Metinvest EBITDA decreases 4.5% m/m in June

Ukraine’s largest steel maker Metinvest (METINV)
generated USD 147 mln EBITDA in June, a 4.5% m/m decrease, according to its
monthly results published on Aug. 29. Its revenue slid 2.3% m/m to USD 720 mln.
Its operating cash flow before working capital changes was USD 120 mln, an 8.4%
m/m drop. Its cash flow from operations grew 46% m/m to USD 169 mln in June, as
the holding reduced its working capital by USD 49 mln during the month.
Metinvest’s CapEx surged 2.5x m/m to USD 31 mln and its end-June cash balance
increased 40% m/m to USD 258 mln.

The monthly results imply that Metinvest’s EBITDA was
USD 839 mln in 1H17, a 45% yoy improvement.

Also, the holding boosted sales in its metallurgical
division by 5.5% m/m to 1.11 mmt, but sales in its mining division dropped by
23.8% m/m to 1.29 mmt in June. Its metallurgical division revenue climbed 0.5%
m/m to USD 608 mln and its mining division revenue fell 14.5% m/m to USD 112
mln.   

Andriy Perederey: The
holding’s monthly results were lower than our expectationsfor flat m/m top and bottom lines. An increase in its end-June cash balance was
a positive surprise, but it looks like it vanished afterwards: average cash for
the period from May 1 to July 31 and was just USD 189 mln, as we can learn from
its report on coupon payments in August. Based on this and also on Metinvest’s low July steel output,
we expect the holding will report weaker P&L and cash flow statements for
July.

As of August however, we expect radical improvements
in its financial indicators, based on expectations of restored output and due
to stronger market prices for steel and iron ore. This allows us to expect a
significant increase in Metivest’s coupon payment in November. All in all, we are
keeping a positive view on Metinvest bonds.