Page 81 - UKRRptJan22

by a 14.9% loss for wheels to 128.7 kt, partially offset by a 23.7% increase for wheelsets to 22.7 kt.
Interpipe boosted its external billet sales 64.2% yoy in 11M21 to 49.7 kt.
Ukraine's share of Interpipe’s pipe sales in 11M21 dropped to 18%, or 4pp less than in 2020. At the same time, the share of sales in the Americas rose 9pp to 20% and the share of CIS countries gained 1pp to 12%. Europe's share in pipe sales dropped 4pp to 25% while MENA's share slid 1pp to 23%
The share of Interpipe’s railway product sales in Ukraine in 11M21 added 1pp from 2020 to 15%, while the share of sales to Europe retreated 2pp to 33%. The share of sales to CIS countries dropped 5pp to 38%. The share of sales in the Americas added 3pp to 6%, and sales in other countries jumped 5pp to 6%.
Regarding production volumes, which might be indicative of sales volumes in the coming months, Interpipe’s pipe production dropped 7.3% m/m to 52.1 kt in November, and particularly its production of OCTG pipes plunged 33.7% m/m to 13.0 kt. Its railway product output added 5.9% m/m to 14.7 kt in November, while steel production jumped 39.1% m/m to 87.7 kt.
EBITDA at Ukraine’s largest pipe and railway wheel producer Interpipe (INTHOL) plunged 44% qoq to $40mn in 3Q21, according to the company’s 9M21 financial statements published on December 17. The plunge in EBITDA (before reallocation from its steel segment) was driven by qoq drops in segment EBITDA for pipes, to negative $26mn in 3Q21 (negative $4mn in 2Q21) and for steel, to positive $62mn (13% less qoq). EBITDA of the railway product segment inched up to $3mn in 3Q21 (from $1mn in 2Q21). After reallocation from the steel segment, Interpipe’s EBITDA fell 43% qoq to $22mn for its pipe segment and plunged 49% qoq for its railway product segment to $14mn. The qoq drop in pipe segment EBITDA was in part due to a positive $15mn contribution to the 2Q21 EBITDA from the release of provisions (much smaller contribution in 3Q21). Interpipe’s revenue added 14% qoq to $296mn in 3Q21, driven by a 15% increase for its pipe segment to $205mn. The increase in pipe segment revenue was driven by seamless pipes (a 6% qoq increase in volumes and an 8% qoq rise in prices). The company’s CapEx inched up 4% qoq to $14mn and its free cash flow plunged to negative $29mn in 3Q21 from positive $1mn in 2Q21. One of the reasons for the negative 3Q21 free cash flow was a $44mn investment into working capital. Total debt was stable qoq at $411mn at end-September while net debt surged 51% qoq to $301mn as cash and cash equivalents plunged 48% qoq to $110mn. In addition to experiencing negative free cash flow, Interpipe paid $40mn in dividends and invested $34mn into financial assets (a portfolio of low-risk marketable securities under the discretionary management of a reputable investment bank) in 3Q21. The motivation for the investment into financial assets was to set off some of the interest costs Interpipe pays on its Eurobonds.
Interpipe has become the largest importer of seamless linear pipes to the EU market. Ivan Mazanka, Director of Pipe Sales to Europe, announced that “Interpipe has become the largest importer of seamless linear hot-rolled pipes
81 UKRAINE Country Report January 2022 www.intellinews.com