Metinvest B.V. (the Netherlands), the parent company of Metinvest mining and metallurgical group, in January-June of this year reduced international sales by 7% compared to the same period last year, to $4.190 billion, providing 72% of consolidated revenue. According to preliminary unaudited interim financial results for the first half of 2019, sales in Ukraine fell by 3% during the reporting period, to $1.628 billion as a result of lower prices and sales of flat products amid a weaker demand from pipe producers, as well as lower coke sales volumes due to reduced production volumes. As a result, the share of Ukraine in consolidated revenue increased by 1 percentage point, to 28%.
The report notes that in the first half of 2019, sales to Europe fell by 2%, mainly due to lower prices for the sale of steel products. At the same time, the region’s share in consolidated revenue grew by 1 p.p., to 35%. Sales to the countries of the Middle East and North Africa were down by 22% against the background of a decrease in sales of semi-finished products and flat products, as well as lower sales prices for these goods. As a result, the region’s share in consolidated revenue decreased by 4 percentage points, to 17%.
Sales in the CIS countries fell by 6% due to lower sales prices and sales volumes of long products, while the region’s share in consolidated revenue remained at 7%. Sales in Southeast Asia grew by 66% due to growth in sales volumes of slabs, square billets and iron ore products. As a result, the share of this market in consolidated revenue increased by 3 p.p., to 7%.
ISD Polska, the structure of Industrial Union of Donbas (ISD), has said it considers Metinvest Group as the most acceptable and promising option for the bankrupt Huta Czestochowa still mill in Poland.
ISD Polska Board Chairman Konstanty Litwinow by telephone from Poland on Friday told the Interfax-Ukraine that Metinvest is the most optimal potential investor involved in new proposals in the bankruptcy lawsuit of the Polish metal enterprise.
Litvinov did not specify new circumstances and requirements for potential investors of the steel mill, but noted that Metinvest has long been interested.
“They have long been interested in the enterprise. They visited us, did due diligence, so they have a complete picture of the situation,” he said.
Litwinow said for Metinvest the acquisition of the Polish steel mill is a logical continuation of the chain for the production of metallurgical products, which can be sold on the European market.
“Previously, there was a chain with the Alchevsk Steel Works (currently located in Russia-occupied Donbas). But there were no mining enterprises in the chain, and the coke and chemical division was insufficient. But Metinvest has all this. Therefore, gaining control over this the plant is logical and is the completion of the full metallurgical cycle for the supply of products to the EU,” Litwinow said.
He did not specify whether additional negotiations on this topic were held with Metinvest, but said relevant information was sent to potential investors.
Litvinov said a court decision is expected next week regarding investor Huta Czestochowa, which will mainly determine further actions.
Litvinov said earlier that a potential buyers of Huta Częstochowa is Chinese company Sunningwell International Polska, which offered the company 240 million zlotys (about $60 million). At the same time, there are several more companies that are also interested in the steel mill.
As reported, the ISD signed a purchase agreement for the Huta Czestochowa steel mill in early July 2005.
ISD, founded in 1995, is an integrated holding company that holds shares in metal and mining companies. It incorporates Alchevsk Steel Works, Dzerzhynsky Dniprovsky Steel Works, Dunaferr and ISD-Huta Czestochowa.
Metinvest, the vertically integrated steel and mining group of companies, has signed its first smart contract on we.trade blockchain trade finance platform supported by UniCredit.
According to a press release provided by Metinvest Group, this blockchain transaction demonstrates the importance of digitalization in the steel industry.
“Importantly, this is the first blockchain transaction provided by UniCredit to Metinvest Group and is a new digital instrument for us. Blockchain technology allows for the creation and management of a large distributed transaction management database that can be shared across multiple nodes of a network. Such transactions demonstrate the Group’s willingness to work in a trusted environment with secure technology, improved risk mitigation and enhanced visibility,” a press service quotes Head of Corporate Finance at the European Re-rolling Business Unit of Metinvest Group, Jamilya Baimukhambetova, as saying.
According to the press release, the underlying transaction is the purchase of equipment for one of Metinvest’s production re-rollers from a European supplier. One of the pilot project’s objectives is to try the new platform from the client side, so that the Group can evaluate its potential as a new type of payment terms that it can offer to some of its major customers.
Exploring the potential of blockchain trade finance is one way that Metinvest Group is implementing its digital innovation strategy, the Group said in its press release.
The we.trade platform works in partnership with major European banks (Austria, Belgium, Denmark, Finland, France, Germany, Great Britain, Greece, Italy, Netherlands, Norway, Spain, Sweden and Switzerland) and is based on distributed ledger technology, the major underlying elements of which include blockchain and smart contracts. When a smart contract is created on the we.trade platform, the payment will be automatically triggered according to the terms agreed by the counterparties once the buyer has confirmed the delivery of the goods, making the transaction considerably faster and more transparent.
According to the press release, we.trade is a truly successful inter-bank collaboration that can help to redefine business relationships among companies, removing obstacles that typically make international transactions costly and complex while delivering benefits for corporates.
Metinvest Group is a vertically integrated group of steel and mining companies that manages every link of the value chain, from mining and processing iron ore and coal to making and selling semi-finished and finished steel products. It comprises steel and mining production facilities located in Ukraine, Europe and the US, as well as a sales network covering all key global markets. Metinvests business is divided for financial reporting purposes into two segments: metallurgical and mining. The Group ended the first quarter with revenues of $2.9 billion and an EBITDA margin was 15%.
Metinvest Holding LLC is the management company of Metinvest Group.
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.