Interpipe cut profit by 90% in Q1

In January–March 2021, Interpipe’s profit slumped by 90% to $12,8 million y-o-y, according to Interfax-Ukraine citing the Company’s interim report on operating and financial results for three months.

Revenue in Q1 decreased by 19.9% y-o-y to $200.9 million; EBITDA declined by 53% y-o-y- to $40 million. Total Net Debt stood at $53 million with net leverage ratio (net debt to EBITDA) at 0.2x.

“In Q1, Interpipe continued operating in challenging market environment which impacted its financial performance. The total revenue dropped by 20%, primarily due to a contraction in railway product segment following the imposition of embargo on imports of Ukraine-made railway products by Russia. Revenue of the railway product segment plunged by 53%, with a fall in sales volumes of 32%,” reads the report.

At the same time, the Company ramped up its capital investment, having spent $17 million for maintenance and expansion projects.

“Additional adverse effects are associated with ongoing global price rally on commodities and metal products. At the same time, sale prices for pipes and railway products were lagging the appreciation of production inputs,” Interpipe noted.

As of 31 March 2021, the Company’s total debt fell to $110 million, keeping the net leverage ratio (net debt to EBITDA) at the minor level of 0.2x.

“The strong price rally on raw materials and steel products in Q1 2021 caused a downward pressure on the Company’s production margins. Starting from 9 February 2021, Russia imposed an embargo on import of Ukrainian railway products, which resulted in much weaker performance. However, then in the first months of Q2 2021 Interpipe have been successful in redirecting sales volumes of wheels to other destinations, having almost reached the pre-embargo production levels,” Fadi Hraibi, Interpipe CEO, said in a commentary.

As GMK Center reported earlier, in 2020, Interpipe reduced its revenue by 23% y-o-y to $865 million. The Company’s EBITDA increased by 6% to $273 million, while its capital investment fell by 26% to $44 million and net debt to $12 million.

Interpipe is an international, vertically integrated pipe and wheel company, one of the top 10 global manufacturers of seamless pipes and one of the top 3 manufacturers of railway wheels.