Metinvest EBITDA rises 1% m/m in July

EBITDA at Ukraine’s largest steelmaker Metinvest
(METINV) increased 0.9% m/m in July to USD 233 mln, according to its monthly
results published on Oct. 4. The holding’s revenue contracted 1.3% m/m to USD
1,082 mln. Metinvest’s operating cash flow before working capital changes
decreased 2.0% m/m to USD 198 mln, whereas cash flow from operations (before
profit tax and interest) rose 11.0% m/m to USD 313 mln in July.

Metinvest resold 366 kt of flat steel products from
its Zaporizhstal JV in July, a record volume since the beginning of 2016
(average volume during the last 30 months was 230 kt).

The holding reported a cash outflow from investment
activities of USD 60 mln (vs. an inflow of USD 6 mln in June). Metinvest’s cash
outflow from financing activities amounted to USD 58 mln and its end-of-month
cash balance jumped 53% m/m to USD 566 mln.

Dmytro Khoroshun: Metinvest’s
business remained steady in July, with prices mostly weakening m/m for both
semi-finished products (pig iron -1%, slabs -4%) and finished products (-2%).
We expect Metinvest’s monthly EBITDA to remain near USD 200 mln for the rest of
2018.

The high end-July cash amount underlines the risks of Metinvest declaring and
paying large amounts of dividends. Metinvest already paid USD 29 mln of dividends in 1H18, and we calculate that the holding is able to distribute USD 308 mln in dividends from 2017
income and USD 334 mln from 1H18 income.