WOOD Flash – MMK: 4Q17 financial results - EBITDA and net income beat consensus but FCF weaker than expected – small positive
MMK has reported its 4Q17 financial results. EBITDA was USD 592m (+30% yoy, +11% qoq), 5% above the Bloomberg consensus. This compares to Severstal and Erdemir experiencing 22% and 36% qoq increases in EBITDA, respectively, as MMK suffered more from its relatively high exposure to the seasonal downturn in the Russian market. FCF of USD 116m was down 68% qoq, 34% below our forecast, impacted by a USD 145m working capital outflow vs. the USD 67m inflow in 3Q17. Net income was 14% above consensus at USD 373m, +36% qoq due to higher than expected EBITDA and a USD 36m one-off due to the Lyvensky acquisition. In addition, MMK’s board has recommended a dividend of RUB 0.806/share for 4Q17, lower than the RUB 0.92/share we had expected, representing a 1.8% yield (7.4% annualised): USD 160m at the current exchange rate, 138% of the IFRS FCF vs. only 59% in 3Q17. Overall, we believe the higher-than-expected EBITDA should be well received by the market, as the working capital movement is only a seasonal factor. However, given the US sell off yesterday, the market should be down regardless.
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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