Metinvest October EBITDA reported flat m/m

Ukraine’s largest steel maker Metinvest (METINV) reported EBITDA of 127 mln in October (-0.7% m/m), according to monthly results published on Dec. 22. The monthly results imply that Metinvest generated EBITDA of USD 1,114 mln in 10M16.

Net operating cash flow came in at USD 33 mln in October after Metinvest recorded USD 48 mln in working capital investments during the month. The holding’s CapEx was USD 25 mln (-4% m/m). Cash ouflow from financial activities declined 81% m/m to USD 5 mln. Its cash balance increased 3% m/m to USD 247 mln, exceeding the USD 180 mln threshold that enabled it to pay out excess cash interest for the month.

Also, recall that Metinvest has promised to publish the final restructuring terms of its Eurobonds on or prior to Dec. 19, but still has yet to do that.

Andriy Perederiy: Metinvest’s October results were driven by beneficial steel and iron ore prices, which continue to remain strong. But the holding returned to its tactics of accumulating working capital that it employed in April-June.

In September-October, Metinvest replenished its working capital by USD 104 mln, but even such an aggressive increase in working capital did not prevent the holding from paying excessively high interest and principal payments to debt holders (the holding paid 98%, 106% of and 151% of interest accrued on Eurobonds in September-November). Based on the standstill agreement, such payments depend on Metinvest’s cash balance.

We continue to expect the holding will be able to agree to a long-term debt restructuring by end-January, and we hope that it will announce the latest restructuring terms in the coming days. We are keeping our positive view on Metinvest Eurobonds.