Metinvest EBITDA rose 18% m/m in January

EBITDA at Ukraine’s largest steelmaker Metinvest
(METINV) rose 17.8% m/m to USD 378 mln in January, according to its monthly results
published on March 30. The holding’s revenue increased 1.5% m/m to USD 1,031
mln.

 

EBITDA excluding joint ventures (JVs) added 16.4% m/m
to USD 298 mln in January.

 

Metinvest’s operating cash flow before working capital
changes climbed 23.8% m/m to USD 297 mln in January, whereas cash flow from
operations after working capital changes (but before profit tax and interest)
skyrocketed 88.0% m/m to USD 408 mln in January.

 

Cash outflow due to changes in accounts receivable
dropped 68.9% m/m to USD 74 mln in January. Cash inflow due to changes in
accounts payable soared 5.6x m/m to USD 219 mln in January.

 

The holding’s cash outflow from investment activities
dropped 28.9% m/m to USD 54 mln. Metinvest’s outflow from financing activities
amounted to USD 55 mln and its end-of-month cash balance shot up 35.5% m/m to
USD 1,119 mln. Its gross debt inched up USD 13 mln m/m to USD 2,950 mln, while
its net debt plunged USD 280 mln m/m to USD 1,831 mln.

 

Metinvest metallurgical segment’s EBITDA (including
JVs) jumped 51.3% m/m to USD 171 mln in January, while its mining segment’s
EBITDA rose 11.4% m/m to USD 234 mln.

 

Excluding JVs, Metinvest metallurgical segment’s
EBITDA soared 68.1% m/m to USD 158 mln in January, while its mining segment’s
EBITDA inched up 1.8% m/m to USD 167 mln.

 

The ratio of Metinvest’s net debt to its last 12 month
(LTM) EBITDA (excluding JVs) dropped to 0.90x at the end of January, down from
1.16x a month ago.

 

Metinvest’s iron and steel product prices jumped in
January, gaining 16% for pig iron, 8% for slabs, 4% for billets, 8% for flat
products and 4% for long products. Its iron ore concentrate price soared 27%
m/m in January, while the pellet price jumped 10% m/m.

 

Dmytro Khoroshun: Metinvest’s
monthly EBITDA might stay close to and even exceed USD 400 mln in
February-March and in 2Q21 as its steel prices should add further 10-20%
following the dynamics of Ukraine’s FOB prices, we estimate.

 

Metinvest’s cash pile has risen above USD 1.1 bln by
the end of January, which is USD 0.8 bln above its historical month-end average
of about USD 0.3 bln. Considering this extra cash and strong profitability
expectations for at least the next few months, it will not be surprising if, in
addition to prepaying some of its debt, Metinvest
pays at least USD 0.4-0.5 bln in dividends in 2021.

 

We maintain our neutral view on METINV bonds.