Metinvest increases EBITDA 14%, net income 31% in 1H13

Metinvest (METINV) reported on November 27 strong 1H13 financial results. Despite a 3% yoy slide in revenue to USD 6.5 bln, the holding’s EBITDA grew 14% yoy to USD 1.2 bln and net income advanced 31% to USD 443 mln. Its EBITDA margin widened to 19% from 16% a year before, net margin rose to 7% from 5%. Metinvest slashed its CapEx 36% yoy to USD 250 mln, as well as total debt 12% yoy to USD 3.8 bln. As a result, financial costs declined 3% yoy during the period, and gross debt-to-EBITDA improved to 1.8x in 1H13 from 2.2x as of end-2012.

Roman Topolyuk: Metinvest’s revenue drop was driven by sliding selling prices, which outweighed the sales volumes increase in both its metallurgical and mining divisions by 14% and 4% yoy, respectively. Nevertheless, Metinvest managed to improve its earnings by cutting costs, including via the implementation of a PCI at its Ilyich Steel plant. Net income grew due to one-off items in its P&L, without which it would have fallen 13% yoy to USD 294 mln, including the impact of a 22% yoy larger depreciation charge.

Metinvest generated USD 596 mln in positive free cash flow in 1H13, compared to a cash burn of USD 20 mln a year ago. Combined with an improved leverage ratio, these figures demonstrate Metinvest’s resilience to a market downturn in the sector.