OREANDA-NEWS. March 14, 2011. Avdiivka Coke has posted a negative UAH 22mn result in FY10 in the announcement for the annual AGM, implying UAH 203mn loss for the 4Q10, and deepening the negative UAH 91mn bottom line of the 3Q10.

Millennium Capital: the news is NEGATIVE for AVDK. The earnings missed our 4Q10 target by more than UAH 300mn (MFKe UAH 106mn vs actual loss of UAH 203mn) despite higher volumes and stronger coke prices in the quarter. However, we expected the miss after Azovstal reported sequentially weak 4Q10 results earlier in Mar apparently caused by heavier transfer pricing on Metinvest behalf. Regarding AVDK we suggest the negative outcome is driven by the intensifying earnings redistribution within Metinvest as well. Moreover, we suggest this situation will most likely last through the entire FY11. Nevertheless, we expect muted reaction from the market in the eve of the forthcoming AGM (Apr 2011) which may potentially approve substantial dividends (up to 100% dividend yield) from the retained earnings of the previous years. In our view, the positive decision is likely given the recent deterioration in transfer pricing at both Azovstal and Avdiivka which flags the apparent cash needs of parent Metinvest.