Metinvest reports USD 203 mln in May EBITDA
25 July 2016
Ukraine’s largest steelmaker Metinvest (METINV) reported on July 22 USD 203 mln in May EBITDA, a 46% rise m/m, 63% of which was generated by its metallurgical division.
Its net cash flow from operations improved to USD 43 mln in May (from USD -9 mln in April), even though working capital investments increased to USD 134 mln (from USD 118 mln in April). CapEx of USD 35 mln and outflow of USD 14 mln for financial activities caused cash on its balance to decrease 2% m/m to USD 163 mln.
Roman Topolyuk: The EBITDA improvement, which is USD 2.4 bln on an annual basis, was the result of Metinvest’s average steel selling prices growing 11-15% m/m in May.
The robust P&L had some dissappointing spots as Metinvest continued to increase its working capital, which it may continue to do in the next couple of months, we now think. This shifts our expectations of possible larger distributions to creditors in form of higher interest payments (more than 30% of accrued) further into the future.
Nevertheless, current iron ore prices remain firm at USD 56/t, while steel prices also demonstrated resilience (HRC grew 2% to USD 363/t, FOB, Black Sea port, during the week ended July 22). This sets the stage for continuing strong operating cash flow of Metinvest, and supports our positive view on the name.
