude oil sales decreased 47% yoy to UAH 1,828 mln, and revenue from sales of ammonia fell 26% yoy to UAH 712 mln. The company avoided reporting revenue from sales of oil products in 1Q16, which was UAH 2,729 mln in 1Q15. The company’s EBITDA was negative at UAH 448 mln in the quarter (vs. positive UAH 2,982 mln a year before) and net losses amounted to UAH 510 mln (vs. net profit of UAH 1,950 mln a year before).

Ukrnafta managed to decrease its trade receivables and prepayments received 16% qoq (and 22% yoy) to UAH 11,518 bln. Its payables to the state amounted to UAH 10,046 mln as of end-1Q16, which is a 5% decline compared to end-2015 (UAH 10,607 mln), but 88% higher yoy.

Alexander Paraschiy: Ukrnafta’s P&L continues to be misleading and inconsistent. For instance, it looks like the company chose to not include its gasoline retail business in its 1Q16 financials, for unclear reasons. The decrease in the company’s trade receivables by UAH 2.1 bln in the quarter looks like a good sign, while that failed to lead to a respective decline in the company’s payables to the state (instead, the company’s trade payables declined). The company’s large debt to the state is currently its key risk in sustaining itself as a going concern.

Recall, Ukrnafta is trying to restructure all its debt to the government, based on an alleged tough liquidity position resulting from the “low payment discipline” of its counterparties last year. A supervisory board meeting to consider restructuring the state debt (involving government representatives, as the government controls a 50%+1 share in Ukrnafta) has been postponed several times, with the next attempt scheduled for May 24.