News

 

31.05.2017

Metalloinvest announces interim management statement for Q1 2017

Metalloinvest (“the Company”), a leading global iron ore and HBI producer
and supplier, and one of the regional producers of high-quality steel, today publishes its IFRS interim
management statement for the first quarter ended 31 March 2017.
FINANCIAL HIGHLIGHTS
o Revenue USD 1,520mn (+85.1% compared to Q1 20161)
o EBITDA2 USD 527 mn (2.9 times increase y-o-y)
o EBITDA margin 34.7% vs. 22.4% in Q1 2016
o Net Income USD 391 mn (2.2 times increase y-o-y)
o Net Debt USD 3,434 mn (+8.6% compared to 31 December 2016)
o Net Debt / EBITDA LTM3 2.1x vs. 2.5x as of 31 December 2016
o Capital Expenditure USD 62 mn (-32.6% y-o-y)
o Total Assets USD 6,815 mn (+9.9% compared to 31 December 2016)
KEY CORPORATE HIGHLIGHTS
o Long-term steel billets supply contract signed with OMK4
o Testing and adjustment of equipment conducted at HBI-3 Plant at LGOK
o Credit rating outlook upgraded to Stable by Standard & Poor’s, ‘BB’ long-term corporate credit rating
affirmed

In Q1 2017, the Company’s revenue increased to USD 1,520 mn, up by 85.1% y-o-y vs. USD 821 mn
in Q1 2016. This was mainly due to substantial growth in average prices for iron ore and steel products and
increased sale volumes of high value-added products.
In Q1 2017, the Company’s EBITDA increased by 2.9 times y-o-y to USD 527 mn. This growth is mostly
attributable to higher EBITDA in the Mining Segment, which rose by USD 323 mn.
The Company's EBITDA margin increased to 34.7% in Q1 2017 vs. 22.4% in Q1 2016. The improved
profitability was largely the result of price increases for the Company’s products and the implementation of its
operational improvement programme.
Net income in Q1 2017 amounted to USD 391 mn compared with USD 178 mn in Q1 2016, an increase
by 2.2 times y-o-y.
FINANCIAL POSITION
As of 31 March 2017, the Company’s total assets amounted to USD 6,815 mn, an increase of 9.9% compared
to USD 6,201 mn as of 31 December 2016. The increase in the dollar-denominated value of the Company’s
assets was mostly due to the appreciation of the rouble.
As of 31 March 2017, the Company’s Net Debt amounted to USD 3,434 mn, up 8.6% against the year-end
figure mainly due to an increase in the USD equivalent of its rouble-denominated debt. The Company's
Net Debt / EBITDA LTM ratio improved to 2.1x vs. 2.5x as of 31 December 2016 due to a significant y-o-y
increase in EBITDA in Q1 2017.
As of 31 March 2017, long-term debt accounted for 92% of total debt, a slight decrease from the end of the
previous year.
As of 31 March 2017, the Company’s cash and cash equivalents amounted to USD 869 mn, compared to
USD 989 mn as of 31 December 2016, representing a 12.1% decrease.
In February 2017, Standard & Poor’s revised its outlook on Metalloinvest from Negative to Stable and affirmed
the Company’s ‘BB’ long-term corporate credit rating.
CAPEX PROGRAMME
In Q1 2017, the Company’s capital expenditures amounted to USD 62 mn, a decrease of 32.6% y-o-y.
This was mainly a consequence of the scheduled completion of construction of key facilities at HBI-3 Plant at
LGOK.
Approximately 46% of total capital expenditure in Q1 2017 was spent on the Company's main investment
project – HBI-3 Plant construction at LGOK. As of 31 March 2017, the Company continues to conduct testing
and adjustment of equipment.
In Q1 2017, Metalloinvest continued to purchase high-performance open-pit mining machinery for its plants.
In March, two new BelAZ vehicles with a lifting capacity of 220 and 130 tonnes, as well as a new locomotive
with a set of dump cars, were delivered to LGOK and MGOK.

As part of the modernisation of DRI-2 at OEMK, the Company is in the process of signing agreements for
technological equipment delivery and is carrying out general construction works.
OTHER IMPORTANT CORPORATE EVENTS
In January 2017, Metalloinvest and United Metallurgical Company signed a long-term contract for the supply
of steel billets for the production of seamless railway wheels. The contract lasts until the end of 2027.
According to the terms of the contract, the pricing is based on current market indicators, taking into account
global price trends.
In February 2017, the Company signed an additional loan agreement with ING BANK (EURASIA). According to
the terms of the agreement, the Bank increased the limit of the Company’s revolving credit line from
USD 100 mn to USD 150 mn and extended the duration of the loan by two years. The Bank also improved the
terms of the floating interest rate linked to LIBOR.
SUBSEQUENT EVENTS
April 2017
Fitch Ratings confirmed the Company’s long-term issuer default rating at ‘BB’ with a Stable outlook.
ING BANK (EURASIA) increased the limit of the two-year committed revolving credit line to USD 200 mn.
May 2017
The Company placed USD 800 mn 4.85% guaranteed notes due 2024. The Company used the proceeds from
the offering to finance the tender offer for its 5.625% notes due 2020 and for general corporate purposes.
A participation rate of 66.7% was achieved in the tender offer launched on 13 April 2017, i.e. a total principal
amount of USD 667 mn of notes was tendered.
The Company signed an agreement with a syndicate of banks for a USD 1.05 bn pre-export finance facility5
(the “PXF-2017”). According to the terms of the agreement, the PXF-2017 is divided into two tranches:
a USD 800 mn five-year tranche with a three-year grace period and a USD 250 mn seven-year tranche with
a five-year grace period. Both tranches have floating interest rates linked to one-month LIBOR. The funds will
be used to refinance part of the Company’s existing pre-export finance facilities on more favourable terms.
17 financial institutions from Europe, the USA, China, Japan and Russia participated in the transaction.

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