Metinvest announces financial results for 2017


Metinvest B.V., the parent company of a vertically integrated group of steel and mining companies (jointly referred to as “Metinvest” or “the Group”), today announced its audited IFRS consolidated financial statements for the 12 months ended 31 December 2017 in compliance with Clause 8.4 and Condition 4(w) of the trust deed dated 22 March 2017 (“the Trust Deed”) executed between Madison Pacific Trust Limited as trustee and Metinvest B.V. as issuer.

Due to rounding, numbers presented throughout this release may not add up precisely to the totals provided and percentages may not precisely reflect absolute figures.

Summary - financial resultsFY2017FY2016Change, y-o-y
US$ mn%
Income statement highlights  
Revenues 8,931 6,223 2,708 44%
Adjusted EBITDA1 2,044 1,153 891 77%
  Margin 23% 19% 4 pp
Net profit 617 118 499 >100%
  Margin 7% 2% 5 pp
Cash flow highlights  
Net cash from operations 595 490 105 22%
Net cash used in investing activities -449 -331 -118 36%
  incl. purchase of PPE and intangible assets2 -465 -358 -107 30%
Net cash used in financing activities -110 -105 -5 5%

Summary - financial results31.12.201731.12.2016Change, YTD
US$ mn%
Total debt3 3,017 2,969 48 2%
Cash and cash equivalents4 259 226 33 15%
Key ratios   
Net debt5/EBITDA

1.1x 2.0x -0.9x
Consolidated Net Leverage Ratio7 1.4x 2.1x   -0.8x


1). Adjusted EBITDA is calculated as earnings before income tax, finance income and costs, depreciation and amortisation, impairment and devaluation of property, plant and equipment, foreign-exchange gains and losses, the share of results of associates and other expenses that the management considers non-core, plus the share of EBITDA of joint ventures. We will refer to adjusted EBITDA as EBITDA throughout this release. On 15 March 2017, Metinvest lost control over all tangible assets owned by enterprises located in the temporarily non-government controlled territory of Ukraine, including Yenakiieve Steel, Krasnodon Coal and Khartsyzk Pipe. Subsequently, the Group decided to make a provision for impairment of all assets of these enterprises, of which US$92 mn for inventories is accounted for in the 2017 EBITDA.

2). Comprises Capital Expenditures defined in the Trust Deed

3).Total debt is calculated as the sum of bank loans, bonds, trade finance, finance lease, seller notes and subordinated shareholder loans.

4).Cash and cash equivalents do not include blocked cash for cash collateral under issued letters of credit and irrevocable bank guarantees and include cash blocked for foreign-currency purchases.

5). Net debt is calculated as the sum of bank loans, bonds, trade finance, finance lease and seller notes less cash and cash equivalents.

6). EBITDA for the last 12 months

7). Calculated in line with the Trust Deed


Summary - production resultsFY2017FY2016Change, y-o-y
Crude steel 7,630 8,393 -763 -9%
  Azovstal 4,265 3,705 560 15%
  Ilyich Steel 3,096 2,736 360 13%
  Yenakiieve Steel 269 1,952 -1,683 -86%
Iron ore concentrate 27,464 29,640 -2,176 -7%
  Northern GOK 11,366 11,634 -268 -2%
  Ingulets GOK 11,429 12,783 -1,353 -11%
  Central GOK 4,669 5,224 -554 -11%
Coking coal concentrate 2,590 3,051 -461 -15%
  Krasnodon Coal 129 750 -620 -83%
  United Coal 2,461 2,302 159 7%



  • On March 15, assets owned by Group subsidiaries like PJSC Yenakiieve I&SW (including its Makiivka branch), the Ukrainian-Swiss JV Metalen, PJSC Khartsyzk Pipe, PJSC Krasnodon Coal, PJSC Komsomolske Flux, PJSC Donetsk Coke and its affiliate PJSC Yenakiieve Coke, which are located in the territory not controlled by the Ukrainian government, were seized following an ultimatum issued by the unrecognised local authorities to re-register these assets.
  • In early 2017, Avdiivka Coke experienced power cuts due to heavy shelling that damaged electricity transmission lines. This forced the plant to scale back coke production for a three-month period and postpone the launch of coke oven battery no. 8 from January to May. In May, the plant resumed operations, with eight coke oven batteries, after a new high-voltage line to it was installed on territory controlled by the Ukrainian government.
  • In September, Azovstal started pulverised coal injection (PCI) at blast furnace no. 2.
  • Over the year, Metinvest launched 47 new steel products, mainly heavy plates and coils (hot and cold-rolled), as well as galvanised products used in construction, machine-building, shipbuilding and pipe production.



