WOOD Flash – Tauron: 1Q19E prelims review – 18% consensus beat, generation and supply surprise positively
On Tuesday (30 April), after the market closed, Tauron kicked off the Polish utilities’ prelims by reporting its 1Q19E figures, shedding some light on the upcoming prelims of the other three utilities under our coverage (PGE, Enea and Energa). In our preview, we flagged that we expected strong results, despite the ongoing pressure from all sides. The company delivered an even stronger performance, beating both our and the consensus EBITDA estimate, by 28% and 18%, respectively. As highlighted in our preview, Tauron decided to reverse back one-quarter of the provision booked in 4Q18 due to the power price freeze law, the generation segment delivered a very good performance and, in line with our expectations, the regulation freezing prices, in its current form, seems to have improved the company’s profitability. As expected, the mining segment improved qoq, but its EBITDA remained negative in 1Q19. The distribution EBITDA exceeded our estimate as well, due mainly to the warm weather, we believe. Tauron is due to report its full 1Q19E numbers on 22 May – we will watch its operating cash flow closely, as it was exceptionally weak in 4Q18.Tauron Polska Energia is engaged in the generation, transmission, distribution, and sale of electricity and heat in Poland. Co. generates electricity from various conventional and renewable energy sources, including hard coal, lignite, natural gas, biomass, wind, solar, and hydro power. It is also involved in quarrying, crushing, and breaking of limestone; quarrying of stone for the construction industry; mining of hard coal; trading in electricity; and production of technical gases. In addition, Co. engages in the repair and maintenance of machinery and electrical equipment; electrical installations; and construction of power lines.
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