Page 65 - UKRRptJun20

9.2 ​Major corporate news 9.2.1​ Oil & gas corporate news
9.2.2 ​Automotive corporate news 9.2.3​ Transport corporate news
With gas prices low for the foreseeable future, Naftogaz will lose “hundreds of millions of dollars” next fall and winter when it sells gas in storage, ​Yuriy Vitrenko, the state energy company’s outgoing director of business development, tells the UBN in an interview. The gas was bought at higher prices last summer and fall to boost reserves to 17.5bn cubic meters in advance of negotiating a renewal of the gas transit contract with Russia’s Gazprom. The sales price inside Ukraine is set by the Cabinet of Ministers, largely drawing on regional prices.
Ukrzaliznytsia​ (Ukrainian Railway) generated UAH7bn in losses in 1Q20, the ​liga.net​ news site reported on May 20, citing information from the website of the Cabinet of Ministers. The company's freight turnover fell 4.8% y/y during the quarter. With such troubles, the company may face a liquidity deficit of about UAH16bn in 2020, including the need for repayment of UAH11bn in debt. Taking into account such data, the Infrastructure Ministry suggested that the cabinet reduce its dividend appetite from Ukrainian Railways to 30% of 2019 net income, ​epravda.com.ua​ news site reported. Recall, the company generated ​UAH2.99bn of net profit in 2019​. Based on the Cabinet decree of April 24, state-controlled companies should pay 50% of their 2019 net income in dividends, with the exception of Naftogaz (95%), Privatbank (75%) and some power companies (30%).
Ukrainian International Airlines is cutting 35% of its staff, mothballing 60% of its fleet, cutting business class seats, and planning to delay resumption of long haul flights until next spring​, Yevhenii Dykhne, UIA CEO, said yesterday in a statement. UIA will let go 900 employees and only fly 14 planes of its fleet of 34 aircraft. During the second half of this year, UIA hopes to fly 1mn passengers, one quarter of the volume of the second half of 2019.
The key driver of the 1Q20 losses of Ukrainian Railways is the devaluation of the hryvnia by 15.6%​ vs. the US dollar during the quarter. As 98% of the company’s end-2019 debt (amounting to $1.38bn in the equivalent) was denominated in $and EUR, we estimate the weakened hryvnia should have resulted in about UAH6bn in foreign currency losses during the quarter. As the national currency has strengthened 5.6% since the beginning of the second quarter and is not likely to devalue much, such losses will likely be partially reversed by end-June. Nevertheless, the company's lost freight traffic due to quarantine restrictions will affect its fundamentals. Therefore, the proposal to reduce the dividend distribution of Ukrainian Railways looks logical, and we expect the cabinet will approve it. ​ ​The next question is – whether the company will be able to find adequate financing of its potential gap this year. So far, the task looks manageable, providing the company’s EBITDA won’t fall
65​ UKRAINE Country Report​ June 2020 ​ ​www.intellinews.com