Metinvest finished products fall 14% qoq in 4Q13, iron ore rises 9% qoq

Обзоры по компаниям и отраслям 04.02.2014 Metinvest (METINV), Ukraine’s largest steel producer, reported on Jan. 31 its 4Q13 finished products output at 2.9 mmt (-14% qoq), with the production of rails, tubes and billets falling the most qoq. On the back of larger iron ore production and lower internal consumption, output of merchant iron ore concentrate and pellets grew 9% qoq to 5.3 mmt. On an annual basis, total finished steel production grew 3% yoy to 12.1 mmt, while output of merchant iron ore products increased 2% yoy to 21.5 mmt. Coking coal production decreased both on a quarterly and an annual basis, by 28% qoq and 22% yoy respectively, mainly due to the weak performance of the firm’s American coal mining subsidiary. Roman Topolyuk: Though we were expecting Metinvest’s weak 4Q13 operating performance due to a seasonal slowdown, the published production results turned out even weaker. The reported qoq increase in iron ore products in 4Q13 isn’t likely to significantly compensate the decline in the steel segment’s operating activity. We now estimate that our previous 4Q13 EBITDA forecast of USD 480 mln as too optimistic, and we are slashing our projection of 2013 annual EBITDA to USD 2.2 bln from USD 2.3 bln. That may bring Metinvest’s total debt-to-EBITDA to 1.7x, higher than 1.6x at of the end of 3Q13, though significantly lower than the Eurobonds covenant of 3x.