Metinvest EBITDA rose 12% m/m in April

EBITDA at Ukraine’s largest steelmaker Metinvest
(METINV) rose 11.9% m/m to USD 650 mln in April, according to its monthly
results published on July 21. The holding’s revenue increased 12.9% m/m to USD
1,555 mln.

 

EBITDA excluding joint ventures (JVs) added 13.0% m/m
to USD 549 mln in April.

 

Metinvest’s operating cash flow before working capital
changes increased 20.2% m/m to USD 541 mln in April, whereas cash flow from
operations after working capital changes (but before profit tax and interest)
dropped 24.8% m/m to USD 472 mln in April.

 

Cash outflow due to changes in accounts receivable was
USD 191 mln in April, compared with an inflow of USD 130 mln in March. Cash
inflow due to changes in accounts payable jumped 2.5x m/m to USD 102 mln in
April.

 

The holding’s cash outflow from investment activities
plunged 80.7% m/m to USD 60 mln. Metinvest’s outflow from financing activities
amounted to USD 156 mln and its end-of-month cash balance jumped 24.1% m/m to
USD 1,204 mln. Its gross debt decreased USD 101 mln m/m to USD 3,172 mln, while
its net debt plunged USD 335 mln m/m to USD 1,968 mln.

 

Metinvest metallurgical segment’s EBITDA (including JVs)
jumped 34.3% m/m to USD 313 mln in April, while its mining segment’s EBITDA
slid 0.7% m/m to USD 399 mln.

 

Excluding JVs, Metinvest metallurgical segment’s
EBITDA jumped 26.8% m/m to USD 279 mln in April, while its mining segment’s
EBITDA inched up 4.1% m/m to USD 333 mln.

 

The ratio of Metinvest’s net debt to its last 12 month
(LTM) EBITDA (excluding JVs) dropped to 0.63x at the end of April, down from
0.86x a month ago.

 

Metinvest’s iron and steel product prices mostly
continued rising in April, gaining 3% for pig iron, 7% for slabs, 8% for flat
products and 5% for long products, while billet prices remained flat m/m. Its
iron ore concentrate price dropped 9% m/m in April, while the pellet price
jumped 20% m/m.

 

Dmytro Khoroshun: Metinvest’s
monthly EBITDA will likely amount to at least USD 400-500 mln in 2Q21 and in
3Q21 because of strong steel and iron ore prices.

 

Metinvest apparently spent USD 101 mln on debt
repayment in April, and the remaining USD 55 mln of its financing cash outflow
was possibly spent on paying dividends. We think that in 2021 Metinvest might
pay at least up to USD 0.5 bln in dividends, which will be justified given the
very high steel and iron ore prices.

 

We maintain our neutral view on METINV bonds.