Outlook: Interpipe to report 2019 results in March

Ukraine’s largest pipe and railway wheel producer
Interpipe (INTHOL) plans to report its 2019 results sometime in March, according
to the statements of the company’s management on the 9M19 results call
in December.

Dmytro Khoroshun: We expect
Interpipe will report net revenue of USD 1,112 mln (a 4% yoy rise) and EBITDA
of USD 277 mln (a 76% yoy jump) for 2019.

In particular, we expect Interpipe’s 4Q19 EBITDA to
amount to about USD 77 mln, a 3% qoq rise. The segment contributions to 4Q19
EBITDA are expected to be as follows: USD 3 mln from pipes
(flat qoq), USD 59 mln from railway products (6% less qoq), and USD 15 mln from
steel (a 61% qoq jump).

Interpipe’s 4Q19 revenue is expected to drop 18% qoq
to USD 250 mln.

Revenue from seamless pipe sales should have dropped
23% qoq to about USD 114 mln in 4Q19, driven by a 14% decrease in sales volumes
to 104 kt and a 10% drop in average sales price to USD 1,096/t. However, we
note that both the price and the cost of seamless pipes might vary a lot
depending on the average content of costly alloying metals other than iron.

We estimate revenue from welded pipe sales will plunge
47% qoq in 4Q19 to USD 13 mln, due to a 42% loss in volume to 20 kt and a 9%
dip in price in price to USD 652/t.

We calculate Interpipe’s wheel segment revenue will
slide 4% qoq to USD 117 mln in 4Q19, as an 11% decrease in sales volume to 50
kt will be partially offset by an 8% gain in price to USD 2,327/t.

However, our model for Interpipe, in particular how
the company allocates its fixed and billet costs between the segments, is still
in development and will be updated using the actual 2019 results.