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Apr 05, 2013

Donbassenergo: Back in black


Donbassenergo, Ukraine’s smallest thermal power producer,returned to the black in 2012 on the back of higherelectricity prices and sales and a reduction in its averagefuel costs, according to IFRS results approved March 20 bythe company’s annual general shareholders meeting.

Net income recovered to $3.8 million, up from a netloss of $3.4 million in 201), EBITDA surged 54% year-onyearto $32 million and net sales increased 15% to$574 million, implying EBITDA and net margins of 5.6%(up 1.4 percentage points on 2011) and 0.7% ( up1.4pp), respectively.Last year’s revenue growth was driven by an 11%increase in the average electricity tariff to $0.07/kWh from$0.0628, and a 4% rise in electricity sales to 8,179 GWh,while the average fuel price decreased by 2.8% to $118per tonne of fuel equivalent, helping improve its margins.

The genco’s gross margin increased 12pp year-onyearin 2012, to 13.5%, yet the company decided tocreate a Hryvna 242 million ($30 million) reserve fordoubtful debts, which reduced EBITDA by the equivalentamount and was the main reason behind weaker thanexpected financials overall, according to Dennis Sakva,utilities analyst at Kiev-based brokerage Dragon Capital.

For 2013, Donbassenergo expects electricityproduction to rise 2% year-on-year to 9.3 TWh and to posta 7.5% gross margin on electricity sales versus 11.7% in2012. The company plans to finish reconstruction of unit13 at its Starobeshevskaya thermal power plant within amonth and start upgrading another unit atStarobeshevskaya and a unit at the Slovyanska plant.Donbassenergo, which is 85.77% owned by the statethrough the sector holding company, the Energy Companyof Ukraine, owns and operates the 1,575-MWStarobeshevskaya and 880-MW Slovyanska plants. Itsofficial total nameplate capacity, according to the NationalEnergy Regulatory Commission, is 2,975 MW, accountingfor around 5% of domestic generating capacity.


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