Page 53 - UKRRptApr19

capacity had been a bottleneck. “This launch is a positive development, in part because the quality of the relevant Metinvest products, slabs and HRC, will be improved as a result. Their production costs should also decrease. However, we are skeptical that Metinvest will be able to achieve the maximum steel-casting capacity load in the near future, for two reasons,” Dmytro Khoroshun of Concorde Capital said in a note. “Firstly, Metinvest reported earlier that the commissioning of the new machine will increase Ilyich Steel’s slab casting capacity to 4 mmt p.a. However, the crude steel capacity of Ilyich Steel’s oxygen converters amounts to only 3.1 mmt p.a., according to Metinvest’s 2018 prospectus. So there are concerns that Metinvest might experience ecological problems when it tries to squeeze 4 mmt p.a. of steel from Ilyich Steel converters, similar to the issues it has experienced with Azovstal’s converter shop from time to time. Secondly, the situation on the world steel markets, particularly the rising protectionism trend, complicates Metinvest’s sales of finished steel products (although slab sales continue to be mostly barrier-free).”
Ukraine’s largest steel producer Metinvest repaid in full $482mn of shareholder loans during 2018, together with $58mn in dividends, totalling $540mn, according to the company's 2018 financial results published on March 21. Metinvest also purchased from its parental company System Capital Management (SCM) a 30% stake in an Italian subsidiary, Ferriera Valsider, for $42mn, paying $36mn of that amount during 2018. The company confirmed that its 2018 Ebitda amounted to $2,513mn (a 23% year-on-year rise), the value inferable from its monthly reports. Revenue advanced 33% y/y to $11,880mn, and its Ebitda margin dropped 2 pp y/y to 21%. Metinvest’s metallurgical segment’s Ebitda jumped 60% y/y to $1,291mn, and Ebitda margin rose 2 pp to 13%. Its mining segment’s Ebitda slid 8% y/y to $1,268mn, and Ebitda margin dropped 6 pp to 34%. The company's CapEx jumped 66% y/y to $898mn in 2018. The share of expansion CapEx amounted to 32% (17% a year ago), and the share of its metallurgical segment CapEx amounted to 57% (51% a year ago). Metinvest’s net profit amounted to $1,188mn in 2018, up 93% y/y, and net profit margin rose 3 pp to 10%. The holding revealed that it has acquired a 23.7% stake in Yuzhcoke, a Ukrainian coke producer, for $30mn. It also disclosed its projections about another recent acquisition, Pokrovske Coal assets: Ebitda margins of 45-65% and coal prices $160-$191 per tonne, depending on the year. Dmytro Khoroshun at Kyiv-based brokerage Concorde Capital wrote in a note on March 21 that having repaid in full its shareholder loans in 2018, Metinvest will switch to dividends as the method of returning money to shareholders. He estimates that the amount will be not less that $400mn-$500mn during 2019. In detail, the July-December 2018 net profit, $520mn, will allow Metinvest to return an additional $260mn (50%) to shareholders, in addition to about $100mn the holding has left for its profits during 2017 and the first hal f of 2018. Once Metinvest publishes its results for the first half of 2010, for which we tentatively expect $300mn of net profit, it will be able to distribute to shareholders another $50mn, the expert added.
Steel production at Ukraine’s largest steel producer Metinvest increased by 7.2% month-on-month to 22 tonnes per day (or 615 tonnes per month) in February, according to calculations of Kyiv-based brokerage Concorde Capital published on March 6. The result includes Azovstal and Ilyich Steel data. Ilyich Steel reported a 2.8% m/m drop in steel production to 10.5 tonnes per day, while Azovstal’s output jumped 18.5% m/m to 11.5 tonnes per day. The holding's hot iron output lost 4% m/m to 21 tonnes per day in February. In January-February, Metinvest's steel output was 1.25mn tonnes, or 7.8% more
53 UKRAINE Country Report April 2019 www.intellinews.com