Metinvest’s EBITDA Slips 14% YoY to USD 460mn in 1Q13

News
Metinvest, Ukraine’s largest steel and mining group, reported a drop in its EBITDA by 14% YoY to USD 460mn in 1Q13 in a trading update released on Thursday (Jun 13). The company said group-wide revenue declined by 3% YoY to USD 3.13bn in the quarter. In a segment breakdown, Metinvest’s metallurgical division revenues were unchanged YoY at USD 2.27bn in 1Q13 despite weaker steel prices in the period. The group sold 3.79mn tonnes (+21% YoY) of steel and coke products in 1Q13. The mining division brought in USD 861mn (-9% YoY) in revenue, with 8.30mn tonnes (+6% YoY) of iron ore and coal products sold in the period. Metinvest did not unveil its first-quarter bottom line in the update.

On the balance sheet side, Metinvest’s total loans and borrowings amounted to USD 3.74bn as of 31 Mar 2013, including short-term borrowings of USD 1.28bn (34% of the total amount). We estimate the company’s Net debt to EBITDA ratio at 1.9x (based on Apr 2012-Mar 2013 12-month EBITDA).

Commentary
The drop in Metinvest’s 1Q top line could have been substantially sharper than the reported 3% if the group had not obtained additional revenue from trading operations of steel products produced by Zaporizhstal, in which Metinvest owns a 49% stake. Trading operations in steel products from Zaporizhstal brought in USD 374mn, or about 12% of total revenue, during the quarter. Overall, 1Q13 failed to meet expectations of a notable improvement in steel demand on export markets. Along with troubles on the demand side, excess global supply has also been negatively affecting the Ukrainian steel sector. With poor demand recovery in China and steel inventories at their highest level in four years, Chinese steel mills are now exporting part of their output, thereby taking orders away from Ukrainian steel producers in Europe and the Middle East.

Metinvest-18 outstanding bonds are currently quoted at 9.7%/9.3% YTM, implying a spread to sovereigns 110 basis points.

Источник: Eavex Capital