Metinvest EBITDA down 18% qoq in 3Q12

Metivest (METINV) reported a 8% yoy decrease in 9M12 revenue to USD 9.8 bln, according to a Dec. 21 financial release. The holding’s adjusted EBITDA reached USD 1.5 bln on an EBITDA margin of 16%, and net profit came in at USD 420 mln. Its metallurgical division contributed most to revenue decline (-10% yoy to USD 7.2 bln), while the external revenue of its mining division fell 3% yoy to USD 2.5 bln. In quarterly terms, revenue slid 14% qoq in 3Q12 to USD 3.03 bln, EBITDA dropped 18% qoq to USD 446 mln for a 1pp decrease in EBITDA margin to 15%, and net income dwindled 48% qoq to USD 86 mln. Financials declined owing to low buying activity, specifically the EU, and strong competitive pressure from Russian and Asian producers, the company said. Total loans and borrowings were USD 3.7 bln as of end September 2012, with seller’s notes reaching USD 283 mln, vs. cash of USD 383 mln.

Roman Topolyuk: Metivnest’s financial performance in 3Q12 is in line with Russian peers – Severstal and Novolipetsk Iron & Steel. Both Russian producers faced a 19% qoq decline in EBITDA in 3Q12, having posted EBITDA margins of 15% and 16%, respectively. In 4Q12, we expect Metinvest to further decrease EBITDA 9% qoq to USD 405 mln on 4-5% qoq lower finished steel prices and mostly flat production, bringing its annual result to around USD 1.9 bln (-45% yoy). We estimate Metinvest’s total debt-to-EBITDA ratio at 2.0x on 2012E EBITDA vs. a Eurobonds covenant of 3x.