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. Last Updated: 07/27/2016

UES Triples Operating Profit in H1

Unified Energy Systems said on Tuesday its operating profit to international accounting standards for the first half nearly tripled year on year to 36.9 billion rubles ($1.25 billion), as sales jumped 25 percent to 300.8 billion rubles.

Operating costs rose 35.9 billion rubles to 264 billion rubles, UES said.

"The rise in costs was influenced mainly by increased expenses on fuel and electricity purchases, accounting for 25.9 billion rubles, or 72.1 percent of the increase," UES said.

Net profit was down to 16.9 billion rubles from 18.8 billion rubles, which UES said was due to a tax benefit in the previous period from a fixed asset revaluation.

Operating cash flows were 31.7 billion rubles and 22 billion rubles went to investment.

"The group completely financed its investment activities out of operating cash flows," UES said.

Russia raised electricity prices 14 percent this year at a time when demand for power grew because of colder weather and an expanding economy. The government, which controls UES, caps power prices to curb inflation and subsidize domestic industries.

"Production of heat and electricity went up because of rising demand, propping up sales," said Alexander Korneyev, an analyst at Moscow brokerage. "At the operating level, the results are healthy. To figure out further details, one needs to see the full report."

Russia plans to split UES into separate generation and distribution companies. Industrial holding companies have been buying UES shares, seeking to get control over assets, but the state has not decided whether it will sell the utility's generating assets for UES shares or accept cash. (Bloomberg, Reuters)