Metinvest EBITDA jumps 38% m/m in September

September EBITDA at Ukraine’s largest steel maker
Metinvest (METINV) jumped 38.2% m/m to USD 217 mln, according to its monthly
results published on Nov. 22. The holding’s revenue rose 11.7% m/m to USD 832
mln. Its operating cash flow before working capital changes grew 35.6% m/m to
USD 183 mln, whereas net cash flow from operations declined 2.9% m/m to USD 68
mln. Its CapEx dropped 61.5% m/m to USD 25 mln and its end-September cash
balance fell 14% m/m to USD 293 mln.

In a separate presentation on its preliminary results
for 9M17, Metinvest reported that EBITDA was USD 1,373 mln in 9M17, or a 39%
yoy improvement. The main reason for the yoy increase in year-to-date EBITDA
was the selling prices.

Dmytro Khoroshun: Metinvest’s
September EBITDA is the highest monthly result since October 2015. We finally
see Metinvest’s realization prices for steel products reflecting the general
increase in prices for contracts concluded that was observed during
July-August. In September, the m/m increases in Metinvest’s realization prices
amounted to 6% for pig iron, 8% for slabs, and 7% for both billets and finished
products.

We expect October to be another strong month for
Metinvest, especially if slab inventories are released. In the 9M17
presentation, Metinvest explained that its slab inventories increased by 158 kt
year-to-date due to a temporary lack of transportation vessels.

We are retaining our position expressed in our
Sept. 26 note on Metinvest that the holding will be able to refinance its
Eurobond by the end of 2018. In light of the strong operating performance
demonstrated in September and expected for 4Q17, we see the increased risks of
Metinvest coming to the financial markets early in 2018 to refinance its debt,
redeeming its notes at 100% of par. We’re keeping our neutral view on
Metinvest’s bond.