Interpipe's EBITDA 25% lower, revenue 2% lower, Capex 66% more in H1 2021

KYIV. Sept 14 (Interfax-Ukraine) – The international vertically integrated pipe and wheel company Interpipe saw $111 million in EBITDA in January-June of this year, which is 25% less than in the previous year.

According to a press release prepared on the basis of the company’s interim operational and financial results for the first half of 2021, its revenue for this period slid 2% compared to the same period last year, to $460 million, but Capex surged by 66%, to $31 million.

Net debt was equal to $199 million while Consolidated Net Leverage Ratio stood at a robust level of 0.9x.

In the second quarter of this year, revenue grew by 29% compared to the previous quarter, to $260 million, EBITDA hiked by 75%, to $71 million, Capex increased by 20%, to $14 million.

According to the press release, in the first half 2021 Interpipe operated in the post-COVID-19 recovery business environment across all key markets and regions which stimulated consumption from oil & gas and construction sectors of key pipe products – OCTG and linepipe.

Despite 31% year-over-year growth in the pipe segment revenue; however, the embargo on the import of Ukrainian railway products in the Russian Federation imposed in February 2021 caused a 40% drop in Interpipe’s railway product segment revenue.

EBITDA totaled $111 million, down 25% year-over-year for the first six months 2021. Margins suffered from skyrocketing prices for raw materials, including natural gas and ferrous scrap. Sales prices for both pipes and wheels lagged in rapid appreciation.

In the first half 2021 Interpipe ramped up its Capex by 66% spending $31 million in total. Capex in new projects tripled year-over-year amounting to $21 million.

As of 30 June 2021, Interpipe’s Total Net Debt increased to $199 million following the successful issuance new 8.375% $300 million eurobonds due 2026. Consolidated Net Leverage Ratio stood at a robust level of 0.9x.

Fadi Hraibi, CEO at Interpipe, said that in Q2 2021 Interpipe exhibited a strong performance amid the company’s vertical integration in scrap collection and own steel billet production as the steel making segment contribution overarched.

"We successfully expanded our seamless pipe sales by 54% quarter-over-quarter in Q2 and 16% year-over-year for the first six months 2021. Our R&D premium and semi-premium pipe connections (UPJ and INTERPID product portfolio) were one of main drivers for ramping up OCTG sales. We also managed to overcome the embargo on the import of Ukrainian railway products to Russia by redirecting sales volumes to other destinations like the United States, CIS, Europe and India. We expect to maintain this pace of 15,000 tonnes of monthly railway products sales achieved in Q2 for the rest of the year," he said.

Hraibi also said that issuance of the $300 million eurobond in May brought an ample liquidity buffer and fully secured our Capex program for 2021-2022.

"We continue investing in the expansion of our capacities: for the first half 2021 we invested over $13 million in the new pipe heat treatment project at Niko Tube and advanced in implementation of railway wheelset assembling project at NTRP," the CEO said.