Zakhidenergo (ZAEN: HOLD) Announces Q105 Results

Zakhidenergo increased its Q105 revenue by 16% yoy to USD 113 mn, but net income dropped to 0.47 mn (compared to USD 6.7 mn in Q104). Also, ZAEN increased its operating costs (including depreciation) from 86% of sales in Q104 to 91% in 2005. Concorde Capital: ZAEN increased electricity output in Q105 by 3.8% yoy, mainly due to a 9.8% yoy increase at its Burshtyn Thermal Power Plant. Two other thermal plants decreased output, because of decreased domestic demand for thermal electricity. An increase in the company?s operating costs can be explained by increased costs (including transportation) and the low quality of energy coal supplied to ZAEN power plants. We expect the situation regarding fuel supplies to improve starting in Q2 or Q3, as the terms of payment for electricity should be changed to benefit ZAEN.