Revenue of Metinvest B.V. (the Netherlands), the parent company of the Metinvest mining and metallurgical group, fell by 7.5% or by $77 million in April compared with the previous month, to $954 million from $1.031 billion.
According to the preliminary unaudited consolidated monthly financial statements of the company, published on Thursday, earnings before interest, taxes, depreciation and amortization (EBITDA) in April was $173 million, which is 6% ($11 million) more than in March of the current year ($184 million).
According to the report, the adjusted EBITDA of the metallurgical division of the group in April 2019 was $53 million ($46 million in March), including $1 million from participation in the joint venture (minus $2 million). The mining division’s EBITDA is $151 million ($148 million in March), including from the joint venture – $28 million ($19 million). The expenses of the management company were $2 million ($8 million).
Total revenue in April 2019 consisted of the sales of the metallurgical division in the amount of $791 million ($844 million in March), mining – $305 million ($340 million), and intra-group sales – $142 ($152 million).
The total debt of the company in April increased $72 million compared to March, to $2.754 billion from $2.828 billion. At the same time, cash and its equivalents increased by $113 million, to $331 million from $218 million.
Metinvest, the largest Ukrainian mining and metallurgical holding, in 2018 ranked 42nd in the list of the world’s largest steel producers with a volume of 9.37 million tonnes compared to the 42nd place in 2017 with a volume of 9.59 million tonnes of steel, the 37th place in 2016 with 10.34 million tonnes of steel, the 40th place in 2015 with 9.65 million tonnes, and the 33th place in 2014 with 11.18 million tonnes.
According to the rating announced by the World Steel Association (Worldsteel), ArcelorMittal remained the largest steel maker last year with a production volume of 96.42 million tonnes (97.03 million tonnes in 2017).
There are no Ukrainian companies, except for Metinvest, in the list of the 50 largest world steel producers in 2018, as well as in 2017, 2016, 2015, and 2014. The Industrial Union of Donbas Corporation (ISD), which ranked 44th in 2013 with a production volume of 7.9 million tonnes, in 2014, 2015, 2016, 2017 and 2018 dropped out of the leaderboard.
Consolidated net profit of Metinvest B.V. (the Netherlands), the parent company of the Metinvest international vertically integrated mining and metallurgical group, grew by 93% in 2018 compared with 2017, to $1.188 billion from $617 million.
According to the audited financial statements published on Thursday, revenue rose by 335, to $11.88 billion from $8.931 billion, while earnings before interest, taxes, depreciation and amortization (EBITDA) increased 23%, to $2.513 billion from $2.044 billion. Gross profit rose by 28%, to $2.787 billion.
The total debt of the company fell by 9%, to $2.743 billion, and cash and cash equivalents grew by 8%, to $280 million.
“In 2018, Metinvest delivered some of its best results in the last four years, proving that it has indeed turned a corner through proactive operational, strategic and financial management,” Chief Executive Officer of Metinvest Yuriy Ryzhenkov said, commenting on the results.
“The operational results were decent: production rose by 3% year-on-year for hot metal, was largely unchanged for crude steel and iron ore concentrate, jumped by 11% for coke and climbed by 9% for coal,” he said.
Amid this, the group reinvigorated its CAPEX programme in the year, spending nearly $900 million to modernise and catch up on deferred maintenance of assets in the largest such outlay since 2011. Metinvest’s Technological Strategy 2030, which serves as a roadmap to guide the group in fulfilling its strategic priorities, aims to strengthen core production processes to lay a solid foundation for future upgrades to downstream facilities.
Among others, the main achievement of the Mariupol steelmakers was the construction of continuous casting machine No. 4 at Illich Steel, which was completed without major delays and on budget. The machine has eliminated casting bottlenecks and effectively expanded the plant’s annual crude steel production capacity by around 40% to 4.3 million tonnes.
“Importantly, around one third of the project cost was financed using long-term funding guaranteed by the Austrian export credit agency,” Ryzhenkov said.
At the iron ore producers, Metinvest is conducting an extensive heavy truck fleet upgrade to improve output volumes and production efficiency. At Northern GOK and Central GOK, pelletising machines are undergoing large-scale maintenance to allow the group to further capitalise on strong pellet premiums, he said.
Metinvest remains committed to securing its long-term future. To this end, in 2018, the group acquired minority stakes in two assets that are an ideal fit for the business model and will help to strengthen vertical integration and improve resilience to economic cycles. The stakes of 24.99% in the Pokrovske coal business and 23.71% in Yuzhcoke will secure long-term supplies of high-quality Ukrainian coking coal and coke to improve Metinvest’s self-sufficiency in these key inputs.
Underpinned by favourable steel and iron ore prices and ongoing economic growth in Ukraine, the Group delivered its strongest financial results in 2018. Revenues soared by 33% year-on-year due to an enhanced focus on priority markets, while EBITDA rose by 23% year-on year, with both the steel and mining segments contributing equally. Free cash flow generation for the reporting period reached $673 million, up nearly five-fold year-on-year, driven by the robust EBITDA and dividends from a mining joint venture.
