Page 50 - bne IntelliNews Ukraine Country Report May 2017

realized prices. The company’s normalized EBITDA was halved y/y to UAH2.96bn. CapEx amounted to UAH0.51bn, which was a slight increase from UAH0.49bn a year before, but still far below the level that allows for maintaining stable production. For that reason, Ukrnafta expects further hydrocarbon output decline in 2017. This year, the company hopes its CapEx program will be UAH2.4bn, though this amount “will depend on the arrangements concerning the repayment of the company’s tax debt”. The company’s tax debt increased to UAH13.2bn as of end-2016 (from UAH10.1bn a year before), even though it managed to increase tax payments by 50% y/y to UAH8.1bn. The company’s current liabilities increased 19% y/y to UAH28.8bn. The company also reported on April 14 that management has offered a new tax debt restructuring proposal for the supervisory board's consideration. The review of the proposal was postponed to allow management to consult with the State Fiscal Service of Ukraine. Management was “instructed by the supervisory board to evaluate the sale of the company's major assets as an alternative approach to meeting the tax obligations,” it reported. Alexander Paraschiy: Ukrnafta is creeping even closer to its bankruptcy with no success in recovering its outstanding receivables, coupled with continued accumulation of payables to suppliers and the state budget. It is not much likely that Ukraine’s tax authorities will agree to any long-term restructuring of tax debt, so the option of selling some assets to repay the debt looks more likely now. In any case, Ukrnafta does not look like a going concern any more.
9.2.2 Automotive corporate news
Motor Sich EBITDA falls 41% in 2016, surges 4.8x in 1Q17 Ukrainian aerospace engine producer Motor Sich reported a 63% y/y jump in net revenue to UAH3.43bn in 1Q17, according to its April 27 regulatory filing. Its EBITDA increased 2.5x y/y to UAH1.73bn and net profit surged 4.8x y/y to UAH1.46bn in 1Q17. Its net debt dropped 24% q/q to UAH0.49bn. The same day, Motor Sich posted its annual financials for 2016, with net revenue of UAH10.55bn (-24% y/y), EBITDA of UAH4.23bn (-35% y/y) and net profit of UAH1.96bn (-41% y/y). Alexander Paraschiy: In dollar terms, Motor Sich's 2016 revenue dropped 35% y/y and 61% from 2013. Such a decline is related to the loss of its major clients, Russian helicopter plants, as a result of Ukrainian economic sanctions. But nonetheless, the company remains highly profitable, being able to secure enough orders for its products, invest into the modernization of its capacities and work on new product lines. According to the company’s plans revealed at its AGM, it is going to boost output by 10% in constant prices in 2017. By our conservative estimates, we expect the company will operate at the same capacity load this year as in 2016, while it will be able to slightly improve its revenue and EBITDA. The company’s long-term future still remains unclear.
9.2.3 Transport corporate news
Ukraine’s Infrastructure Deputy Minister Yevhen Kravtsov said that freight rates of railway monopoly Ukrzaliznytsia may be raised in June or July, Interfax-Ukraine reported on April 18. The growth may be linked to inflation rates in Ukraine, Kravtsov assumed, which is a straightforward benchmark. Recall, the last time Ukrzaliznytsia enjoyed a rate hike was a 15% increase in late April 2016. Since then, Ukraine’s consumer prices have risen by about 12% and producer prices by about 35%. In its December
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