Page 63 - UKRRptMar21

EBITDA of Metinvest’s mining segment rose 8% y/y to $1,448mn in 2020, while that of its metallurgical segment skyrocketed to positive $890mn from negative $107mn in 2019.
Operating cash flow before working capital changes jumped 66% y/y to $1,832mn. Net cash from operations soared 2.1x y/y to $1,740mn. Operating cash inflow due to changes in working capital jumped 48% y/y to $242mn.
Metinvest’s CapEx dropped 37% y/y to $663mn in 2020, as its mining segment’s CapEx lost 39% y/y to $313mn and its metallurgical segment’s CapEx decreased 36% y/y to $332mn.
Net debt stood at $2,111mn at December 31, 23% less y/y, and the ratio of net debt to last 12 month (LTM) EBITDA amounted to 1.0x, plunging from 2.3x at the end of 2019.
In 2020, Metinvest paid $100mn in dividends to its owners (2019: $100mn) and paid $77mn under a guarantee. Metinvest also reported that it declared $200mn of dividends in February 2020.
Metinvest disclosed that in 2019-2020 the Pokrovske coal business had restructured a significant part of its debt and changed the ownership structure of the business. At the end of 2020, Metinvest owned 24.77% of the Pokrovske coal business and its co-investors owned 75.22%. Metinvest owns an option to buy its co-investors’ 75.22% stake in the Pokrovske coal business and expects to exercise this option in two steps: 25.23% within a year and 49.99% by the end of 2022, according to its 2020 financial statements.
The profitability of Metinvest’s steel business significantly improved y/y in 2020, and we expect it to be even stronger at least in 1Q21 after the increase in steel prices during November-January. However, we expect the steel prices to correct during 2021.
The profitability of Metinvest’s iron ore business should also be stronger in 1Q21 than on average during 2020 after the recent jump in prices at the global markets, but these prices are also likely to decrease by the year end.
Overall, Metinvest’s profitability in 2021 would improve y/y, at least marginally, we expect.
Regarding Metinvest’s $77mn payment under a guarantee, it is possible that Metinvest will eventually recover these funds. It is likely that the guarantee in question was the one issued by Metinvest for the obligations of its co-investors into the Pokrovske coal business (the companies likely affiliated with Metinvest’s owners, the SCM and Smart groups). One way for Metinvest to recover these funds might be to agree with its co-investors to set off the $77mn guarantee payment against the amounts (estimated at $0.5-0.6bn in total) to be paid to the co-investors if Metinvest exercises the option for 75.22% in the Pokrovske coal business.
Metinvest​ EBITDA jumps 22.1% m/m in December.​ EBITDA at Ukraine’s
63​ UKRAINE Country Report​ March 2021 ​ ​www.intellinews.com