Monthly report of Metinvest June 2017

10 September 2017

Owing to favorable situation on the global steel market, during last months Metinvest reports good financial performance.

According to Metinvest report for June total revenues of the company in reporting month made USD 720M, which have been slightly lower than in previous month (USD 737M), but by 29% higher y-o-y.

EBITDA margin of the group remains relatively stable, in June it made 20% (with EBITDA in money terms at the level of USD 147M vs. USD 154M in May).

Metinvest revenues and EBITDA margin dynamics since the beginning of Y2016 look as follows:

Metinvest revenues and EBITDA margin June 2017

In reporting month Metallurgical division revenues (USD 608M) made about 84% of total Metinvest sales. The company increased sales of finished production vs. May by 8% up to 777k tons (the highest value since November 2016, main factor growth of Zaporizhstal flat products sales). Due to slump of slabs sales, realization of semi-finished products declined vs. previous months by 6% (to 246k tons).

In total in June Metinvest sold 1 023k tons of steel products, which has been the highest value for several latest months.

Selling prices of Metallurgical division declined vs. previous months by 4-7%, EBITDA margin made 6% (vs. about 8% in April-May).

As for Mining division, its revenues (disregarding intragroup sales) decreased vs. previous month by 15% to USD 112M. Changes took place in the structure of sales by products sales of iron ore concentrate declined vs. May by 50%, while sales of pellets increased by 50%.

Average iron ore products selling price declined vs. May by 10% (vs. peak level of March almost by 40%, which generally corresponds to global iron ore market trends in June global prices reached its local trough at the level of USD 54/t, while current iron ore price (CFR China) is already close to USD 76/t). Despite prices decline EBITDA margin of the segment in reporting month comprised 45%.

As for operating cash flow, disregarding factually paid income tax and interest expenses, in June it amounted to USD 169M vs. USD 116M in previous month. We note decrease of inventory by USD 50M, while growth of receivables (USD 42M) has been offset by increase of payables (USD 38M).

In reporting month Metinvest directed USD 28M for investment activity (since the beginning of Y2017 USD 171M), so amount of cash of the company grew from USD 185M as of 31.05.2017 up to USD 215M.

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