Metinvest surprises market with February EBITDA USD 42 mln

Ukraine’s largest steelmaker Metinvest (METINV) reported February EBITDA at USD 42 mln, compared to minus USD 15 mln generated in January. Both its metallurgical and mining divisions contributed almost equally to the monthly result, which also implies EBITDA of USD 28 mln in 2M16.

Monthly CapEx was USD 18 mln in February, well below the USD 28 mln cap approved in its standstill agreement with bondholders. Total debt stood almost unchanged m/m at USD 2,910 mln as of end-February, while cash was USD 143 mln.

Roman Topolyuk: Metinvest surprised the markets with its February financial result, which was a combination of realized price increases for certain products and 8% m/m hryvnia devaluation during the month. The holding’s average realized selling price for long products grew 17% m/m in February, compared to market prices growing 2-3% m/m. The bulk of the steel price increases of USD 165-207/t (60-73%), between end-February and end-April, has yet to be reflected in Metinvest’s future financial results.

With such market prices, Metinvest’s cash position as of end-March or April might have exceeded USD 180 mln, which would enable the company to distribute additional cash to creditors, on the top of the currently agreed upon payment of a third of accrued interest. The result supports our bullish view on Metinvest.