2018 highlights

a commendable performance

In 2018, Metinvest reported some of its most impressive results in the last four years. Major financial investment and corporate accomplishments marked significant progress towards fulfilling the strategic priorities for 2030.

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crude steel production 7,323kt
steel production capacity 9.6mt
share of pellets 48%
coke production 5,269kt


revenues US$11,880m
ebitda US$2,513m
net debt US$2,463m
free cash flow US$673m
ebitda margin 21%
net debt to ebitda 1.0x

chief executive officer's review

on the right track

In 2018, Metinvest excelled on numerous fronts, providing strong validation that it has created the right roadmap for a sustainable future. Focusing on quality in everything it does, the Group forged ahead with large-scale asset upgrades, while the improved debt portfolio allowed it to ramp up its most capital-intensive plans. Metinvest also seized several acquisition opportunities that are an ideal fit with the business model.

yuriy ryzhenkov chief executive officer download ceo's review 502kb



Increase operational efficiency and achieve best practices in steelmaking through focused investments in advanced technologies

Continue improving Metinvest’s self-sufficiency in key raw materials

Increase production capacity by growing organically and by pursuing selective acquisition opportunities

Establish and sustain a continuous improvement culture

Increase personnel productivity

strengthen positions in strategic markets

Increase focus on finished products

Improve the product portfolio mix

Increase sales of steel products in the Ukrainian and regional markets

Build long-term customer relationships and deliver high-quality customer service worldwide

Achieve business excellence through best practices

Further develop the operating model

Strengthen the unified corporate culture and maximise employees’ commitment

Enhance unified and efficient business processes

Maintain transparency of operations and corporate responsibility


The Group increased its spending on sustainability improvements to US$358 million, up 17% year-on-year. A key sustainability project was commissioning the first-phase facility of the new gas cleaning equipment in the sinter plant at Ilyich Steel. Other ESG initiatives included the replacement of all gas-cleaning filters on the Lurgi 552-B pelletising machine at Northern GOK.


Despite upward pressure on costs driven mainly by market factors worldwide and increases in hryvnia-denominated expenses in Ukraine, Metinvest implemented various measures to optimise spending. Examples include making shipments to and from Mariupol more efficient and introducing several SAP initiatives, including an optimisation model for coal, coke and hot metal planning. In addition, numerous CAPEX projects are designed to improve cost efficiency, such as the installation of pulverised coal injection technology at Azovstal’s blast furnace no. 3, which progressed this year.


As part of the Technological Strategy 2030, Metinvest’s organic growth projects include the completion of continuous casting machine no. 4 at Ilyich Steel, which increased the plant’s steel production capacity by around 40% a year. The major overhaul of Azovstal’s blast furnace no. 3, which will increase the plant’s annual hot metal capacity by some 10-15%, also advanced during the year.


In the Metallurgical segment, the Group made further progress in implementing its steel distribution strategy in Europe. It also acquired Unisteel, a Ukrainian producer of galvanised coils. This improved the share of high value-added products in its steel portfolio, which amounted to 51% of sales (excluding re-sales) in 2018. As for the Mining segment, Metinvest boosted the shares of Ukraine and Europe in revenues and increased the proportion of higher-margin pellets in the iron ore sales mix. It also sold 82% of iron ore under long-term contracts, compared with 72% in 2017.


The Group completed various projects to improve customer service in 2018. It launched accounts for customers, accessible through the new website, introduced more trade finance tools for customers and developed forwarding and agent functions in Italy. It also worked to enhance product quality and technical support.


In 2018, Metinvest implemented several initiatives to strengthen its S&OP system, one of which was a planning model for the “iron ore-sinter-hot metal” chain that optimises the loading of the sintering and blast furnace production stages. Other operational improvements, which had a total positive effect on EBITDA of more than US$20 million, included projects to increase the use of sinter in the charge, as well as to reduce the consumption of coke and pulverised coal by adjusting the hot blast temperature.


