MMK Group boosted EBITDA 5.6% in Q3, above forecast
MOSCOW. Oct 31 (Interfax) - The MMK Group, whose main asset is Magnitogorsk Iron and Steel Works , boosted its EBITDA 5.6% in Q3 2019, to $525 million, according to the company's report under International Financial Reporting Standards (IFRS).
Analysts at investment companies and banks polled by Interfax had predicted 4.8% growth, to $521 million.
Revenue grew 0.5%, to $2.009 billion. Analysts had predicted 0.1% growth, to $2.001 billion.
Net profit fell 0.4%, to $271 million, despite expectations of 9.9% growth, to $299 million.
FCF grew to $289 million from $61 million in Q2.
"Currently, the Company's management is seeing a decline in demand on exports markets and a seasonal weakening in consumption of metal on the domestic market amid the correction in steel prices, reflecting the unfavourable conditions on the global market. Together, these factors should put pressure on MMK Group's performance in Q4 2019," the report reads.
"Despite the negative trends, the Company expects that while the price premium on the domestic market compared to exports will decline, it will remain at a sufficiently high level. This, together with a decline in prices for key raw materials and high capacity utilisation of high-margin production units, should have a positive effect on the Company's results," it reads.
Capex fell 24% quarter-on-quarter, to $188 million, "in line with the investment programme schedule."
The company confirmed its 2019 capex forecast of $850 million. In 9M, capex totaled $592 million (-9.8% year-on-year).
Highlights ($ mln):
| Q3 2019 | Q2 2019 | Change | 9M 2019 | 9M 2018 | Change | |
| Revenue | 2 009 | 1 999 | 0.5% | 5 844 | 6 252 | -6.5% |
| Cost of sales | -1 418 | -1 451 | -2.3% | -4 190 | -4 144 | 1.1% |
| Operating profit | 386 | 376 | 2.7% | 1 082 | 1 449 | -25.3% |
| EBITDA | 525 | 497 | 5.6% | 1 462 | 1 881 | -22.3% |
| - Steel (Russia) | 518 | 481 | 7.7% | 1 417 | 1 766 | -19.8% |
| - Steel (Turkey) | -5 | -1 | - | -13 | 6 | - |
| - Coal | 14 | 12 | 16.7% | 58 | 105 | -44.8 |
| EBITDA margin | 26.1% | 24.9% | +1.2 pp | 25.0 | 30.1 | -5 pp |
| Net profit | 271 | 272 | -0.4% | 768 | 1 072 | -28.4% |
| Free cash flow | 289 | 61 | 373.8% | 610 | 788 | -22.6% |
MMK is one of Russia's biggest steel companies. Viktor Rashnikov, the chairman of its board of directors, is its main beneficiary, controlling 84.26% via Mintha Holding, and 15.74% is in free float.