Metinvest, Ferrexpo to raise salaries 30-40% during 2018

Metinvest (METINV), Ukraine’s largest steelmaker, will
raise salaries for its Ukrainian workers 10% in October following a 20% raise
in April, the company said in a Sept. 27 press release. The average salary
after the increases will amount to about UAH 15,900 per month, according to Concorde
Capital’s analysis of the data in Metinvest’s release.

The average salary at Ferrexpo Poltava Mining (FPM),
the main asset of iron ore miner and pellet producer Ferrexpo (FXPO LN, FXPOLN),
amounted to UAH 13,300 per month during 1H18, a 38.9% yoy increase, FPM
reported in a press release cited by kg.ua, a Kremenchuk local news site.

Dmytro Khoroshun: The 30-40%
rise in salaries during 2018 at Metinvest and Ferrexpo’s Ukrainian assets is
substantial but below the 50% increase we analyzed in relation to the strikes at ArcelorMittal Kryviy Rih
(AMKR, KSTL UK) in May.

As a result of these hikes, we estimate that yearly
costs and expenditures on salaries and related social contributions in Ukraine
will increase by USD 115 mln (0.9% of estimated 2018 revenue) at Metinvest and
by USD 19 mln (1.5% of estimated 2018 revenue) at Ferrexpo, as compared to
2017.