The Group purchased a 24.99% stake in the Pokrovske coal business in Ukraine. This targeted acquisition will help to secure raw material supplies and improve long-term self-sufficiency to strengthen vertical integration.

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in focus

results:a show of strength

In 2018, Metinvest reported some of its best results in four years, demonstrating that it is indeed moving forward with conviction. Key performance indicators were solid across the board, in terms of both operations and finances, representing a show of strength.

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By any measure, the period from 2014 to 2017 was a testing one, as the Group worked to maintain operations amid force majeure developments in Eastern Ukraine, market uncertainty and liquidity constraints. Despite such conditions, however, Metinvest prevailed, emerging to post some of its strongest operational and financial results in the reporting period, a testament to the dedication of its executives and employees.

Metinvest made several adjustments to its operating model, which has allowed it to progress further. The Group increased output at the Mariupol facilities, secured more stable raw material supplies and intensified its investment programme, which, among other objectives, envisages greater production at those steel plants. Metinvest diverted almost all coking coal from its US mines to its Ukrainian coke producers. In addition, the Group arranged sustainable square billet supplies for its Bulgarian re-roller.


While the conjuncture on the global steel market undoubtedly improved in the last two years, volatility nonetheless remained high amid rising concern about global economic growth, trade tensions between key global players and rapidly moving prices for raw materials and energy. In such an environment, the Group put on a commendable operational display, reconfirming its ability to respond proactively to sudden changes in external conditions, supported by its global sales network.

Regarding steel sales over the period from 2014 to 2018, the share of such priority markets as Ukraine, Europe and MENA remained steadily above 70%, while the mix among other regions shifted from the CIS towards North America and Southeast Asia.

In the iron ore sales mix, the share of pellets reached 48% in 2018, compared with 38% in 2014. At the same time, there were significant changes in the breakdown of markets. Although Ukraine remained the home market for iron ore sales, the Group managed to increase sales volumes to Europe by 3.5 times over the last four years due to its focus on quality, which pushed the share of Europe to above 50%.

This operational strength fed into equally solid financial results in 2018. Revenues climbed to US$11,880 million, up 12% compared with 2014. EBITDA reached US$2,513 million, very close to the level seen four years ago. The contributions to EBITDA from the Mining and Metallurgical segments fluctuated, from a respective 61% and 39% in 2014 to 50% each in 2018, proving the benefits of vertical integration. In addition to stronger results from the business, the Group rebuilt its financial position in 2018.

revenue growth +us$1,315m over the last four years
hva in steel sales in 2018 51% in-house products only
iron ore sales volumes to europe +3.5x over the last four years


Having updated the Technological Strategy 2030, the roadmap for the next 12 years, Metinvest moved full steam ahead with its asset modernisation plans in 2018, allocating around US$900 million in CAPEX. After largely conducting essential maintenance during the challenges of recent years, the Group switched back into upgrade mode, refocusing its efforts on projects to introduce cutting-edge technology, reduce environmental footprint and increase operational efficiency.

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In 2017, Metinvest completed a comprehensive review of the Technological Strategy 2030 to ensure that it will be the most appropriate blueprint for the long term. The Group then embarked on the course charted, guided by the strategy’s three key objectives: to enhance operational and environmental standards; to boost steel production capacity to 11 million tonnes a year, improving cost efficiency while focusing on the downstream; and to penetrate premium segments in the iron ore market by pursuing a quality-over-quantity strategy while keeping expenses low.

Following the period of force majeure underinvestment in 2015-16, Metinvest signalled a decisive return to its long-term asset transformation programme in 2018. CAPEX totalled US$898 million, up 66% year-on-year, of which 57% went to the Metallurgical segment, 41% to the Mining segment and 2% on corporate overheads.

Notably, US$613 million was spent on maintenance at the steelmakers, re-rollers and coke, coal and iron ore producers. Importantly, US$285 million was spent on expansion, which represents 32% of overall CAPEX.

