Page 61 - UKRRptFeb20

9.2 ​Major corporate news 9.2.1​ Oil & gas corporate news
Naftogaz profit rises 27% y/y in 9M19, producing dividends. ​Ukraine’s leading natural gas company Naftogaz (NAFTO) boosted its bottom line 27% y/y to UAH21.3bn in 9M19, according to the company’s report issued this week. The company has already paid part of this profit, or UAH8.5bn, as dividends to the government on December 26, the company’s CEO reported the same day. He added that the company has paid UAH103.8bn to the state year-to-date, including taxes and dividends.​ ​ The company’s revenue decreased 3.7% y/y to UAH165.3bn and its operating profit advanced 13.4% y/y to UAH31.2bn in 9M19. Its EBITDA fell 16.6% y/y to UAH55.5bn, based on Concorde Capital calculations. Its net debt slid 14% YTD to UAH35.8bn, and net debt to LTM EBITDA ratio was 0.44x, based on Concorde Capital calculations. Naftogaz generated UAH44.8bn in cash from operating activity and spent UAH24.7bn for CapEx and UAH12.3bn for dividends in 9M19. Alexander Paraschiy: Naftogaz has proven its image as a quasi-sovereign company, with the state contributing heavily into its equity when the company has faced financial troubles (about UAH140bn since 2014). At the same time, Naftogaz has paid most of profits in dividends during its better times (UAH64bn paid to the state in 2017-2019), and even paying extra dividends these days to improve performance of state budget. For fixed income investors, the most important information is the implications of Naftogaz's unbundling (spinning off its gas transit business) on its future cash generation potential and profits. Based on the 9M19 results, the contribution of its transit business to EBITDA was UAH27.1bn, we calculate, or 49% of total EBITDA (41% in 9M18). That means, next year (after the unbundling) Naftogaz will likely be left with half its EBITDA, thus raising its financial leverage. At the same time, the company’s leverage will likely remain safe: over the last 12M, the company’s net debt-to-EBITDA excluding its transit segment was 0.81x, we calculate.
Naftogaz updates gas price for January 2020 to reflect market changes
The new wholesale gas price for households is 25% lower than in January 2019 and 15% below the previous forecast for January 2020 29 January 2020, Kyiv 3⁄4 The January wholesale gas price for households, heat producers and other protected consumers receiving gas under the terms of public service obligations (PSO) will be UAH4.65 per cubic meter (net of VAT, retail margin, transmission and distribution costs). This price is 25% lower than that of January 2019 and 15% lower than the price offered by Naftogaz for January 2020 in December 2019. Naftogaz has calculated the new price according to the government’s Resolution #17 of 24 January 2020. With the new guidelines on PSO gas pricing, Ukraine is honoring its commitment to the IMF to deregulate the Ukrainian retail gas market gradually and introduce competition in this segment. The wholesale price offered by Naftogaz reflects import parity level. According to the new formula, the price for the current month is based on actual gas trading data during the first 22 days of a given month. The company will publish the price for the current month within several working days after the 22nd of the month. Naftogaz has also disclosed all components of the wholesale PSO price and provided links to public sources of this data.
61​ UKRAINE Country Report​ February 2020 ​ ​www.intellinews.com