Mechel, one of the leading Russian mining and steel groups, has announced that in 2009 it registered a 93.5 percent decrease year on year in its consolidated net income attributable to shareholders to $73.7 million compared to $1.14 billion in 2008, due to the collapse in global steel and coal prices.
In 2009, Mechel's net revenue went down by 42.2 percent to $5.75 billion, its operating income fell by 90.4 percent to $245.6 million, or 4.3 percent of its net revenue, while its consolidated EBITDA decreased by 51.2 percent to $998.3 million, all compared to 2008. Mechel also noted that its 2009 figures were impacted by the depreciation of the Russian ruble against the US dollar over the same period, and by its subsequent rebound.
Accordingly, Mechel's mining segment registered the biggest decrease year on year in 2009 revenue from external customers, down 53.5 percent to $1.5 billion, due to the strong declines in demand and prices for all kinds of steelmaking raw materials. In 2010, Mechel expects its mining segment to finally overcome the negative impact of the crisis, helped by the further improvement in market conditions and by the increased volumes of its US-based Bluestone coking coal assets, and to return to the full pre-crisis capacities of its Russian coal mining assets as early as May this year.
Mechel's steel segment revenue from external customers in 2009 decreased by 39.8 percent year on year and amounted to $3.3 billion. In 2010, Mechel views the prospects of its steel plants with optimism, considering the segment development trend as positive.
Meanwhile, Mechel's ferroalloy segment revenue from external customers in 2009 amounted to $363.7 million, registering a decrease of 16.2 percent year on year. However, taking into account current improvements in the ferroalloy, stainless and specialty steel markets, the company is highly positive on the outlook for its ferroalloy plants and expects that in 2010 they will notably contribute to its consolidated financial results.
On the other hand, the group's 2009 financial results were strongly supported by a buoyant Q4, which saw it posting an increase of 214 percent quarter on quarter in its net profit to $413.5 million. "Increased production together with growing prices for coking coal concentrates and iron ore supported the segment performance," Mechel Mining Management Company CEO Boris Nikishichev said in a statement. Mechel's Q4 revenues reached $1.72 billion - up 9.3 percent, while its EBITDA amounted to about $683 million - up 62.5 percent, both compared to Q3 2009.
Capital expenditure on property, plant and equipment and acquisition of mineral licenses for the 2009 full year amounted to $612.7 million, of which $366.9 million was invested in the mining segment, $208.7 million was invested in the steel segment, $32.8 million was invested in the ferroalloy segment and $4.4 million was invested in the power segment.
For the 2009 full year, Mechel spent $26.1 million on acquisitions, including $14.6 million spent on acquisition of minority interests in other subsidiaries.
As of December 31, 2009 Mechel's total debt stood at $6.0 billion.