Metinvest 1H21 EBITDA skyrocketed 5.3x

Metinvest (METINV), Ukraine’s largest steelmaker,
released its 1H21 financial results on Sept. 1. The holding’s revenue jumped
70% yoy to USD 8,470 mln, EBITDA (including JVs) skyrocketed 5.3x yoy to USD
3,795 mln, and net profit was positive USD 2,769 mln (negative USD 240 mln a
year ago). Its EBITDA margin surged 30pp yoy to 45%.

 

EBITDA (including JVs) of Metinvest’s mining segment
soared 4.5x yoy to USD 2,462 mln in 1H21, while that of its metallurgical
segment skyrocketed 7.3x yoy to USD 1,742 mln.

 

Excluding JVs, Metinvest’s total EBITDA shot up 5.1x
yoy to USD 3,161 mln in 1H21. Its mining segment EBITDA soared 4.8x yoy to USD
1,985 mln, while the EBITDA of Metinvest’s metallurgical segment skyrocketed
5.8x yoy to USD 1,585 mln.

 

Metinvest’s CapEx amounted to USD 411 mln in 1H21, 31%
more yoy, with its mining segment CapEx rising 32% yoy to USD 204 mln and that
of its metallurgical segment gaining 25% yoy to USD 184 mln.

 

Net debt stood at USD 1,016 mln at June 30, 52% less
YTD, and the net leverage ratio of net debt to last-12-months EBITDA (including
JVs) amounted to 0.2x, dropping from 1.0x at the end of 2020. Excluding JVs,
Metinvest’s net leverage ratio dropped to 0.2x at June 30 from 1.2x at
end-2020.

 

Metinvest had increased its stake in the Pokrovske
coal business to about 99% at end-June from about 25% at end-2020 by exercising
its option. The fair value of purchase consideration under the option in the
amount of USD 670 mln was partly set off
with USD 645 mln of receivables originated from Metinvest’s payments under a
guarantee issued, according to the company’s financial statements.

 

Metinvest received USD 209 mln in dividends from its
joint venture Southern Iron Ore in 1H21 (zero in 1H20).

 

Metinvest repaid USD 1.0 bln of debt in 1H21,
including USD 438 mln out of USD 543 mln of debt by Pokrovske coal business
assets added at their consolidation in March.

 

Metinvest paid USD 423 mln in dividends in 1H21 (zero
in 1H20) and declared further USD 590 mln of dividends in July, after the
balance sheet date.

 

Dmytro Khoroshun: Metinvest
is well-prepared to spend its considerable cash position and future earnings on
investments and returns to shareholders in the next few quarters.

 

The substantial deleveraging and the completion of the
Pokrovske coal business acquisition were the significant steps Metinvest made
during 1H21 to reach this stage.

 

Importantly, Metinvest’s debt maturity profile at
end-June looks well-constructed and conductive to activities other than
managing the existing debt portfolio. Namely, excluding trade finance, the
company has less than USD 300 mln of debt principal to repay until end-2024,
and its scheduled repayments do not exceed USD 600 mln per year starting from
2025.

 

We maintain our neutral view on METINV bonds.