Metinvest EBITDA lost 20% m/m in August

EBITDA at Ukraine’s largest steelmaker Metinvest
(METINV) dropped 20.5% m/m to USD 766 mln in August, according to its monthly
results published on Nov. 3. The holding’s revenue slid 2.5% m/m to USD 1,706
mln.

 

EBITDA excluding joint ventures (JVs) decreased 15.9%
m/m to USD 664 mln in August.

 

Metinvest’s operating cash flow before working capital
changes dropped 13.8% m/m to USD 671 mln in August, whereas cash flow from
operations after working capital changes (but before profit tax and interest)
plunged 50.2% m/m to USD 487 mln.

 

Cash outflow due to changes in accounts receivable was
USD 85 mln in August (vs.an inflow of USD 457 mln in July). Cash outflow due to
changes in accounts payable plunged 78.8% m/m to USD 32 mln.

 

The holding’s cash inflow from investment activities
was USD 27 mln (vs. an outflow of USD 314 mln in July). Metinvest’s outflow
from financing activities amounted to USD 213 mln and its end-of-month cash balance
slid 2.7% m/m to USD 2,017 mln. Its gross debt dropped USD 203 mln m/m to USD
2,246 mln, while its net debt lost USD 146 mln m/m to USD 229 mln.

 

Metinvest metallurgical segment’s EBITDA (including
JVs) dropped 16.4% m/m to USD 351 mln in August, while its mining segment’s
EBITDA plunged 27.4% m/m to USD 443 mln.

 

Excluding JVs, Metinvest metallurgical segment’s
EBITDA lost 17.3% m/m to USD 305 mln in August, while its mining segment’s
EBITDA dropped 20.9% m/m to USD 387 mln.

 

The ratio of Metinvest’s net debt to its LTM EBITDA
(excluding JVs) dropped to 0.04x at the end of August, down from 0.08x a month
ago.

 

Metinvest’s iron and steel product prices finally
turned and dropped m/m in August, losing 5% for pig iron, 5% for slabs, 9% for
billets, 2% for flat products and 3% for long products. Its iron ore
concentrate price lost 15% m/m in August, while the pellet price dropped 10%
m/m.

 

Dmytro Khoroshun: Metinvest’s
monthly EBITDA will drop further in September and in 4Q21 because of the recent
plunges in steel and iron ore prices at the global markets.

 

Nevertheless, Metinvest’s monthly EBITDA should amount
to at least USD 200-300 mln in the next few quarters, we expect, keeping its
net leverage comfortably below 1x.

 

We maintain our neutral view on METINV bonds.