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TheStreet Open House

Mechel Reports The 1H 2012 Financial Results

Stocks in this article: MTL

Revenue Amounted to $6.0 Billion Consolidated Adjusted EBITDA Amounted to $849 Million Net Loss Attributable to Shareholders of Mechel OAO Amounted to $605 Million

MOSCOW, Oct. 2, 2012 (GLOBE NEWSWIRE) -- Mechel OAO (NYSE:MTL), a leading Russian mining and steel group, today announced financial results for the 1H 2012.

Mechel OAO's Chief Executive Officer Yevgeny Mikhel commented on the 1H 2012 financial results:

"The first half of 2012 witnessed a series of milestone events for the Group – we completed a large-scale debt restructuring process and set off to execute on the company's new strategy of divesting non-strategic assets, improving operating cash flow and reducing debt.

"The key markets for the products exported by Mechel's mining and steel divisions gradually deteriorated in the first half of 2012. Even though the Group's divisions operated quite stably in terms of production and distribution, the Group's financial results were strongly affected, inter alia, by non-recurrent accounting write-offs, resulting from declining market environment, as well as foreign exchange loss. However, the company took measures to improve its operational and financial performance by way of cutting production costs and accessing new sales markets, thus achieving positive cash flow in the reporting period."

Consolidated Results For The 1H 2012

US$ thousand 1H 20 12 (1) 1H 20 11 (1) Change Y-on-Y
Revenue from external customers 6,035,955 6,406,944 -5.8%
Intersegment sales 877,427 1,092,366 -19.7%
Operating (loss) / income (156,580) 924,685 -116.9%
Operating margin -2 .5 9% 1 4.43 % --
Net (loss) / income attributable to shareholders of Mechel OAO (605,004) 501,022 -220.8%
Adjusted net income (1) (2) 40,982 501,022 -91.8%
Adjusted EBITDA (1) (3) 848,848 1,179,174 -28.0%
Adjusted EBITDA, margin (1) 1 4.06 % 18.40% --
(1) See Attachment A.      
(2)  Adjusted net income is net income adjusted for effects of impairment of long-lived assets and goodwill and provision for amounts due from related parties (including income tax and amounts attributable to noncontrolling interests effects)      
(3) Adjusted EBITDA is EBITDA adjusted for effects of remeasurement of contingent liabilities at fair value, forex gain/(loss), net result on the disposal of non-current assets, impairment of long-lived assets and goodwill, provision for the loan given to related parties, amounts attributable to noncontrolling interests and interest income.      
       
US$ thousand 2Q 20 12 (1) 1Q 20 12 (1) Change Q-on-Q
Revenue from external customers 3,085,908 2,950,047 4.6%
Intersegment sales 408,864 468,563 -12.7%
Operating (loss) / income (470,607) 314,027 -249.9%
Operating margin - 1 5.25 % 10 . 64% --
Net (loss) / income attributable to shareholders of Mechel OAO (823,023) 218,019 -477.5%
Adjusted net (loss) / income (1) (2) (177,037) 218,019 -181.2%
Adjusted EBITDA (1) (3) 385,446 463,402 -16.8%
Adjusted EBITDA, margin (1) 12.49% 15.71% --
(1) See Attachment A.      
(2) Adjusted net income is net income adjusted for effects of impairment of long-lived assets and goodwill and provision for amounts due from related parties (including income tax and amounts attributable to noncontrolling interests effects)      
(3) Adjusted EBITDA is EBITDA adjusted for effects of remeasurement of contingent liabilities at fair value, forex gain/(loss), net result on the disposal of non-current assets, impairment of long-lived assets and goodwill, provision for the loan given to related parties, amounts attributable to noncontrolling interests and interest income.      

The net revenue in 2Q 2012 increased by 4.6% and amounted to $3.1 billion compared to $3.0 billion in 1Q 2012. The operating loss amounted to $471 million or -15.25% of the net revenue, compared to the operating income of $314 million or 10.64% of the net revenue in 1Q 2012.

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