  • In January, the Group’s seller notes were restructured. Their maturity was extended to 31 December 2021.
  • In March, Metinvest successfully concluded the restructuring of its bonds and pre-export financing (PXF) facilities, issued new bonds totalling US$1.2 bn and amended, restated and combined four PXF facilities into one facility totalling US$1.1 bn, both due in 2021.
  • Following the debt restructuring, international rating agencies Moody’s and Fitch upgraded Metinvest’s credit ratings to ‘Caa1’ (‘positive’ outlook) and ‘B’ (‘stable’ outlook) respectively.
  • In May, Metinvest secured a new five-year financing facility totalling around US$14 mn from Caterpillar Financial Ukraine to lease mining equipment for Ingulets GOK.
  • In December, Spartan UK, Metinvest’s re-rolling plant in Newcastle (UK), secured a revolving GBP15 mn commodity trade finance facility from the Bank of London and The Middle East. The facility has an initial term of 12 months with an option for extension.
  • In December 2017, Metinvest-Shipping secured a US$7.35 mn five-year facility from a Ukrainian bank to partly finance railway wagon purchases..



  • In 12 January 2018, international rating agency S&P assigned Metinvest a long-term corporate credit rating of 'B-', the outlook ‘stable’.
  • In February 2018, Metinvest fully repaid seller notes of United Coal.

Commenting on the results, Yuriy Ryzhenkov, Chief Executive Officer of Metinvest, said:

“For the full-year 2017, Metinvest delivered a strong set of operational and financial results, a tribute to its proven business model, prudent strategy and committed human capital. A supportive external environment aided our operational performance and profitability.

During the reporting period, rising global demand for steel and iron ore led to continued price growth. Positive market trends continued into the first quarter of 2018, and we see this continuing over the short to medium term.

At the same time, protectionist sentiments persisted globally. As a group, we actively participate in major anti-dumping investigations and are open to dialogue. We are also confident that we will find a way to mitigate any negative impact from tariffs and other measures.

Ukraine saw another year of economic recovery and relative economic and political stability. The GDP grew 2.1% year-on-year. This has driven demand for steel products from the construction, machine building and other industries.

Last year also saw important developments in Eastern Ukraine. In March 2017, we lost control over assets in non-government-controlled territories. However, with the outstanding efforts of our entire team, we were able to rapidly adjust our operating model and make our business even more robust. Among other measures, we maximised steel capacity utilisation, increasing steel production at our Mariupol steelmakers by 14%.

In 2017, we made a comprehensive review of our Technological Strategy in light of the operating environment. Our updated strategy aims to make the Group more resilient in market downturns while creating opportunities in the upward part of the cycle by focusing on high-value-added products to access premium markets. We already saw promising results in 2017, as the share of high-value-added steel products reached 42% of the sales mix. In iron ore, the share of pellets with Fe content above 65.0% rose 16 percentage points to 54% of sales and that of concentrate with Fe content above 68.0% increased by 17 percentage points to 26% of sales.

Last year, crude steel production stood at 7.6 million tonnes and iron ore output amounted to 27.5 million tonnes. At the same time, we delivered a solid set of financial results, reflecting the stronger market environment and our operational performance. Revenues grew by 44% year-on-year to US$8,931 million. The share of Ukraine in total sales increased to 28%, while the share of Europe, another priority steel and iron ore market for us, remained steady at 36% of sales. Our EBITDA jumped 77% year-on-year to US$2,044 million amid sales price growth. Importantly, operational improvements delivered a positive effect of US$100 million over the year. Profitability shifted towards the Mining segment, which contributed 67% to EBITDA, while the EBITDA margin reached a healthy 40%.

Operating cash flow for the period increased by 22% year-on-year to US$595 million. It was affected by an outflow of working capital, attributable to the required changes in the operating model, rising inventories and receivables build-up, mainly amid sales growth. We are closely monitoring this issue. Importantly, we spent US$542 million to maintain and upgrade our production facilities for continued organic growth.

On the back of improved liquidity, Metinvest fully repaid the seller notes and is current on interest under its outstanding bonds and pre-export finance facility. We are actively reviewing all options to return to international debt capital markets to reschedule maturities to suit the business cyclicality and payback periods of our investment projects.

In summary, I want to underline my belief that Metinvest Group is back on track for growth. We anticipate that 2018 will be a year of great opportunities. We are cautiously optimistic that, today, we have reached a new horizon with promising frontiers beyond.

I would like to thank our clients, investors, creditors, employees and other stakeholders for their support during 2017.”