By far the landmark achievement was the completion of continuous casting machine no. 4 at Ilyich Steel, which represents the largest industrial construction project of its kind in Ukraine since independence, involving investments of around US$150 million. The new two-strand facility: features state-of-the-art dust removal, water recycling and gas cleaning technology; has the design capacity to cast 2.5 million tonnes of slabs a year for re-rolling; and effectively increases the enterprise’s annual crude steel production capacity to 4.3 million tonnes, up 40%. As such, it will contribute to environmental improvements in Mariupol and increase Ilyich Steel’s output of value-added slabs and hot-rolled coils, while cutting costs by reducing metal losses and energy consumption.

Meanwhile, Azovstal moved closer to concluding the major overhaul of blast furnace no. 3, constructing in parallel a pulverised coal injection unit there.

The Group also worked on upgrading the pelletising machines at Northern GOK, namely the OK-306 and Lurgi 278-A, to improve the mechanical properties of their pellets and capture additional margin.

Several environmental projects are under way as well. In the reporting period, Ilyich Steel made progress on reconstructing its sinter plant, commissioning the first-phase facility of new gas cleaning equipment in April. Other projects included the major overhaul of gas-cleaning equipment at Azovstal’s secondary steel treatment facilities, extensive maintenance of the oven chambers at Avdiivka Coke and Zaporizhia Coke, and the replacement of the pelletising machine gas-cleaning units at Northern GOK and Central GOK.

TOTAL CAPEX IN 2018 us$898m


If one event in 2018 demonstrated that Metinvest has embarked on a new path to greater success, it was the completion of the refinancing arrangement. By successfully concluding a series of interdependent, multi-instrument transactions with creditors, the Group has placed itself on firmer financial footing for the future.

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A new chapter in Metinvest’s financial history began in April 2018, when the Group successfully completed the market-driven refinancing of its debt of US$2,271 million. This marked the culmination of a liability management drive that began in the second half of 2014.

In 2018, the Group conducted three simultaneous interdependent transactions: a tender offer with concurrent consent solicitation for the bonds due in 2021; the issuance of new bonds; and the amendment and restatement of the pre-export finance (PXF) facility.

In concluding the deal, the Group fulfilled several objectives.

First, it effectively extended and smoothed its debt maturity profile. Second, it took advantage of favourable conditions to refinance bonds to decrease total funding costs and create a sustainable capital structure by untying the bonds and PXF facility, which significantly lowered refinancing risks. Finally, it aligned the contractual terms of the bond financing with standard market terms for comparably rated issuers.

The refinancing marked the attainment of new heights in more than one respect. For Metinvest, the bond was its largest to date, with its lowest ever coupon and longest maturity. The placement was the most sizeable by a Ukrainian corporate sector yet.

In December, the transaction received major external acclaim, when the International Financing Review (IFR) magazine named the transaction Emerging EMEA Bond of 2018 in its annual awards, which are among the most prestigious in the industry worldwide.


The absence of major repayments until 2023 allows the Group to concentrate on the implementation of its Technological Strategy 2030. Metinvest’s financing strategy envisages using ECA-backed facilities offering long-term funding for investment projects.

In 2018, US$63 million was secured for equipment financing through several facilities. The largest was a seven-year repayment buyer credit facility of around EUR43.2 million. It is covered by an Austrian export guarantee issued by Oesterreichische Kontrollbank Aktiengesellschaft (OeKB), while Raiffeisen Bank International AG acted as the sole lender. The facility is the first ECA-covered one since 2012.


The Group has reduced its reliance on short-term trade finance to fund its working capital needs, although it maintains a solid and diversified trade finance portfolio. The amount totalled US$363 million as of 31 December 2018, compared with US$911 million as of 31 December 2013.


In 2018, the Group secured credit ratings from key international rating agencies, although they are constrained by Ukraine’s Sovereign level.



