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TheStreet Open House

Mechel Reports The 9M 2012 Financial Results

Stocks in this article: MTL

Revenue amounted to $8.8 billion

Consolidated adjusted EBITDA amounted to $1.2 billion

Net loss attributable to shareholders of Mechel OAO amounted to $550 million

MOSCOW, Dec. 12, 2012 (GLOBE NEWSWIRE) -- Mechel OAO (NYSE:MTL), a leading Russian mining and steel group, today announced financial results for the 9M 2012.

Evgeny Mikhel, Mechel OAO's Chief Executive Officer, commented on the 9M2012 financial results:

"In this accounting period, the group focused on its key strategic tasks as outlined by the Board of Directors in May. We focused our efforts on our core businesses — mining and full-cycle steelmaking, and made significant headway in cutting costs and maximizing sales. At the same time we have taken a series of measures aimed at minimizing the impact loss-generating enterprises have on the group's financial results. We cut down to a minimum manufacturing of those products that are unprofitable in current economic conditions and prepared for sale those assets earlier designated for divestment. Work on optimizing the company's debt structure never stops, as demonstrated by the recent refinancing of the syndicated loan as well as several long-term loans from Russian banks taken out to repay short-term debt. Investment expenses are subject to ever more rigorous control. Despite the fact that programs of production cost cuts have always been in place at our enterprises, now we pay extra attention to the issue. All these measures enabled us not only to improve our profitability at the EBITDA level and achieve a net profit in the 3rd quarter, but also to demonstrate a maximum quarter operational cash flow since the 2nd quarter of 2009*."

Consolidated Results For The 9M 2012

US$ thousand 9M 2012 (1) 9M 2011 (1) Change Y-on-Y
Revenue from external customers 8,750,831 9,617,126 -9.0%
Intersegment sales 1,231,103 1,586,328 -22.4%
Operating (loss) / income (29,868) 1,454,169 --
Operating margin -0.34% 15.12% --
Net (loss) / income attributable to shareholders of Mechel OAO (550,094) 526,730 --
Adjusted net income (1) (2) 173,113 526,730 -67.1%
Adjusted EBITDA (1) (3) 1,223,696 1,856,763 -34.1%
Adjusted EBITDA, margin (1) 13.98% 19.31% --
(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.

* For the comparative purposes the operating cash flow for the 4th quarter 2011 is taken net of the effect of the repayment of receivables by the related metallurgical plants.

US$ thousand 3Q 2012 (1) 2Q 2012 (1) Change Q-on-Q
Revenue from external customers 2,714,876 3,085,908 -12.0%
Intersegment sales 353,676 408,864 -13.5%
Operating income / (loss) 126,712 (470,607) --
Operating margin 4.67% -15.25% --
Net income / (loss) attributable to shareholders of Mechel OAO 54,910 (823,023) --
Adjusted net income / (loss) (1) (2) 132,130 (177,037) --
Adjusted EBITDA (1) (3) 374,848 385,446 -2.7%
Adjusted EBITDA, margin (1) 13.81% 12.49% --
(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 3Q 2012 decreased by 12.0% and amounted to $2.7 billion compared to $3.1 billion in 2Q 2012. The operating income amounted to $126.7 million or 4.67% of the net revenue, compared to the operating loss of $470.6 million or -15.25% of the net revenue in 2Q 2012.

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