Centrenergo decreases bottom line 86% yoy in 2014

Power GenCo Centrenergo (CEEN UK) increased net revenue 1.4% yoy to UAH 7,758 mln in 2014, according to its released financial statements. The increase in revenue was solely a result of higher prices as its electricity production volume decreased 9.5% yoy to 12.51 TWh. The company’s gross profit declined 62% yoy to UAH 294 mln as its material costs (mainly fuel costs) increased almost 10% yoy. This resulted in a 60% yoy decline in Centrenergo’s EBITDA to UAH 311 mln, and an 86% yoy decline in its net income to UAH 71 mln, implying an EPS of UAH 0.19.

The company’s net debt decreased dramatically from UAH 757 mln as of beginning of 2014 to negative UAH 15 mln as of year-end. This was caused mainly by a decline in Centrenergo’s working capital – primarily a fall in inventories by UAH 765 mln during the year. The latter was a result of dramatic depletion of the company’s coal stockpiles which fell from 1,094 kt at the beginning of 2014 to a worrying 56 kt as of year-end.

Alexander Paraschiy: The company’s weak financial results are of no surprise given that the second half of 2014 was the toughest period for Centrenergo. All its three power plants were suffering insufficient coal supply, with one (located near front line in Donbas area) hurting from damaged transport infrastructure. Two other power plants starved from an overall deficit of anthracitic coal in Ukraine, and for the first time in their history they had to import coal. The situation with coal supplies has slightly improved now, but remains unstable.

As the state has a large stake in the company, Centrenergo has to pay at least 30% of its bottom line (or UAH 0.0573) in dividends. Earlier the company was one of most dividend yielding issuers in the Ukrainian universe, while this time its dividend yield (if any) would be much more modest: 0.7%, based on CEEN’s current price. The date for the company’s shareholder meeting, which has to approve the dividend distribution, is yet to be announced.

Источник: Конкорд Капитал