Metinvest added further weight to its core in 2018 and early 2019, making three key acquisitions. Two of them helped to secure long-term self-sufficiency in key raw materials, while one enhanced the steel product portfolio, thereby reinforcing both the upstream and the downstream parts of the business model.

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Among other factors, the long-term viability of any vertically integrated business depends on strength across all links of the value chain. Recognising this, Metinvest regularly evaluates opportunities to acquire assets that secure needed raw materials, unlock synergies from its iron ore reserves to semi-finished steel products, enhance the steel portfolio and drive sales. Following a period of relatively lower M&A activity, the Group renewed its efforts in the area in 2018, buying stakes in two assets and taking full ownership of a third one, all of which complement the business strongly.


In July, Metinvest acquired a 24.99% stake in the Pokrovske coal business in Ukraine, thereby securing additional long-term raw material supplies close to its core production base. The acquisition targets include several extraction, enrichment and sale entities that together represent the largest coking coal extraction and production business in the country. The Pokrovske coal business is strategically important for Metinvest, as it has traditionally been a supplier, and covered more than 20% of the Group’s coking coal needs in the reporting period.

The total consideration for the stake was around US$190 million. In addition, Metinvest obtained an option to purchase the remaining 75.01% from the other co-investors within 10 years. This is conditional on all relevant governmental and other consents, as well as proper management of their debt liabilities.

In 2018, the assets mined 4.0 million tonnes of raw coal and produced 2.3 million tonnes of coking coal concentrate.

Another similar transaction was the acquisition of 23.71% in Southern Coke, a Ukrainian producer of metallurgical coke, for US$30 million, after the reporting date. The asset, which is located in Kamyanske, near the city of Dnipro, has annual coke production capacity of around 600 thousand tonnes. The deal is also consistent with the Group’s strategic priority of diversifying raw material supplies and improving long-term self-sufficiency to strengthen vertical integration, particularly given the planned capacity increase at Metinvest’s steelmakers.


In the reporting period, the Group also bought 100% of Unisteel, a Ukrainian producer of zinc-coated hot-dip galvanised (HDG) coils. Located in Kryvyi Rih, Unisteel has a galvanising line with a production capacity of up to 100 thousand tonnes a year. The strategic acquisition was aimed at further strengthening Metinvest’s steel portfolio and improving the share of high value-added products. Moreover, galvanised steel has good prospects in Ukraine, which imported 129 thousand tonnes of such products in 2018.


global operations

strength in numbers

key assets 12
warehouses 37
sales offices 42
sales countries 100
customers 10,000+
employees 66,000
Map legend
  • Regions with sales in 2018
  • Regions with no sales in 2018
Metinvest's operations
  • 1Ukraine's key operations
    • (Azovstal,
    • Ilych Steel,
    • Avdiivka Coke,
    • Zaporizhia Coke,
    • Northern GOK,
    • Central GOK,
    • Ingulets GOK)
  • 2Ferreira Valsider
  • 3Metinvest Trametal
  • 4Promet Steel
  • 5Spartan UK
  • 6United Coal
Metinvest's sales offices
  • 1Belarus
  • 2Belgium
  • 3Bulgaria (3 offices)
  • 4Canada
  • 5China
  • 6Dominican Republic
  • 7Germany (2 offices)
  • 8Italy (3 offices)
  • 9Lebanon
  • 10Poland
  • 11Romania
  • 12Russia (11 offices)
  • 13Singapore
  • 14Spain
  • 15Switzerland
  • 16Tunisia
  • 17Turkey
  • 18Ukraine (8 offices)
  • 19United Arab Emirates
  • 20United Kingdom

chairman's statement

a clear route ahead

In 2018, Metinvest delivered a robust operational and financial performance, posting results that set a new benchmark compared with recent years. Alongside this, the Group strengthened the expertise of its Supervisory Board and Executive Committee, focused even more on attracting and retaining talent, and made strong additional environmental, social and governance achievements.

oleg popov chairman of the supervisory board download chairman's statement