WOOD Flash – EVRAZ: 2H19 financial results – above the consensus, with a higher-than-expected dividend
EVRAZ reported its 2H19 financial results this morning (27 February). EBITDA of USD 1.12bn in 2H19 (-24% hoh, -42% yoy) was 5% above the consensus and 9% above our estimate, while the FCF of USD 685m in 2H19 (-3% hoh, -46% yoy) was 120% above our estimate. This was helped by capex that was USD 88m lower than the annual guidance, and a working capital release of USD 422m in 2H19. Net debt fell 6% hoh to USD 3,445m, 10% below our estimate, due to the stronger-than-expected FCF. The ND/LTM EBITDA rose to 1.32x (vs. 1.07x after 1H19). The company also announced a USc 0.4/share interim dividend, which is an 8.2% yield at the current share price. We were only expecting USc 0.15, so this is a positive surprise for us. With the 1H19 dividend of USc 0.35/share, which implies USc 0.75 for the year, a c.15% yield based on the current share price. Bloomberg consensus had USc 0.63/share, so the news should be taken positively, in our view. We expect a positive share price reaction.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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