MMK: revenue almost flat, but asset impairment drove a loss

On July 23, MMK released its results for the second quarter of 2026. Revenue declined only 1.1% year-on-year to RUB 153,286 million, but EBITDA fell 27.8%, and the company posted a net loss of RUB 17,742 million versus a profit a year earlier. This review examines what lies behind these figures: where the margin was lost, what caused the loss, and how it affects the company's valuation.

Key takeaways

— Revenue was almost flat in Q2, but EBITDA fell 27.8% due to higher cost of sales

— Net loss of RUB 17.7 billion driven by asset impairment of RUB 19.7 billion

— EBITDA margin contracted to 10.4% from 14.3% a year earlier

— Operating cash flow rose to RUB 29,955 million, but capex remains elevated

— Net debt is negative, but the debt-to-EBITDA ratio is not disclosed

— Shares rose 8.1% after the report despite the loss

— No dividends paid over the last 12 months; model expects zero payout

Key figures, RUB bn

Revenue was almost flat in Q2, but EBITDA fell 27.8% due to higher cost of sales

In Q2 2026, MMK's revenue amounted to RUB 153,286 million, only 1.1% below the prior year. At the same time, cost of sales rose to RUB 128,830 million from RUB 127,398 million, almost completely offsetting the effect of stable revenue. As a result, gross profit declined 11.6% to RUB 24,456 million.

EBITDA fell 27.8% year-on-year to RUB 15,971 million, reflecting pressure on profitability. The main contributor was cost of sales, which increased amid higher raw material and logistics costs, although the company does not disclose cost details in the report. Operating profit was only RUB 2,812 million versus RUB 7,665 million a year earlier.

Net loss of RUB 17.7 billion driven by asset impairment of RUB 19.7 billion

Net loss for Q2 amounted to RUB 17,742 million versus a profit of RUB 2,476 million a year earlier. The key factor was asset impairment of RUB 19,708 million, which the company reflected in the income statement. This is a one-off non-cash effect related to the review of recoverable amounts of certain assets, including in the coal mining segment.

Excluding impairment, the company would have posted a small profit, but including taxes and other expenses, the loss before tax was RUB 16,646 million. Income tax added another RUB 1,096 million in expenses, leading to the final loss. This is an important signal: operating activities remain profitable, but the quality of assets raises questions.

EBITDA margin contracted to 10.4% from 14.3% a year earlier

EBITDA margin in Q2 2026 was 10.4% versus 14.3% in the same period last year. This is a significant deterioration driven by cost of sales growing faster than revenue. Pressure on margins comes from both external factors – raw material and logistics prices – and internal ones – higher personnel and repair costs.

The decline in margins comes amid falling revenue in previous quarters: in Q1 2026 revenue fell 18.6% year-on-year, while in Q2 it fell only 1.1%. This suggests the company is gradually adapting to new market conditions, but the recovery in profitability lags behind the recovery in volumes.

Operating cash flow rose to RUB 29,955 million, but capex remains elevated

In Q2 2026, operating cash flow amounted to RUB 29,955 million, significantly higher than in the previous quarter (minus RUB 1,757 million) and above the year-ago level (RUB 20,781 million). The improvement was driven by working capital release, particularly a reduction in inventories of RUB 17,708 million in H1.

Capital expenditures in Q2 amounted to RUB 15,404 million, lower than in Q1 (RUB 15,810 million) and significantly lower than a year earlier (RUB 23,907 million). However, for H1, capex totaled RUB 31,214 million, exceeding operating cash flow for the same period (RUB 26,508 million). This means the company is financing part of its investments from accumulated cash.

Net debt is negative, but the debt-to-EBITDA ratio is not disclosed

At the end of Q2 2026, MMK's net debt was minus RUB 81,394 million, meaning cash and financial investments exceed debt. During the quarter, net debt decreased by RUB 14.7 billion, and over the last 12 months by RUB 12.3 billion. This indicates the preservation of a financial cushion.

The net debt / EBITDA ratio for the last 12 months is minus 1.25, reflecting a net cash position. However, the company does not disclose the dynamics of this indicator, so it cannot be said whether leverage improved or deteriorated. The report also shows that long-term loans and borrowings increased from RUB 15,513 million at the beginning of the year to RUB 21,108 million, and short-term from RUB 22,801 million to RUB 31,498 million, but this is offset by an increase in financial investments.

Shares rose 8.1% after the report despite the loss

MMK's share price before the report was RUB 17.645, rose 1.8% on the release day, and a further 8.1% by August 17, 2026. The market, apparently, took the results better than expected, given that the loss is mostly non-cash and operating cash flow remains strong.

Current valuation: EV/EBITDA for the last 12 months is 2.33, below the three-year average of 2.44. This suggests the shares trade at a slight discount to their own history despite weak financial results. Market capitalization stands at RUB 229,185.5 million.

No dividends paid over the last 12 months; model expects zero payout

Over the last 12 months, MMK has not paid dividends, and our model estimates the next payout at RUB 0.0 per share. With a fair yield of 10.5% and a payout ratio of 0.48 of profit, the absence of dividends reflects uncertainty about financial results and the priority of investments.

For shareholders, this means that current yield is not supported by cash payments, and the main hope is for capital appreciation. However, given the negative net profit over the last 12 months (loss of RUB 17,742 million in Q2), dividend payment is unlikely in the near term.

Valuation on the latest reported figures

Bottom line

In Q2 2026, MMK showed almost stable revenue but a significant drop in EBITDA and a net loss due to asset impairment. The strong side remains operating cash flow, which rose to RUB 29,955 million, and negative net debt, providing financial stability. However, the one-off impairment and declining margins point to structural problems, especially in the coal segment. For shareholders, the key question is whether the company can restore profitability without new write-downs, and when dividend payments will resume. For now, shares trade at a discount to their own history, but this reflects risks rather than opportunities.