OREANDA-NEWS. Zakhidenergo (ZAEN) increased net sales by 26.8% y-o-y to $179 mln in 3Q07, while gross profit dropped 58.2% to $3.2 mln, indicating a gross margin of just 0.4%. EBITDA came in at a negative $1.2 mln level for ZAEN, after $5.6 mln in the same period the year before. The company shows net losses of $14.4 mln, which is 9% higher than in 3Q06.

Dniproenergo (DNEN) ended 3Q07 with results similar to those of ZAEN, increasing net sales by 37.3% y-o-y to $179 mln in 3Q07. However, gross profits contracted by 63.0% to $0.7 mln, implying a gross margin of 0.4%. EBITDA was saved by D&A, but still fell by 72.5% to $4.8 mln. DNEN posted net losses of $7.1 mln in 3Q07, a significant drop from net income of $3.7 mln in 3Q06.

According to Alfa Capital Ukraine's analysts, lower gross profits for ZAEN and DNEN are attributable to rising prices for scarce domestic coal, which were not covered by a sufficient increase in sales tariffs, as they are currently suppressed by the National Electricity Regulatory Commission (NERC). Notably, both companies also have increased their interest expenses indicating more active short-term borrowings this year.