Metinvest EBITDA skyrockets 3.8x m/m in July

EBITDA at Ukraine’s largest steelmaker Metinvest
(METINV) skyrocketed 3.8x m/m to USD 204 mln in July, according to its monthly
results published on Oct. 5. The holding’s revenue gained 7.4% m/m to USD 910
mln.

 

Recall, Metinvest’s EBITDA was USD 54 mln in
June, plummeting 67% m/m due to accounts receivable
impairments of USD 112 mln that month. From the USD 166 mln of June’s EBITDA
adjusted for the impairments, July’s EBITDA rose 22.9%.

 

EBITDA excluding that of joint ventures (JVs) soared
6x m/m to USD 174 mln in July.

 

Metinvest’s operating cash flow before working capital
changes climbed 8.5% m/m to USD 153 mln in July, whereas cash flow from
operations after working capital changes (but before profit tax and interest) plunged
47.9% m/m to USD 183 mln in July.

 

Cash flow due to changes in accounts receivable was
negative USD 89 mln in July, compared with positive USD 83 mln in June. Cash
inflow due to changes in accounts payable was USD 53 mln in July, a 55.8% m/m plunge.

 

The holding’s cash outflow from investment activities
jumped 2.4x m/m to USD 63 mln. Metinvest’s inflow from financing activities
amounted to USD 28 mln and its end-of-month cash balance climbed 31.4% m/m to
USD 611 mln. Its gross debt rose USD 71 mln m/m to USD 3,081 mln, while net
debt decreased USD 75 mln m/m to USD 2,470 mln.

 

Metinvest’s metallurgical segment EBITDA (including
JVs) rose to positive USD 57 mln in July from negative USD 30 mln in June,
while its mining segment EBITDA skyrocketed 2.4x m/m to USD 154 mln.

 

Excluding JVs, Metinvest’s metallurgical segment
EBITDA advanced to positive USD 62 mln in July from negative USD 24 mln in
June, while its mining segment EBITDA soared 3.7x m/m to USD 119 mln.

 

The ratio of Metinvest’s net debt to its last-12-month
(LTM) EBITDA (excluding JVs) dropped to 2.58x at the end of July, down from
2.82x a month ago.

 

In 7M20, Metinvest’s revenue dropped 13.1% yoy to USD
5,878 mln, while its EBITDA including JVs slid 11.2% to USD 919 mln and EBITDA
excluding JVs lost 10.0% yoy to USD 788 mln.

 

Iron and steel product prices rebounded in July,
gaining 1% for pig iron, 2% for slabs, 7% for billets, 2% for flat products and
5% for long products. Its iron ore concentrate price jumped 16% m/m in July,
while the pellet price gained 3% m/m.

 

Dmytro Khoroshun: Metinvest’s
iron and steel prices rebounded in July, reflecting the May-September strong positive trend in Ukraine’s export
prices.  As a result, the EBITDA of Metinvest’s
metallurgical segment rebounded already in July, earlier than we anticipated,
and we expect it to rise further in August-September.

 

The EBITDA of Metinvest’s mining segment should also
remain strong in the next few months due to the high prices at the global
markets due to strong demand from China and interruptions in supply from
Brazil.

 

We maintain our neutral view on METINV bonds.