Page 9 - FSUOGM Week 44 2021

FSUOGM PERFORMANCE FSUOGM

Naftogaz improves financial position

in H1 but "worst times ahead"

UKRAINE EBITDA at Ukraine’s state national gas company for political reasons,” Paraschiy continued. “For
Naftogaz climbed 31% year on year in the first these reasons, Naftogaz will do all its best to show
The company will come half of the year, arriving at UAH33.1bn ($1.2bn), a net profit for the year – otherwise it will be hard
under strain in the on the back of higher gas prices. to explain to the government why it should have
coming heating season. Revenues were up 46% y/y at UAH106.2bn, replaced the Naftogaz CEO this spring.”
primarily due to a 105% increase in earnings The analyst warned that another challenge
from trading and supply, thanks to higher gas for Naftogaz was that its longer Eurobond
prices. Upstream gas EBITDA was up 145% at maturing in 2026 trades at a discount to par
UAH26.64bn while trading EBITDA came to value, “implying that a possible new issue of
UAH4.55bn, versus a loss of UAH1.98bn a year mid-term bond would require a higher inter-
earlier. Naftogaz’s oil arm Ukrnafta reported est rate now (which might not be politically
UAH2.48bn in EBITDA, compared with a loss acceptable.”
of UAH2.13bn a year before. “Therefore the company is unlikely to offer
Despite the improvement in core earn- a new Eurobond in the next couple of weeks
ings, the company still recorded a net loss of (unless the bonds will be repriced positively),
UAH1.65bn, although this was much smaller meaning its attempt to refinance the $335mn
than the loss of UAH11.54bn a year earlier. bond maturing next July is only possible in the
As Alexander Paraschiy, an analyst at Con- next year,” he said.
corde Capital, commented, Naftogaz’s results CEO Yuriy Vitrenko said at a press confer-
were “very strong, but the worst times are ahead.” ence on October 29 that Naftogaz had yet to
“In the coming heating season, the company decide on the possible Eurobond issue this year.
will face the need to sell a lot of natural gas at Going back to the company’s first-half
discount to the market (to households, budget results, operating cash flow before working cap-
entities and heating utilities) while importing ital changes tripled y/y to UAH33.72bn, largely
more,” he said in a research note. “All this will reflecting its EBITDA level before impairment.
likely worsen the company’s liquidity, its profit The company generated UAH17.78bn in net
and loss in 4Q21 and possibly in 1Q22, as well as cash from operations, 19% more y/y, while its
prevent it from reporting a positive bottom line investments in property, plant and equipment
for the full year 2021.” were flat at UAH7.42bn.
“Taking into account the company’s empha- Total debt increased 12% between the start
sis on a positive bottom line for 2Q21, net losses of the year and the end of June to UAH58.2bn,
in the upcoming quarters will not look desirable although net debt fell 73% y/y to UAH7.86bn. ™

Week 44 03•November•2021 www. NEWSBASE .com P9