WOOD Flash – EVRAZ: 1H19 financial results – in line with consensus, with slightly disappointing 1H19 dividend
EVRAZ reported its 1H19 financial results this morning (8 August). EBITDA of USD 1.48bn in 1H19 (-23% hoh, -20% yoy) was in line with the Bloomberg consensus and our estimate, as was FCF of USD 705m (-44% hoh, +33% yoy), helped by capex that was lower than the run-rate, to meet the annual guidance, offset by a working capital outflow of USD 49m. Despite the FCF being higher than the USD 577m dividend payment in the first half, the net debt rose 2% hoh to USD 3.65bn, 7% above our estimate, due to the introduction of IFRS 16, meaning that EVRAZ’s ND/LTM EBITDA rose to 1.07x. The company also reported an interim dividend of USD 0.35/share (below our USD 0.51 estimate and the Bloomberg forecast of USD 0.40/share), implying a 4.8% yield and only 72% of the FCF, rather than the 100% we expected, based on previous statements from management. We expect a neutral or slightly negative share price reaction, given the conservative dividend payment and unsurprising results.Evraz engages in the production and distribution of steel and related products and coal and iron ore mining. Co. also produces vanadium products. Co. has four segments: Steel, which includes production of steel and related products at all mills except for those in North America, and includes the extraction of vanadium ore and production of vanadium products, iron ore mining and enrichment and certain energy-generating companies; Steel, North America, which includes production of steel and related products in the U.S. and Canada; Coal, which includes coal mining and enrichment; and Other operations, which includes energy-generating companies, shipping and railway transportation companies.
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