Metinvest shows decent financial performance in March

30 May 2017

Despite formal EBITDA decline due to provisions related to loss control over several enterprises, financial performance of the largest Ukrainian steel and iron ore producer improved.

According to report of Metinvest in March its revenues made USD 663M, which is the largest monthly figure for more than 1.5 years and exceeds February revenues by 12%. Main growth factors have been both increase of realization volumes in tons and growth of prices.

Growth of sales in tons mainly referred to flat products (+25% vs. February) and iron ore concentrate (+80%). At the same time reflecting world market trends average iron ore realization price of the company in reporting month increased vs. February by 3-10% (depending on type of production, average iron ore concentrate price in March comprised USD 85/t), for steel semi-finished products growth of prices made 6-7%, for flat products 2-3% (USD 557/t in March).

During October 2016 March 2017 average iron ore realization price of Metinvest grew by 60-65%, steel semi-finished products by 40-45%, flat products by 20-30%. As for the future projections, taking into account decrease of global iron ore prices since October by more than 30% (steel prices dynamics has been better, but there is also some uncertainty regarding their future dynamics), we can expect decline of Metinvest realization prices during following reporting months.

Speaking about financial performance of main activity segments, in reporting month Metallurgical division revenues (USD 534M, +14% vs. previous month) made about 80% of total Metinvest sales. Segments EBITDA has been negative (USD -23M), reason forming of provisions in amount of USD 87M related to loss of control over several enterprises situated at the non-controlled by Ukrainian government Donbass territory.

As for Mining division, its revenues (disregarding Intragroup sales) remained close to the level of previous month (USD 129M). EBITDA margin of division made 54% (vs. 42% in February).

As a result total Metinvest EBITDA in March made USD 96M (vs. USD 151M in February).

Total Metinvest proceeds during Q1 2017 made USD 1.853bln (+44% vs. Q1 2016), EBITDA USD 406M (vs. USD 118M a year ago).

Operating cash flow dynamics of the company improved in March it made (after changes in working capital) USD 107M (vs. USD 63M in January and USD 19M in February). Receivables of Metinvest (disregarding changes in VAT Receivables) in March decreased by USD 29M, along with it Payables in March decreased even more - by USD 46M.

In March Metinvest spent USD 47M for investment activity.

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