WOOD Flash – Severstal: 1Q20 results/conference call – results in line, strong dividend and capex cut
Severstal announced its 1Q20 financial results this morning (24 April). The EBITDA was down 8% qoq, to USD 555m (2% below our forecast), and the FCF fell 47%, to only USD 54m (USD 19m above our forecast). This resulted in a quarterly dividend of USD 0.37/GDR, down 12% qoq, a 3.1% yield based on the closing GDR price. We expected only USD 0.24/GDR, given our expectation of weak FCF in 1Q20, so this appears a good result to us. Furthermore, during the conference call, at 08:30am UK time, the CFO guided that 2020E capex will be only USD 1.45bn, down 15% vs. the previous guidance. The results should be taken as a small positive by investors, in our view. However, the new capex is broadly in line with our forecast before the recent rouble devaluation, so the capex cut is not as large as we hoped, and the CFO expects Severstal to be slightly FCF negative this year on this new capex.
WOOD & Company is the leading investment bank in Emerging Europe. Founded in 1991 and head-quartered in Prague, our footprint spans the region and touches investors around the globe.
A pioneer in Emerging Europe, WOOD executed many of the first CEE equity trades and landmark investment banking transactions. Our electronic trading platform was the first in the region, and remains the best. We are continually expanding our relevance and reach in these ever-evolving markets.
Our equity market share reflects our stature: 7% in Warsaw, 20% in Bucharest, 16% in Hungary, 40% in Prague and 5% in Vienna. Our distribution is unparalleled, with the largest salesforce in the region, servicing a uniquely diverse investor base.
We couple local expertise with a truly international perspective. With offices on the ground in the region, and in key financial hubs such as London and Milano, we are never far from our clients and we remain at the forefront of what’s afoot in the CEE emerging and frontier landscape.
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