Page 62 - UKRRptSept18

Ukraine’s largest producer Metinvest alongside companies likely affiliated with its owners, have acquired 100% ownership in Ukraine’s producer of coking coal concentrate Donetsksteel and a 40.8% stake in Ukraine’s largest coking coal miner Pokrovske Coal, Kyiv-based brokerage Concorde Capital reported on August 10. Donetsksteel, a Ukrainian producer of coking coal concentrate (and formerly of iron and steel), reported in its recent filing that Fintest Trading Co. Ltd. of Cyprus (Fintest), as of August 1, had reduced its stake in Donetsksteel to 0% from 100% previously. Donetsksteel also reported that its new owners are Metinvest B.V. (24.99%) and three other companies (each 24.99%). The four new owners of Donetsksteel also each own 24.99% stakes in Industrial Coal Holding LLC (ICH) of Ukraine, the majority owner of Pokrovske Coal. Fintest is the top holding company of Donetskteel group.
Ukraine’s Ferrexpo ’s cost jump by a third in first half of 2018. Ukraine’s largest iron ore pellet exporter Ferrexpo reported its the first half of 2018 financial results on August 2. Revenue increased 4.3% y/y to $617mn, while EBITDA dropped 18.4% y/y to $234mn. Operating cash flow before working capital decreased 15.3% y/y to $245mn, while net cash from operating activities slid 19.5% y/y to $156mn. CapEx grew 23.1% y/y to $56mn. The cash outflow due to stockpiling of lean ore was $24mn in the first half of 2018, down from $27mn a year ago, bringing the inventories of lean ore to $213mn at the end of the first half of 2018, up from $163mn a year ago, the company reported. Ferrexpo’s net debt amounted to $369mn at the end of the first half of 2018, a 21.8% y/y drop. The net debt-to-EBITDA ratio dropped to 0.74x at the end of the first half of 2018, down from 0.94x a year ago. Ferrexpo’s C1 cash production cost swelled 31.5% y/y to $41.6/t. The company disclosed that out of the $10.0/t y/y increase in C1 production cost, approximately $2.6/t was due to increases in maintenance and $2.6/t due to higher stripping volumes at FPM. Ferrexpo also announced that its directors have declared a $0.033 per share interim dividend, to be paid on September 26. The record date for this dividend is August 24, and the ex-dividend date is August 23. “The substantial increase in C1 cost is discouraging, especially if the higher stripping costs persist in the future. We also emphasize that the cash cost per ton of lean ore that Ferrexpo stockpiles is high. For example, in 2017 Ferrexpo experienced $53mn of cash outflow related to the stockpiling of 11.4 mmt of unprocessed lean ore during the year. This comes to $4.6 per ton of raw ore, which seems high,” Dmytro Khoroshun of Concorde Capital said in a note.
Ukraine’s largest iron ore pellet exporter Ferrexpo increased the PXF facility it arranged in November to $400mn from $195mn, the company reported in its August 9 filing. The tenor of the facility was increased to four from three years with a grace period of one year before quarterly amortizations, while the margin to $Libor remained unchanged at 450 bps. “This news comes as no surprise after Ferrexpo discussed the possibility of taking on more PXF loans at a June analyst meeting. The repayment of $173mn Eurobond principal in April 2019 now looks secured,” Dmytro Khoroshun of Concorde Capital said in a note. “We retain our neutral view on FXPOLN Eurobonds.”
Steel production at Ukraine’s largest producer Metinvest was 19.1 kt per day (or 591 kt per month) in July, an 11.2% m/m decrease in average daily terms, according to Concorde Capital. That result includes Azovstal and Ilyich Steel figures, the bank said in a note. Production at Metinvest’s Yenakiyeve Steel was halted in February 2017 and is not included in the calculation. Nor is
62 UKRAINE Country Report September 2018 www.intellinews.com