Metinvest in February good profitability, weak cash flow

5 May 2017

Despite disruptions of some key facilities operations and as situation on the global steel&ore markets remained relatively favorable, Metinvest demonstrated relatively good financial performance in February. Main question point is quality of profits due to weaker performance in terms of operating cash flows.

According to statement of the company in February its revenues amounted to USD 592M, which has been approximately on the level of previous month. In natural terms volumes of both Metallurgical and Mining segments realization declined: for steel products by 12% (due to slump of semi-finished production sales by almost 50%, while finished products realization grew by 3%), for iron ore products by 14%.

On positive side is growth of prices (which almost offset decrease of sales in natural terms) by 2-18% vs. previous months depending on types of production.

As a result, in last reporting month Metallurgical division proceeds (USD 468M, on the level of previous months) made 79% of total Metinvest revenues. Segments EBITDA margin in February made 10% (close to average level of the last several months).

As for Mining division, sales to the 3rd parties in money terms also remained on the level of previous month (USD 124M). Growth of pellets prices vs. January made 7%, iron ore concentrate prices by 18%. EBITDA margin of Mining divisions in February made 42% (37% in January).

Total Metinvest revenues in 2m 2017 comprised USD 1 190M (vs. USD 823M in January-February 2016), EBITDA USD 306M (USD 27M).

As a reminder in Y2016 revenues of Metinvest made USD 6.2bln (vs. USD 6.8bln in Y2015), EBITDA 1.359bln:

Metinvest financial results for December 2016

Operating cash flow dynamics in last reporting month worsened with EBITDA in February at USD 151M (and decrease of VAT receivables by USD 22M) operating cash flow (before interest and income tax payments) made USD 19M. Reason growth of Inventory by USD 86M and Receivables (USD 87M, disregarding changes in VAT receivables). During July16 February17 total Metinvest EBITDA made USD 1 085M, operating cash inflow just USD 459M (thereof USD 282M was driven to investments and USD 118M paid as interest).

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