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in August, a 10.3% m/m increase, according to Concorde Capital’s analysis of separate news reports by Interfax-Ukraine. Ilyich Steel reported a 5.7% m/m gain in steel production to 11.9 kt per day, while Azovstal’s output advanced 14.8% m/m to 13.2 kt per day in August. The holding's hot iron output increased 4.7% m/m to 26.0 kt per day. In 8M20, Metinvest's steel output was 5.45 mmt (22.4 kt per day), or 4.0% more y/y.
Metinvest semi-finished steel prices rise further. Ukraine FOB prices for semi-finished steel products exported by Metinvest, Ukraine’s largest producer, increased during September 4 – 11, according to Metal Expert, an industry consultancy. Billet prices inched up 1% w/w to $415/t on September 11, 19% above their 2019 low of $350/t on October 4 and 1% above their 1Q20 high of $410/t on January 10. Slab prices jumped 6% w/w to $465/t on September 11, 39% above their 2019 low of $335/t on November 1 and 11% above their 1Q20 high of $420/t on January 17. HRC prices were flat w/w at $503/t on September 11, 38% above their 2019 low of $365/t on October 25 and 5% above their 1Q20 high of $478/t on February 21. Metal Expert did not provide an update for pig iron prices (Metal Expert’s FOB Black Sea assessment for a group of countries that includes Ukraine), which stood at $350/t on September 4, 23% above their 2019 low of $285/t on November 1 and 5% above their 1Q20 high of $333/t on March 20. The prices provided by Metal Expert are sophisticated estimates, but they are not necessarily the same as the prices realized by Metinvest for its specific products. Ukraine’s FOB iron and steel prices rebounded strongly in May-September. Therefore, we expect the monthly EBITDA of Metinvest’s metallurgical segment (including JVs) to remain depressed in July, in line with May’s $39mn and June’s $24mn (adjusted for one-offs). But then we expect it to stabilize and possibly rebound strongly in August-October. However, the strong iron ore prices at the global markets, which were one of the reasons for the recent rebound in iron and steel prices, will keep the profitability of Metinvest’s metallurgical division subdued throughout 2H20.
EBITDA at Ukraine’s largest steelmaker Metinvest plunged 66.7% m/m to $54mn in June, according to its monthly results published on September 8. The holding’s revenue inched up 0.5% m/m to $847mn. Metinvest impaired accounts receivable totaling $112mn in June, according to its monthly report. Its June EBITDA adjusted for this one-off impairment was $166mn, or 2.5% more m/m. EBITDA excluding that of joint ventures (JVs) dropped 80% m/m to $29mn in June. Metinvest’s operating cash flow before working capital changes slid 0.7% m/m to $141mn in June, whereas cash flow from operations after working capital changes (but before profit tax and interest) skyrocketed 4.0x m/m to $351mn in June. Cash flow due to changes in accounts receivable was positive $83mn in June, compared with negative $112mn in May. Cash flow due to changes in accounts payable was positive $120mn in June, compared with negative $8mn in May. The holding’s cash outflow from investment activities plunged 73% m/m to $26mn. Metinvest’s cash outflow from financing activities amounted to $102mn and its end-of-month cash balance soared 79% m/m to $465mn. Its gross debt dropped $88mn m/m to $3,010mn, while net debt plunged $293mn m/m to $2,545mn. Metinvest’s metallurgical segment EBITDA (including JVs) plunged to negative $30mn in June from positive $39mn in May, while its mining segment EBITDA dropped 44% m/m to $63mn. Excluding JVs, Metinvest’s metallurgical segment EBITDA plunged to negative $24mn in June from positive $45mn in May, while its mining segment EBITDA retreated 64% m/m to $32mn. Metinvest’s net leverage ratio, that of its net debt to its last-12-month (LTM) EBITDA
80 UKRAINE Country Report October 2020 www.intellinews.com
