Metinvest boosts sales to Russia and North America in 1Q16

Revenue of Ukraine’s largest steelmaker Metinvest (METINV) fell in 1Q16, but its sales to Russia and North America boosted, according to its quarterly trading update published on July 12. Its total revenue decreased 29% yoy to USD 1,287 mln in 1Q16, due to decreases in most regions except Russia (+28% yoy to USD 89 mln, 7% portion of total revenue) and North America (+11% to USD 57 mln, 4% portion of total revenue). The company reported signing new contracts in North America and introducing incentives for its Russian clients like loyalty programs. 

Europe remained the company’s key market, having contributed the same 35% portion of total revenue in 1Q16 as a year ago, the update reported.

Metinvest also reported a set of quarterly financials that have been available to the market via monthly reports published previously. These financials revealed no 1Q16 adjustments: EBITDA fell 65% yoy to USD 118 mln, total debt slid just 1% to USD 2.917 mln from December 2015 and CapEx was USD 54 mln, or 42% yoy growth.

Roman Topolyuk: The quarterly update confirmed that Europe has remained a priority destination for Metinvest’s products. At a time when the key steel markets are being squeezed by sluggish demand, it will be crucial for the company to defend its positions in Europe amid an ongoing anti-dumping investigation launched by the European Commission in early July of hot-rolled coil from Ukraine and four other countries. Improved sales to North America and Russia is by all means a positive development, though its impact on Metinvest’s top line is not very meaningful so far.