“After successfully refinancing its bonds and pre-export facility, Metinvest has normalised its debt portfolio to achieve a sustainable maturity profile, improving the investment case as a result. These achievements received official acclaim when the transaction won the Emerging EMEA Bond of 2018 nomination in the International Financing Review annual awards,” the top manager said.
“In 2019, global iron ore and steel prices are an ongoing source of uncertainty. Trade tensions and concerns about a potential global economic slowdown are creating price pressure. This year will also bring presidential and parliamentary elections in Ukraine, which could cause some turbulence,” Ryzhenkov said.
At the same time, Metinvest will continue to prioritise improving operational performance and implementing the long-term upgrade programme; emphasising health and safety, of both staff and contractors; and reducing environmental impact.
“I would like to thank our clients, investors, creditors, employees and other stakeholders for their support during 2018,” he said.
Revenue of Metinvest B.V. (the Netherlands), the parent company of the Metinvest mining and metal group, fell by 6.4% in May 2018 or by $68 million compared with the previous month, to $998 million from $1.066 billion. According to a monthly report based on preliminary financial results, earnings before interest, taxes, depreciation and amortization (EBITDA) in May totaled $224 million, which is 3% or $7 million more than in April ($231 million).
According to the report, adjusted EBITDA of the metallurgical division of the group in May 2018 totaled $133 million, including $17 million from participation in JVs, EBITDA of the mining division was $87 million, including $14 million from participation in JVs. Corporate overheads totaled $5 million.
Total revenue in May consisted of revenue of the metallurgical division in the amount of $875 million, the mining division – $262 million and eliminations were -$139 million. Total debt of the company in May fell by $229 million compared with April, to $2.977 billion. Cash and cash equivalents fell by $375 million, to $268 million. Net cash used in investing activities totaled $68 million and net cash used in financing activities were $200 million.
Metinvest Group has officially announced it has bought up to 24.99% stake in Donetsksteel’s coking coal producers for about $190 million. “The Group has secured additional long-term supply of high-grade coking coal by investing in production cooperation and acquiring up to 24.99% of some coking coal assets in Ukraine,” it said in a statement on the Irish Stock Exchange on August 16. “The assets include several extraction, enrichment and sale entities, the most significant of which is Pokrovske Colliery and Svyato-Varvarinskaya Enrichment Plant, which together form the largest coking coal extraction and production business in Ukraine [until recently, they were part of the industrial and financial group Donetskstal, also known as Donetsksteel],” the statement said.
They are located on the border of Dnipropetrovsk and Donetsk regions, close to Metinvest enterprises. The assets are registered in accordance with Ukrainian law and none is located in the non-controlled territories of Ukraine.
According to Metinvest, the acquisition is in line with the Group’s strategic priority of improving its self-sufficiency in coking coal to strengthen its vertical integration.
As of December 31, 2017, the long-life proven and probable coal reserves amounted to 81 million tonnes, as calculated according to JORC methodology as at January 1, 2013, and adjusted for production in 2013-17. In 2017, raw coal extraction was 4.3 million tonnes, while coking coal concentrate production was 2.6 million tonnes.
Metinvest says sale products mostly consist of high-quality K-grade coal (hard coking coal, most of whose quality characteristics are in line with the Platts requirements for the Premium Low Vol HCC benchmark), which is used in coke production.
The Metinvest Group is a vertically integrated group of steel and mining companies in Donetsk, Luhansk, and Dnipropetrovsk region. Its major stockholders are SCM with 71.24% and Smart-Holding with 23.76%, which jointly manage the group.
Metinvest, the largest mining and metal holding in Ukraine, in 2017 was 42nd in the list of the largest global steel manufacturers with the volume of 9.59 million tonnes compared with the 37th position in 2016 with the volume of 10.34 million tonnes, the 40th position in 2015 with 9.65 million tonnes and 33rd position in 2014 with 11.18 million tonnes.
According to the World Steel Association (Worldsteel), last year ArcelorMittal with 97.03 million tonnes of smelted steel was first in the 2018 edition of World Steel in Figures.
It is followed by China Baowu Group with 65.39 million tonnes, NSSMC (includes Nippon Steel & Sumikin Stainless Steel Corporation, with 100% of shares, and Nisshin Steel (51%), USIMINAS (31.2%) with 47.36 million tonnes.
The editions of World Steel in Figures of 2018, 2017, 2016 and 2015 did not contain other Ukrainian companies, apart from Metinvest. Industrial Union of Donbas (ISD), which was 44th in 2013 was not included in the next editions.
Worldsteel said that in 2017, Ukraine produced 21.3 million tonnes of steel and was 12th. Apparent steel use was 4.5 million and apparent steel use per capita was 101.5 kg.
Ukraine exported 15.2 million tonnes of steel products, being 12th in the global rating, while China was first and Russia was fourth.
Ukraine was fourth in net exports of steel in the world with 13.8 million tonnes (16.9 million tonnes in 2016, fourth). China was first with 60.9 tonnes and Japan was second with 31.2 million tonnes.
