OREANDA-NEWS. March 29, 2011. At the AGM held Mar 23 Enakievo Steelworks provided the full disclosure of its FY10 financial results. The com-pany’s net sales and EBITDA suffered minor qoq declines in 4Q10, while the net profit of UAH 10mn came out as a pure surprise against 3Q10 net loss of UAH 305mn. The result was effected by a one-off rise in financial income (UAH 492mn) which is a typical accounting tweak of Metinvest. On the BS, additional paid-in capital jumped up more than twofold to UAH 615mn in FY10, bringing total shareholders’ equity back to into the black, UAH 162mn at year-end 2010 vs –UAH 209mn in 3Q10.

Millennium Capital: the news is NEUTRAL for ENMZ UK. The transfer pricing magnitude was consistent with previous quarters with lower discount on sales offset by higher premium on costs. 4Q10 EBITDA came out below our expectations at - UAH 358mn ( vs MFKe – UAH 332mn) but could be worse if not for the unexpected UAH 55mn of other operating income. Regarding earnings, although the bottom line featured UAH 10mn net profit in the quarter the figure boils down to a loss of UAH 463mn if we adjust for the artificially high financial income. Hence, adj. net margin stands at -20.9% which means 7.5pps deterioration compared to 3Q10 result (-13.4%). On the flipside, the equity was temporarily fixed by a new portion of additional paid-in capital. All in, we do not see 4Q10 results as a major negative event for the stock as our bar was not high given the past financial performance. Meanwhile, the lease of MMZ facilities may actually bring some change and we expect the confirmation of that in 2Q11 results.