Metinvest 9M19 EBITDA drops 39%

Metinvest (METINV), Ukraine’s largest steelmaker,
released its 9M19 financial results on Dec. 17. The holding’s revenue lost 6%
yoy to USD 8,490 mln, EBITDA dropped 39% yoy to USD 1,234 mln, and its EBITDA
margin decreased 7pp yoy to 15%.

EBITDA of Metinvest’s mining segment rose 29% yoy to
USD 1,217 mln in 9M19, while that of its metallurgical segment plunged 96% yoy
to USD 41 mln.

Metinvest’s CapEx amounted to USD 770 mln in 9M19, up
24% yoy, driven by a 69% yoy jump in its mining segment’s CapEx to approximately
USD 377 mln.

Net debt stood at USD 2,457 mln at Sept. 30, flat ytd,
and the ratio of net debt to last-12-months EBITDA amounted to 1.4x, inching up
from 1.0x at the end of 2018.

Dmytro Khoroshun: Metinvest’s
metallurgical business continued to suffer in 3Q19, and will continue to be
loss-making in 4Q19. However, prices have been rebounding since early November,
and we expect Metinvest’s metallurgical segment EBITDA to return to zero or
small positive values in 1Q20.

We maintain our neutral view on METINV bonds.