The international vertically integrated pipe and wheel company Interpipe in January-March this year increased EBITDA by 5.2 times compared to the same period last year – up to $79 million, but reduced revenues from sales by 4% – to $229 million.
According to the first quarter press-release of the company, steel output went up 13% to 184 thsd mt, pipes output increased 12% to 105 thsd mt but railroad products output decreased 13% to 20 thsd mt. In this case, the sales of products decreased by 23% to 108 thousand tons, including pipes – by 20% to 82 thousand tons, railway products – by 27% to 19 thousand tons, steel billets – by 50% to 6 thousand tons.
Net leverage ratio strengthened to 0.7x.
The press-release notes that at the beginning of 2023, production at all Interpipe enterprises was negatively affected by tight limits on electricity consumption by industrial consumers. However, already in March the situation improved due to the removal of these restrictions. As a result, and due to the effect of low comparison base due to last year’s downtime, steel output increased by 13% and tubes – by 12%.
At the same time, Interpipe’s sales continued to decline as external market conditions have already begun to show the first signs of cooling. In particular, the sales of OCTG-pipes (oil and gas variety – IF-U) decreased by 37% and line pipes – by 12%. The fall in the railway division is also continuing and the company is trying to compensate for it by increasing sales to the promising markets of North and South America, the Middle East and the Asia-Pacific region.
The decline in operating performance, in turn, led to a decrease in financial results. Specifically, its sales revenues decreased by 4% to $229 mn, while EBITDA went up 5.2 times to $79 mn, which significantly improved its net leverage to 0.7x.
Andriy Korotkov, Interpipe’s CEO, states that since the middle of the quarter the company’s plants have returned to work steadily, without any “broken” schedules. This made it possible to increase production at the end of the quarter and in some segments, for example, in the pipe division, to get somewhat closer to the pre-war level.
“Even under difficult military conditions, Interpipe continues to fulfill all orders and delivers products to customers quickly and on time. Significant support is provided by the extension of the cancellation of all quotas and duties on Ukrainian goods by the US and the EU,” says the top manager, who is quoted by the press service.
As earlier reported, Interpipe posted net profits of $204.441 million in 2022, which is 2.2 times more than in the previous year ($91.316 million). Last year’s pre-tax profit was $220.579 million compared to $110.907 million in 2021. The revenue in 2022 decreased by 13.4% to $981.330 million from $1 billion 132.9 million a year earlier. At the same time, Interpipe has increased its free cash flow from $109.627 mln to $153.777 mln during the year.
“Due to the war, in 2022, Interpipe reduced EBITDA by 11% compared to the previous year – up to $204 million. Steel output in 2022 decreased 39% to 595 thousand tons, pipes – by 36% to 393 thousand tons, railway products – by 51% to 84 thousand tons.
Sales of products in the reporting period decreased by 37%, to 524 thousand tons, including pipes – by 36%, to 384 thousand tons, railway products – by 50%, to 87 thousand tons. Its sales revenues decreased by 13% to $981 mln, while net leverage remained at a strong and stable level of 1.1x.
“Interpipe is a Ukrainian industrial company producing seamless pipes and railroad wheels. The company supplies its products to more than 80 countries all over the world through a network of sales offices located in the key markets of the Middle East, North America and Europe. In 2022, the company sold 384 thnd mt of tubes and 87 thnd mt of railroad products. The company sells its railroad products under the KLW brand.
Interpipe has 10 000 employees. In 2022 the company transferred 2.8 billion hryvnias to the budgets of all levels.
The company has five industrial assets: “Interpipe Nizhnedniprovsk Tube Rolling Plant (NTZ)”, “Interpipe Novomoskovsk Tube Plant (NMTZ)”, “Interpipe Niko-Tube”, “Dnepropetrovsk Vtormet” and the electric steelmaking complex “Dneprostal” under the “Interpipe Steel” brand.
The ultimate owner of Interpipe Limited is Ukrainian businessman Viktor Pinchuk and his family members.
