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Metinvest, Ukraine’s largest steelmaker, released its 2019 financial results on March 4. The holding’s revenue lost 9% y/y to $10,757mn, EBITDA plunged 52% y/y to $1,213mn, and net profit fell 71% y/y to $341mn. Its EBITDA margin decreased 10pp y/y to 11%, and its net margin dropped 7pp to 3%. EBITDA of Metinvest’s mining segment rose 6% y/y to $1,343mn in 2019, while that of its metallurgical segment plunged to negative $107mn from positive $1,291mn in 2018. O perating cash flows before working capital dropped 50% y/y to $1,101mn. Net cash from operations decreased 26% y/y to $814mn. Operating cash inflow due to changes in working capital amounted to $163mn, compared with an outflow of $500mn in 2018. Metinvest’s CapEx rose 17% y/y to $1,055mn in 2019, driven by a 39% y/y jump in its mining segment’s CapEx to $510mn. In 2019, Metinvest paid $100mn in dividends to its owners (2018: $58mn) and provided $146mn in loans, most of it to parties related to its majority owner SCM. Net debt stood at $2,758mn at December 31, 12% more y/y, and the ratio of net debt to last-12-month (L12M) EBITDA amounted to 2.3x, jumping from 1.0x at the end of 2018.
Steel production at Ukraine’s largest producer Metinvest was 23.8 kt per day (or 690 kt per month) in February, a 3.1% m/m loss, according to Concorde Capital’s analysis of separate news reports by Interfax-Ukraine. Ilyich Steel reported a 0.7% m/m decrease in steel production to 11.2 kt per day, while Azovstal’s output dropped 5.1% m/m to 12.6 kt per day in February. The holding's hot iron output slid 1.0% m/m to 22.4 kt per day. In 2M20, Metinvest's steel output was 1.45 mmt (24.2 kt per day), or 16.1% more y/y.
Metinvest Ukraine’s largest steelmaker, does not currently see a need to modify its 3x net debt-to-EBITDA covenant, according to CEO Yuriy Ryzhenkov, who spoke on the holding's 2019 results in a call with investors on March 4. Net leverage is a maintenance covenant under Metinvest’s agreement with PXF creditors, Ryzhenkov confirmed, adding that Metinvest’s short-term sales planning with a horizon of four-five months does not foresee the holding breaking that covenant. However, should there be a need, Metinvest will proactively seek to amend its covenants by approaching its creditors, the CEO said. F or January, Metinvest’s EBITDA is positive, Ryzhenkov said. Recall, for December, Metinvest’s EBITDA was a negative $39mn (negative $3mn adjusted for receivables impairment). At the current prices for Metinvest’s products, the 2020 full year EBITDA will be not less than than for 2019, or $1.2bn, Ryzhenkov guided on the call. Metinvest plans to cut its CapEx about 38% y/y to $650mn in 2020, of, which $350mn will be for maintenance (a 51% plunge y/y) and $300mn for ecology and development (11% less y/y), according to Ryzhenkov. Until Metinvest’s profitability improves, it will not distribute funds to shareholders (neither as dividends nor in other forms such as loans), the CEO said.
EBITDA at Ukraine’s largest steelmaker Metinvest dropped to negative $39mn in December from negative $2mn in November, according to its monthly results published on March 4. The holding’s revenue gained 12.3% m/m to $778mn. Metinvest’s operating cash flow before working capital changes dropped to negative $8mn in December from negative $3mn in November, whereas cash flow from operations (before profit tax and interest) rose 20.9% m/m to $52mn. Metinvest also noted it impaired accounts receivable totaling $36mn in December. The holding’s cash outflow from investment activities jumped 83.1% m/m to $119mn. Metinvest’s inflow from financing activities amounted to $1mn and its end-of-month cash balance
60 UKRAINE Country Report April 2018 www.intellinews.com
