Consolidated revenue of Metinvest B.V. (the Netherlands), the parent company of the international vertically integrated mining and metallurgical group Metinvest, in January-March this year increased by 43% compared to the same period last year, to $3.624 billion.
According to the published preliminary unaudited consolidated results of the company’s financial statements, adjusted EBITDA for the first quarter was $1.462 million, which is 3.92 times higher than in the same period last year ($373 million). The margin was 40% (15% in Q1, 2020).
It is noted that Metinvest’s consolidated revenues rose by 43% which is driven primarily by higher selling prices of steel and iron ore products in line with global benchmarks. In addition, the Group increased sales volumes of flat products by 6% y-o-y, as a result of a recovery in demand in several strategic markets for the Group, as well as recently implemented investments.
Metinvest also boosted pellet shipments by 34% y-o-y, amid higher pellet premiums globally.
During the reporting period, revenues in Ukraine increased by 30% y-o-y, to $947 million. This was mainly due to higher average selling prices of steel and iron ore products, as well as higher sales volumes of iron ore products (up 17%) and coke (up 18%). The share of Ukraine in consolidated revenues edged down by 3 percentage points (p.p.) y-o-y, to 26%.
Sales to other markets increased by 48% y-o-y, to $2.677 million in the first quarter of 2021, accounting for 74% of total revenues. Sales to Europe surged by 54% y-o-y, primarily amid higher steel and iron ore selling prices. In addition, sales volumes of cast iron, flat products and pellets rose by 32%, 28% and 51%, respectively. As a result, the region’s share in overall revenues increased by 3 p.p. y-o-y, to 35%.
Revenues from the Middle East and North Africa (MENA) region rose by 48% y-o-y, mainly amid higher steel selling prices, as well as greater shipments of pig iron (up 29%), slabs (up 73%) and flat products (up 4%). The region’s share in consolidated revenues remained unchanged at 18%.
Sales to Southeast Asia increased by 9% y-o-y, amid higher iron ore selling prices despite practically no shipments of semi-finished and finished steel products to the region. Southeast Asia’s share in consolidated revenues declined by 2 p.p. y-o-y, to 8%.
Revenues from the CIS rose by 20% y-o-y, primarily as a result of higher selling prices for flat products. Meanwhile, the region’s share in consolidated revenues declined by 1 p.p. y-o-y, to 5%.
In the first quarter of this year, consolidated EBITDA was $1.462 billion, which is 3.9 times higher compared to the same period last year. This was primarily driven by an increase in the Mining segment’s contribution of $676 million and in the Metallurgical segment’s contribution of $494 million. In addition, corporate overheads decreased by $2 million, while eliminations increased by $83 million.
The increase in consolidated EBITDA was primarily attributable to higher average selling prices for steel and iron ore products, the effect of which on sales of Metinvest’s goods totaled $778 million. Higher prices also improved earnings from resales (up by $23 million) and the contribution of both joint ventures (up by $216 million).
In the first quarter of this year, the Group’s consolidated EBITDA margin increased by 25 p.p. y-o-y, to 40%. The Metallurgical segment’s EBITDA margin rose by 16 p.p. y-o-y, to 24%, while that of the Mining segment climbed by 38 p.p. y-o-y, to 75%.
Metinvest, the largest Ukrainian mining and metallurgical holding, in 2020 ranked 45th in the list of the world’s largest steel producers with a volume of 10.16 million tonnes compared to the 42nd place in 2017-2019, when it produced 9.59 million tonnes, 9.37 million tonnes and 9.58 million tonnes, respectively.
According to the annual compilation published by the World Steel Association (Worldsteel), China Baowu Group became the largest steel company last year with 115.29 million tonnes, and ArcelorMittal dropped to the second place from the first position with 78.46 million tonnes.
They are followed by Shagang Group with 41.59 million tonnes, Nippon Steel with 41.58 million tonnes, HBIS Group with 43.76 million tonnes, and POSCO with 40.58 million tonnes.
There are no Ukrainian companies in the list of the 50 largest world steel producers in 2020, as well as in 2014-2019, except for Metinvest. Industrial Union of Donbas corporation (ISD), which ranked 44th in 2013 with a production volume of 7.9 million tonnes, dropped out of the list of leaders.
According to Worldsteel, Ukraine produced 20.6 million tonnes of steel in 2020 and ranked 12th.
Metinvest B.V. (the Netherlands), the parent company of the Metinvest mining and metallurgical group, in January-March this year reduced capital investments by 1% compared to the same period last year, to $ 147 million from $ 148 million.
The unaudited consolidated financial results for the first quarter of 2021 show that strategic investment declined 37% year-on-year as a result of the ongoing revision of the technology strategy and the completion of some key projects in 2020, while maintenance project investment increased by 32%, which brought its share in total capital investments to 30% and 70%, respectively (47% and 53% in the first quarter of 2020).
At the same time, Metinvest continued to implement the following key strategic projects: the construction of a cyclical flow technology at Pivnichny and Inhulets GOKs (completion of work at both GOKs is expected by the end of 2021), the construction of an air separation unit at Illich Steel Plant (detailed engineering documentation has been completed). Metinvest has also launched a project for thickening waste enrichment at Pivnichny GOK to reduce waste transportation costs and the cost of servicing pumping equipment at slurry pumping stations. The group continued the construction of new block No. 11 at the mine of the recently consolidated Pokrovske mine directorate to maintain production volumes.
