Metinvest EBITDA rose 16% m/m in March

EBITDA at Ukraine’s largest steelmaker Metinvest
(METINV) rose 15.5% m/m to USD 581 mln in March, according to its monthly results
published on May 31. The holding’s revenue increased 13.2% m/m to USD 1,377
mln.

 

EBITDA excluding joint ventures (JVs) added 16.5% m/m
to USD 486 mln in March.

 

Metinvest’s operating cash flow before working capital
changes increased 10.6% m/m to USD 450 mln in March, whereas cash flow from
operations after working capital changes (but before profit tax and interest)
skyrocketed 61.9% m/m to USD 628 mln in March.

 

Cash inflow due to changes in accounts receivable was
USD 130 mln in March, compared with an outflow of USD 115 mln in February. Cash
inflow due to changes in accounts payable plunged 72.3% m/m to USD 41 mln in
March.

 

The holding’s cash outflow from investment activities
surged 54.7% m/m to USD 311 mln. Metinvest’s outflow from financing activities
amounted to USD 474 mln and its end-of-month cash balance dropped 17.8% m/m to
USD 970 mln. Its gross debt added USD 240 mln m/m to USD 3,273 mln, while its
net debt jumped USD 450 mln m/m to USD 2,303 mln. In its 1Q21 trading update,
disclosed also on May 31, Metinvest said that consolidation of Pokrovske coal
business, which was reported in early March, added USD
547 mln to its total debt.

 

Metinvest metallurgical segment’s EBITDA (including
JVs) slid 9.3% m/m to USD 233 mln in March, while its mining segment’s EBITDA
jumped 26.4% m/m to USD 402 mln.

 

Excluding JVs, Metinvest metallurgical segment’s
EBITDA slid 6.8% m/m to USD 220 mln in March, while its mining segment’s EBITDA
gained 26.5% m/m to USD 320 mln.

 

The ratio of Metinvest’s net debt to its last 12 month
(LTM) EBITDA (excluding JVs) rose to 0.86x at the end of March, down from 0.79x
a month ago.

 

Metinvest’s iron and steel product prices mostly
continued rising in March, gaining 11% for pig iron, 9% for slabs, 1% for
billets, 9% for flat products, but sliding 1% for long products. Its iron ore
concentrate price was flat m/m in March, while the pellet price added 6% m/m.

 

Dmytro Khoroshun: Metinvest’s
investing cash outflows in March (USD 311 mln) and February (USD 201 mln) were
high compared with the monthly average of USD 69 mln for 2020. Metinvest’s 1H21
financial statements (expected to be disclosed in August-September) might shed
light on the nature of these outflows.

 

Metinvest apparently spent about USD 307 mln on debt
repayment in March, and some part of the remaining USD 167 mln of its financing
cash outflow was possibly spent on paying dividends. We think that in 2021
Metinvest might pay at least up to USD 0.5 bln in dividends, which will be
justified given the very high steel and iron ore prices.