Outlook: Interpipe to report 4Q20 results in March-May

Ukraine’s largest
pipe and railway wheel producer Interpipe (INTHOL) should report its 4Q20 and
FY20 results by the end of May according to the terms of its performance
securities outstanding (within 150 days from the end of the period for the
fourth quarter of each year).

Dmytro Khoroshun: We expect Interpipe’s 4Q20 EBITDA
to amount to about USD 41 mln, a 39% qoq drop. Contributions to 4Q20 EBITDA by
segment (before the reallocation of steel segment EBITDA) are expected to be as
follows: negative USD 5 mln from pipes (from positive USD 12 mln in 3Q20, which
includes positive USD 14 mln from the release of provisions), USD 32 mln from
railway products (a 10% increase qoq), and USD 13 mln from steel (a 47% plunge
qoq).

Interpipe’s 4Q20
revenue is expected to drop 6% qoq to USD 181 mln. Revenue from seamless pipe
sales should have dropped 10% qoq to about USD 92 mln in 4Q20, driven by a 7%
decrease in sales volume to 92 kt and a 3% drop in average sales price to USD
1,008/t.

We estimate that
revenue from welded pipe sales will decrease 14% qoq in 4Q20 to USD 13 mln, due
to a 19% loss in volume to 19 kt, offset by a 7% rise in price to USD 678/t.

We calculate
Interpipe’s railway product segment revenue will gain 7% qoq to USD 69 mln in
4Q20, driven by a 6% increase in sales volume to 45 kt and a 1% gain in price
to USD 1,522/t.

For 2020, we expect Interpipe’s revenue to have dropped 25% yoy to USD
841 mln. Its EBITDA is expected to slide 1% yoy to USD 257 mln, driven by a 85%
yoy plunge for the pipes segment EBITDA (before the reallocation of steel
segment EBITDA) to USD 5 mln and a 10% yoy decrease for railway products to USD
171 mln, largely offset by a 2.5x yoy jump for the steel segment to USD 79 mln.