YASK net profit falls 28% yoy in 2012

Yasynivka Coke (YASK UK) reported USD 10.9 mln in 2012 net income (-28% yoy) in its AGM announcement released on March 20. The company cut its long-term debt sharply to USD 0.4 mln from USD 43.6 mln as of end-2012. The AGM agenda, which contains a significant deals item, is scheduled for April 25.

Roman Topolyuk: Though transfer pricing has been a common practice for Yasynivka Coke, its bottom-line decline can be explained by market factors. Coke production at the plant fell 2% yoy to 1.67 mmt in 2012, domestic coke prices fell 28% yoy to USD 264/t, and export prices declined 36% to USD 281/t. A positive development is YASK’s decline in leverage, which had been always putting pressure on the company’s financial result, while the debt was used by its parent company, Donetskstal. We believe YASK cut its long-term debt on the decline of its receivables, which fell 72% to USD 40 mln. The company could have opted to do this in order to clean up its balance sheet and to serve as the guarantor for long-term debt that Donetskstal is currently preparing to secure. YASK shareholders voting against significant items at the AGM will receive the right to sell their stocks back to the company at UAH 0.605/share, we estimate.