Metinvest EBITDA lost 25% m/m in September

EBITDA at Ukraine’s largest steelmaker Metinvest
(METINV) dropped 24.7% m/m to USD 577 mln in September, according to its
monthly results published on Dec. 3. The holding’s revenue slid 4.0% m/m to USD
1,637 mln.

 

EBITDA excluding joint ventures (JVs) lost 22.3% m/m
to USD 516 mln in September.

 

Metinvest’s operating cash flow before working capital
changes dropped 21.3% m/m to USD 528 mln in September, whereas cash flow from
operations after working capital changes (but before profit tax and interest)
jumped 45.8% m/m to USD 710 mln.

 

Cash inflow due to changes in accounts receivable was
USD 115 mln in September (vs.an outflow of USD 85 mln in August). Cash inflow
due to changes in accounts payable was USD 8 mln in September (vs. an outflow
of USD 32 mln in August).

 

The holding’s cash outflow from investment activities
was USD 91 mln (vs. an inflow of USD 27 mln in August). Metinvest’s outflow
from financing activities amounted to USD 597 mln and its end-of-month cash
balance slid 0.5% m/m to USD 2,006 mln. Its gross debt slipped USD 1 mln m/m to
USD 2,245 mln, while its net debt inched up USD 10 mln m/m to USD 239 mln.

 

Metinvest’s metallurgical segment EBITDA (including
JVs) dropped 23.6% m/m to USD 268 mln in September, while its mining segment’s
EBITDA plunged 44.0% m/m to USD 248 mln.

 

Excluding JVs, Metinvest’s metallurgical segment
EBITDA lost 28.5% m/m to USD 218 mln in September, while its mining segment’s
EBITDA plummeted 38.8% m/m to USD 237 mln.

 

The ratio of Metinvest’s net debt to its LTM EBITDA
(excluding JVs) was unchanged m/m at 0.04x at the end of September.

 

Metinvest’s iron and steel product prices mostly
accelerated their m/m drops in September, losing 17% for pig iron, 9% for
slabs, 5% for flat products and 1% for long products, but adding 8% for billets.
Its iron ore concentrate price dived 38% m/m in September, while the pellet
price plunged 31% m/m.

 

Dmytro Khoroshun: Metinvest
likely paid around USD 600 mln in dividends in September, we infer from the
financing activities cash outflow.

 

Further dividend payments are possible in 4Q21 and in
2022 as the holding’s cash pile remains about USD 1.5 bln above its minimum
liquidity required for smooth operations.

 

Metinvest’s monthly EBITDA will drop further in 4Q21
to USD 350-550 mln because of further drops in steel and iron ore prices at the
global markets.

 

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.