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Mechel Reports First-Quarter Financial Results
07/15/2010 - Mechel reported that net revenue in the first quarter of 2010, which ended March 31, increased by 61.1% to $1.9 billion, compared to $1.2 billion in the first quarter of 2009. Operating income rose by 971.2% to $147.6 million, or 7.8% of net revenue.
Mechel reported that net revenue in the first quarter of 2010, which ended March 31, increased by 61.1% and amounted to $1.9 billion compared to $1.2 billion in the first quarter of 2009. Operating income rose by 971.2% to $147.6 million, or 7.8% of net revenue, compared to operating income of $13.8 million, or 1.2% of net revenue, in the first quarter of 2009.
For the first quarter of 2010, Mechel reported consolidated net income attributable to shareholders of Mechel OAO increased by 112.0% to $82.6 million compared to a consolidated net loss of $690.7 million in the first quarter of 2009.
Consolidated EBITDA in the first quarter of 2010 increased by 120.9% to $257.6 million, compared to $116.6 million in the first quarter of 2009. Depreciation, depletion, and amortization in the first quarter of 2010 for the company were $120.6 million, an increase of 60.0% compared to $75.4 million in the first quarter of 2009.
“In the first quarter of 2010, Mechel focused its efforts on the final overcoming of the global financial crisis consequences,” said Mechel’s CEO Yevgeny Mikhel. “In particular, reaching the pre-crisis coal production volumes has become one of the most important priorities of our company’s operations. We continued developing and improving the structure of Mechel’s sales network. We launched investment projects, which had been postponed earlier, and intensified works on implementation of the most important current projects, such as Elga Coal Deposit development and construction of the Universal Rolling Mill.
“Even taking into consideration that not all achievements and success of the 2010 first quarter were reflected in full measure in the financial results of that period and will be witnessed only in the next periods, we consider that the company successfully worked through this hard but important stage of its life and laid the foundation for the further improvement of its operational and financial results.”
Mechel’s steel segment revenue from external customers in the first quarter of 2010 amounted to $1.2 million, or 61.0% of consolidated net revenue, an increase of 80.2% over net segment revenue from external customers of $643.2 million, or 54.5% of consolidated net revenue, in the first quarter of 2009.
In the first quarter of 2010, the steel segment operating income increased by 150.1% and totaled $42.7 million, vs. operating loss of $85.2 million in the first quarter of 2009. EBITDA in the steel segment in the first quarter of 2010 increased by 289.4% and amounted to $68.8 million, compared to EBITDA loss of $36.4 million the previous year. The EBITDA margin of the steel segment was 5.59% for this year’s first quarter, vs. the EBITDA negative margin of 5.31% a year ago.
Depreciation, depletion, and amortization in steel segment rose by 16.0% from $26.4 million in the first quarter of 2009 to $30.6 million in that of 2010.
“Having reached pre-crisis production level already last year, Mechel’s steel segment continued demonstrating strong financial results in the first quarter of 2010,” said Andrey Deineko, Chief Executive Officer of Mechel-Steel Management Co. “Recovery in consumption and price increase in the first quarter of 2010 due to the preparations for the new construction season had a positive effect on steel segment performance and allowed us to substantially increase the operating profit.
“Favorable conditions in the foreign markets persisted; South-East Asia and Middle East witnessed continuous demand growth,” Deineko continued. “Despite certain temporary chill-out on the Russian and international markets, which we notice at the moment, that is quite natural after relatively strong growth of last several months. We believe that market conditions will improve in the beginning of Autumn 2010.
“Favorable market conditions and our efforts to strengthen the company’s positions on the European and Russian steel markets led to the improvement of our financial results in the first quarter of 2010. At the moment, we can confidently say that metal segment has good prospects for the second quarter of 2010 as well” Deineko concluded.
Mechel is a leading Russian integrated mining and steel group. Its business includes four segments: mining, steel, ferroalloy, and power. The company unites producers of coal, iron ore concentrate, steel, rolled products, ferroalloys, hardware, heat and electric power. Its products are marketed domestically and internationally.
