Metinvest to load more Mariupol plants to compensate Yenakiyeve loss
2 June 2017
Ukraine’s largest steel maker Metinvest (METINV) reported its 2016 EBITDA more than doubled (+120% yoy) to 1.15 bln, according to its annual financial results published on May 30. Its metallurgical segment generated EBITDA of USD 737 mln (52% yoy growth) and its mining segment distributed USD 548 mln (5.2x yoy surge) in 2016.
The holding’s revenue dropped 9% yoy to USD 6.22 bln in 2016 and its net profit was USD 490 mln compared to a net loss of USD 1.0 bln in 2015. Its total debt increased 0.8% yoy to USD 2.97 bln as of end-2016 and its ratio of total-debt-to-EBITDA improved to 2.58x from 5.61x a year before. Its CapEx increased 30% yoy to USD 358 mln in 2016. Metinvest’s crude steel output increased 9% to 8.393 mmt in 2016 and sales of steel products were almost unchanged.
At a call with investors on June 1, CEO Yuriy Ryzhenkov said the holding’s future CapEx will be in line with terms approved during its debt restructuring (USD 636 mln in 2017 and USD 651 mln in 2018). Also, Ryzhenkov stated that the holding is going to boost steel output at its Mariupol-based mills by 10-15% (compared to their previous plan, as we understood it) to partially offset the decline in production due to loss of control over Yenakiyieve Steel.
Andriy Perederey: Metinvest’s full-year 2016 EBITDA was lower than the results based on the holding’s monthly numbers, due to the impairment of trade and other receivables by USD 227 mln in 2016. Meanwhile, the 2016 EBITDA improvement was driven by greater steel output and cost reduction.
The holding’s intention to partially offset losses at Yenakiyieve Steel with output at its Mariupol mills looks encouraging. Such an increase looks realistic now after Avdiyivka Coke (AVDK UK) got a new power line (independent from the occupied territories) and is working stably. We are keeping our positive view on Metinvest bonds, which are now trading at 92-93% of par.
