Metinvest EBITDA jumps 28% m/m in December

December EBITDA at Ukraine’s largest steel maker
Metinvest (METINV) jumped 28.1% m/m to USD 251 mln, according to its monthly
results published on Mar. 1. The holding’s revenue expanded 5.7% m/m to USD 915
mln. Its operating cash flow before working capital changes grew 7.1% m/m to
USD 180 mln, whereas cash flow from operations (before profit tax and interest)
changed from negative USD -34 mln in November to positive USD 123 mln in
December. The holding’s CapEx increased 5.0% m/m to USD 63 mln and its end-of-month
cash balance increased 32% m/m to USD 259 mln.

The monthly results imply that Metinvest’s EBITDA was
USD 2,044 mln in 2017, or a 77% yoy improvement.

Dmytro Khoroshun: Metinvest’s
December EBITDA is the highest monthly result since October 2015, due to both
its metallurgical and mining segments demonstrating strong results.

Despite the m/m decrease in steel prices for most of
the products (pig iron by 2%, slabs by 3%, billets by 6%, finished products by
1%), the EBITDA margin of its metallurgical segment increased from 17% in
November to 20% in December. The EBITDA margin of its mining segment recovered
from a very low 26% in November to 43% in December.

We continue to expect Metinvest’s monthly EBITDA to be
close to, or exceed, the USD 200 mln level well into 2018 due to strong iron
ore and steel prices.

We maintain our Speculative Buy recommendation on
Metinvest Eurobond on expectations of a deal (restructuring or refinancing) in
the near future. For more details behind our recommendation, please refer to
our yesterday’s research update on Metinvest.