“Despite the completion of the main work within the largest environmental project in the history of Ukraine – the reconstruction of the sinter plant at Illich Steel Mill, environmental issues remain a priority for the group,” the report emphasizes.
Thus, other environmental projects in the first quarter of 2021 included the reconstruction of the gas cleaning facilities of the foundry and the bunker rack of blast furnaces No. 4 and No. 5 at Illich Steel Mill, the reconstruction of the gas cleaning system of oxygen converters at Azovstal and the replacement of the gas cleaning equipment of the Lurgi 552-A roasting furnace at Pivnichny GOK.
Metinvest is a vertically integrated group of mining and metallurgical enterprises. The group’s enterprises are located mainly in Donetsk, Luhansk, Zaporizhia and Dnipropetrovsk regions.
The main shareholders of the holding are the SCM Group (71.24%) and Smart-Holding (23.76%), which jointly manage it.
Metinvest Holding LLC is the management company of Metinvest Group.
The revenue of Metinvest B.V. (the Netherlands), the parent company of the Metinvest mining and metallurgical group, in February this year increased by 17.9%, or $ 185 million compared to the previous month, to $ 1.216 billion from $ 1.031 billion.
According to the published preliminary unaudited consolidated monthly results of the company’s financial statements, total EBITDA in February was $ 503 million, which is $ 125 million, or 33.1%, higher than in January ($ 378 million), while EBITDA from participation in joint venture amounted to $ 86 million (in January – $ 80 million).
According to the report, the adjusted EBITDA of the metallurgical division of the group for February 2021 amounted to “plus” $ 257 million (in January – “plus” $ 171 million), including $ 21 million from participation in joint venture ($ 13 million), while EBITDA of the mining division – $ 318 million ($ 234 million), including from joint venture – $ 65 million ($ 67 million). The management company spent $ 6 million ($ 7 million).
Total revenue in February consisted of $ 920 million ($ 789 million in January) from the metallurgical division, $ 426 million ($ 329 million) from the mining division, and $ 130 million from intra-group sales ($ 87 million).
The total debt of the company in February increased by $ 83 million compared to January, to $ 3.033 billion from $ 2.950 billion, while the volume of cash increased by $ 61 million, to $ 1.180 billion from $ 1.119 billion.
Funds used in investment activities amounted to $ 201 million, in financial activities – $ 90 million.
Metinvest in February received $ 58 million from the resale of square billets in the amount of 95,000 tonnes. In addition, $ 170 million was received from the resale of 258,000 tonnes of flat products, 47,000 tonnes of long rolled products brought $ 32 million, 89,000 tonnes of pig iron – $ 45 million
The main shareholders of Metinvest are SCM Group (71.24%) and Smart-Holding (23.76%), jointly managing the company.
Metinvest Holding LLC is the management company of Metinvest Group.
Metinvest Group, taking into account associated companies and joint ventures, is expected to increase the payment of income tax by more than seven times in January-June 2021, year-over-year, to UAH 10.2 billion, a source in the tax authorities told Interfax-Ukraine.
In turn, Metinvest confirmed to the agency information about a significant increase in income tax payments in the first half of 2021.
“Enterprises of the Metinvest group will pay income tax in the first half of 2021, replenishing the national budget by UAH 10.2 billion (compared to the first half of 2020, the income tax paid was about UAH 1.4 billion). Thus, according to the results of the first half of the year, income tax payments increased by 7.4 times. This unprecedented increase in tax payments during coronavirus pandemic will help support the cities where Metinvest enterprises operate, pay salaries in full and on time communal and medical workers,” the company told the agency.
At the same time, the group said that Metinvest is one of the largest taxpayers in Ukraine. Thus, in 2020, the company increased its tax payments by 5%, to UAH 22.1 billion year-over-year. Earlier, the group said that over 15 years of its work, it transferred UAH 165 billion to the budgets of all levels.
Fitch Ratings has revised Metinvest B.V.’s outlook to stable from negative, the Long-Term Issuer Default Ratings (IDRs) and senior unsecured rating for the bonds of the Ukrainian integrated steel company are affirmed at ‘BB-‘, the recovery rating is ‘RR4’, the rating agency said on its website. “The revision of Metinvest’s outlook reflects strong cash flow generation linked to supportive steel and iron ore markets amid the global economic recovery and our expectation of a gradual reduction of gross debt to $ 2.9 billion ($ 2.5 billion net; both Fitch-adjusted values) over the next three years. It also takes into consideration that some of this cash flow will be used for earnings accretive growth, including taking control of Pokrovske Coal and incremental capital expenditure,” the report says.
“Fitch now forecasts funds from operations (FFO) gross leverage of 1.5x-1.6x over the medium term, providing for very comfortable headroom compared to the negative ratio guideline of 2.5x for the ‘BB-‘ rating. But we note that the company does not have a formal dividend policy or gearing target,” it says.
Metinvest is a vertically integrated group of mining and metallurgical enterprises. Its enterprises are located in Ukraine – in Donetsk, Luhansk, Zaporizhia and Dnipropetrovsk regions, in European countries. In particular, in Bulgaria there is Promet Steel plant with a capacity of 500,000 tonnes of rolled metal per year, in Italy – Metinvest Trametal and Ferriera Valsider with a total capacity of 1.2 million tonnes per year. In the UK, the company owns Spartan UK plant that can produce 200,000 tonnes of rolled steel per year.
The main shareholders of the holding are SCM Group (71.24%) and Smart-Holding (23.76%), which jointly manage it.
Metinvest Holding LLC is the management company of Metinvest Group.
