Daily monitor

Interpipe Nyzhnodniprovsky Pipe Rolling Works [NITR UZ, HOLD] increased its output 4% MoM to 52.6 thsd metric tons of pipes in May 2008. The mill also produced 252.2 thsd metric tons of pipes in 5M2008, reducing its production 1.3% YoY. NITR is one of the biggest Ukrainian pipe producers and the world’s second largest producer of railway wheels. The mill makes seamless pipes for the oil, gas and power industries, as well as produces railway wheels and tires.

Electricity generation companies (except Energoatom) which belong to State owned Energy Company of Ukraine have increased their electricity production by 6.3% YoY amounting to 30.9 bln kWh. State owned thermal generation companies (Gencos) increased their output by 8.2% YoY increasing their utilization rate by 1.7p.p. to 25.8%

Gross electricity consumption (including electricity losses in the grids) increased for 5M08 by 5.3% YoY amounting to 82 bln kWh. Net electricity consumption amounted to 66 bln kWh implying a net electricity consumption increase of 5.9%. Largest consumption increase was due to household consumption which grew by 8.7% YoY compared to industrial consumption – 3.5% YoY.

The Rada’s decision to postpone the enactment of the 10% import duty law with regards to automobiles (1 to 2.2 liter engines), is going to allow Zaporizhzhya automobile plant (ZAZ) to retain its production and sales growth rates. ZAZ also plans to accumulate funds and complete the restructuring of enterprises and technical re-equipment of production, and preserve the existing jobs for its workers: such was the recent announcement of Mykola Evdokymenko, the Head of the ZAZ’s Board of Directors. Mr. Evdokymenko had also emphasized that the adoption of the law should enable the enterprise to shift its exports to new markets, be able to reorient economic ties; as well as complete the current production programs and implementation of long-term contracts.

Daniel Valk, the CEO of Dniprospetsstal [DNSS UZ, U/R], confirmed plans to implement a USD 200 mln investment program. The timeframe of the program changed from 2008–2009 to 2009–2012. Valk also projected net sales exceeding USD 800 mln for 2008. According to the CEO, EBITDA should increase at least 40% in 2008, surpassing USD 150 mln. According to Interfax-Ukraine, which reported from a June 05 investment forum, Valk noted increasing sales in Asia and North America, as well as opening an office in Chicago. Cheap Ukrainian labor, as well as favorable logistics for supplies on natural markets (Ukraine and the CIS), were mentioned as competitive advantage factors.

Zaporizhstal [ZPST UZ, Strong BUY] conducted an AGM on June 06. Some clarification has been given regarding the modernization program, including the USD 1.7-2.0 bln converter-concaster shop construction project. The company postponed profit distribution decision, and streamlined its management structure.

The third annual press conference of Metinvest Holding took place in Kyiv on June 06. The company officers reported the preliminary 2007 financial results, and confirmed some of its capital expenditure plans.

May is the first month this year in which inflation was below 2% MoM. Official statistical data signals the beginning of the downward trend for the inflation in Ukraine in May. Monthly inflation reached 1.3% in may comparingto 3.1% in April. Since the beginning of the year CPI rose 14.6% and 31.1% since May 2008. We can finally see the picture when prices were stabilizing in almost all product groups, except meet and energy related transport services.

EU Food and Veterinary Office (FVO) experts are set to inspect Ukrainian dairy producers planning to export dairy products to European countries for compliance with EU quality standards.

Ukrtelecom [UTEL UZ, U/R], the largest Ukrainian fixed-line telecommunication operator announced yesterday its development plans in broadband and mobile segments at Investment conference in Kyev. UTEL is planning to get 56% of broadband market till 2013 and increase subscriber pool till 1 mln subscribers already in 2009, then grow till 4 mln users at the end of 2011 then 6 mln.users in 2013.