Metinvest EBITDA rose 16% m/m in May

EBITDA at Ukraine’s largest steelmaker Metinvest (METINV)
rose 15.7% m/m to USD 752 mln in May, according to its monthly results
published on Aug. 4. The holding’s revenue inched up 0.9% m/m to USD 1,569 mln.

 

EBITDA excluding joint ventures (JVs) added 10.2% m/m
to USD 605 mln in May.

 

Metinvest’s operating cash flow before working capital
changes increased 11.6% m/m to USD 604 mln in May, whereas cash flow from
operations after working capital changes (but before profit tax and interest)
lost 2.8% m/m to USD 459 mln in May.

 

Cash outflow due to changes in accounts receivable was
USD 91 mln in May, a 52.4% m/m drop. Cash inflow due to changes in accounts
payable plunged 99% m/m to USD 1 mln in May.

 

The holding’s cash inflow from investment activities
was USD 43 mln in May, compared to an outflow of USD 60 mln in April.
Metinvest’s outflow from financing activities amounted to USD 251 mln and its
end-of-month cash balance inched up 2.9% m/m to USD 1,239 mln. Its gross debt
decreased USD 247 mln m/m to USD 2,925 mln, while its net debt dropped USD 282
mln m/m to USD 1,686 mln.

 

Metinvest metallurgical segment’s EBITDA (including
JVs) rose 17.3% m/m to USD 367 mln in May, while its mining segment’s EBITDA
added 15.3% m/m to USD 460 mln.

 

Excluding JVs, Metinvest metallurgical segment’s
EBITDA gained 15.1% m/m to USD 321 mln in May, while its mining segment’s
EBITDA advanced 7.8% m/m to USD 359 mln.

 

The ratio of Metinvest’s net debt to its last 12 month
(LTM) EBITDA (excluding JVs) dropped to 0.47x at the end of May, down from
0.63x a month ago.

 

Metinvest’s iron and steel product prices continued
rising in May, gaining 1% for pig iron, 6% for slabs, 7% for billets, 13% for
flat products and 10% for long products. Its iron ore concentrate price jumped
12% m/m in May, while the pellet price gained 11% 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.

 

However, we expect Metinvest’s realized prices to
decrease eventually in 4Q21 and in 2022.

 

The USD 43 mln cash inflow due to investing activities
might be due to dividends received from Metinvest’s JV Southern Iron Ore.
In April, Southern Iron Ore declared USD 705 mln in dividends, of which
Metinvest stands to receive USD 275 mln (after 15% tax).

 

We maintain our neutral view on METINV bonds.