WOOD Flash – PGE: adjusted 2Q19 preliminary EBITDA in line; compensation impact to be known soon
PGE posted its 2Q19 preliminary results on Friday (13 September), after the market closed. The results look slightly better than expected by the market, but this was driven mainly by non-cash items. Moreover, we do not know if the Bloomberg consensus includes the impact of the whole compensation; while PGE decided to include the compensation estimate in its preliminary numbers. We note that the company might have to revise its numbers, depending on the total size of the compensation for power freezes, and the risk of not being fully compensated remains very high. The coal and lignite volumes are weak, but we believe this has been priced in by the market already. We highlight the possibility of compensation adjustments. It remains to be seen whether the heavy industrials will choose the support scheme or not, as the suppliers have not been informed properly about the issue.PGE Polska Grupa Energetyczna is an electricity company based in Poland. Co. is engaged in the generation and selling of electricity. Co. is a predominant power producer and supplier in Poland and a major heat and power sector company in Central and Eastern Europe. Co. supplies over 5 million households, businesses and institutions through a combination of its own fuel resources (lignite), power generation and final distribution networks. Co.'s activities focus on the following areas: Conventional Power Generation, Renewable Power Generation, Nuclear Power Generation, Wholesale, Distribution and Retail. Co. has 12.2 GW of installed generation capacity.
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