Metinvest reports June EBITDA of USD 119 mln

Ukraine’s largest steelmaker Metinvest (METINV) reported EBITDA of USD 119 mln (-41% m/m) in June, according to a preliminary monthly financial report published on August 30. The bulk of the generated operating cash flow of USD 95 mln was absorbed by working capital investments of USD 83 mln, while CapEx was USD 16 mln in June. Cash inflow from financial activities reached USD 28 mln (compared to outflow of USD 14 mln), leading to a 12% m/m increase in cash to USD 183 mln.

These monthly results imply that Metinvest generated EBITDA of USD 579 mln (-7% yoy) in 1H16.

Roman Topolyuk: Metinvest’s June EBITDA could have been larger by USD 64 mln, as some steel products remained unsold to third parties, subject to reversal in the months to come. The company is on track to surpass our EBITDA projection of USD 773 mln in 2016, driven by strong steel and iron ore prices. Ongoing investments in working capital leave little additional cash to be distributed between creditors in excess of 30% of accrued interest so far. However, given steel and iron ore prices remain firm, the company may be in position to increase cash payments on interest soon, we anticipate. Our view on Metinvest remains bullish.