Metinvest EBITDA drops 2.6% m/m in February

Ukraine’s largest steel maker Metinvest (METINV) reported EBITDA of USD 151 mln in February, a decline of 2.6% m/m, according to monthly results published on April 28. Its revenue decreased 1% m/m to USD 592 mln in February. Its operating cash flow before working capital changes was USD 130 mln (8.3% m/m growth). Its cash flow from operations was negative at USD 19 mln, as it recorded USD 149 mln in working capital investments during the month (vs. USD 57 mln in January).

The holding’s CapEx dropped 6% m/m to USD 32 mln. Its cash flow from financial activities decreased to USD 6 mln. Its end-February cash balance plunged 22.5% m/m to USD 192 mln.

Andriy Perederey: The decline in profit was a natural consequence of halted operations at Yenakiyeve Steel since Feb. 20, which was the result of a trade blockade of occupied Donbas imposed by paramilitaries. We expect the Yenakiyeve factor will have an even bigger influence on the March results, when the plant was seized by the separatist government. Also in January-February, Metinvest replenished its working capital by USD 206 mln, which allows us to expect smaller accumulations of working capital in coming months.

On May 18, Metinvest will pay its first coupon on new Eurobonds and the key question is how large the payment will be. We expect that the holding will pay all the mandatory and optional coupons (10.875% interest rate, including PIYC interest and catch-up interest), but will not repay any principal this time. This will require total payments of about USD 20 mln in May.