Metinvest EBITDA rises 42% m/m in April

Ukraine’s largest steelmaker Metinvest (METINV)
generated USD 136 mln in EBITDA in April, an increase of 42% m/m, according to
its June 30 earnings release. 
Metinvest’s revenue decreased 9% m/m to USD 603 mln in April. Its
operating cash flow before working capital changes was USD 94 mln, a 32% m/m
decline. Its cash flow from operations became negative at USD 24 mln, as it
recorded USD 118 mln in working capital investments during the month (vs. USD
32 mln in March).

The holding’s CapEx decreased 51% m/m to USD 23 mln
and its end-April cash balance decreased 36% m/m to USD 137 mln. The monthly
results imply that Metinvest’s EBITDA was USD 538 mln in 4M17, a 2.1x surge
yoy.

Andriy Perederey: If we exclude
the March provisions for the impairment of inventories (USD 183 mln), Metinvest’s
April EBITDA in fact dropped 26% m/m. As we expected, the April
results were weaker due to lower output of attributable steel. Also in 4M17,
Metinvest replenished its working capital by USD 356 mln. The high working
capital investments in April were used to restore inventories that were lost on
the occupied territory of Ukraine in mid-March (Yenakiyieve Steel, Krasnodon
Coal and Khartsyzk Pipe).

The April results also prompt
us to expect less working capital to have been accumulated in May. We know from
available data that the holding also boosted its May
output at its Mariupol-based mills
and we expect stronger P&L results for May. All in all, we are keeping our
positive view on Metinvest bonds.