Metinvest EBITDA rises 13% m/m in May

Ukraine’s largest steelmaker Metinvest (METINV)
generated USD 154 mln EBITDA in May, an increase of 13% m/m, according to monthly
results published on July 26. Its revenue rose 22% m/m to USD 737 mln in May.
Its operating cash flow before working capital investments was USD 131 mln, a
39% m/m increase. Its cash flow from operations turned positive at USD 116 mln,
as it recorded tiny USD 15 mln in working capital investments during the month
(-87% m/m in May). The holding’s CapEx dropped 48% m/m to USD 12 mln and its
end-May cash balance increased 35% m/m to USD 185 mln.

The monthly results imply that Metinvest’s EBITDA was USD
692 mln in 5M17, a 50.4% yoy surge.

Also, the holding boosted its sales of semi-finished
products by 43% m/m to 262 kt and finished product sales increased by 20.4% m/m
to 719 kt in May 2017.

Andriy Perederey: As we expected,
the holding had strong P&L results and low working capital accumulations in
May. In 5M17, Metinvest replenished its working capital by USD 371 mln. Aslo,
the holding’s increased sales were supported by average selling prices rising
by 1.5% m/m for semi-finished products and 3% m/m for finished products.

We know from the available data that the holding
slightly decreased its June output,
so we expect flat P&L results for June. All in all, we are keeping our
positive view on Metinvest bonds, which are now trading at 95% of par.