Metinvest confirms 21% EBITDA surge in 9M16

Ukraine’s largest steelmaker Metinvest (METINV) reported EBITDA of USD 989 mln in 9M16 (+21% yoy), according to its update published on Dec. 9. The improvement was the result of reduced costs of raw materials by USD 186 mln yoy and other costs by USD 353 mln yoy.

Metinvest estimated a positive impact of the devaluation at USD 264 mln on its EBITDA in 9M16. Savings on lower prices for natural gas of USD 93 mln were more than offset by hiked electricity rates, causing additional energy expenses of USD 25 mln during the period. Also, the holding`s corporate overheads and eliminations more than doubled yoy to USD 100 mln.

The holding’s revenue declined by 15% to USD 4,568 mln in 9M16.

In 3Q16, Metinvest`s EBITDA decreased 11% qoq to USD 409 mln. The holding’s cash position as of end-September stood at USD 239 mln.

Andriy Perederiy: Metinvest’s 9M16 EBITDA isn’t a surprise as it nearly coincides with the numbers posted in the holding’s monthly reports. The holding’s high cash interest payments for October-November indicate an improvement in its ability to generate cash flow. Improved financial results were driven by beneficial steel and iron ore prices, which continue to remain strong. So we expect high cash interest payment in December as well.

We continue to expect the holding will be able to agree to a long-term debt restructuring by end-January, and hope that it will announce the latest restructuring terms in the coming days. We are keeping our positive view on Metinvest Eurobonds.