One of the leading Russian mining and steel groups, Mechel, has announced its financial results for the first nine months of 2008.
According to the company's release, in the first nine months of 2008 Mechel's revenue increased by 84.7 percent, its net operating income by 167 percent, net income by 132 percent and EBITDA by 137.7 percent year on year. The respective figures in US$ were 8.6 billion, 2.8 billion, 1.6 billion and 2.9 billion. The company's EBITDA margin increased to 33.4 percent from 25.9 percent for the same period last year.
The company commented that the strong results for the first nine months of 2008 were achieved due to the successful implementation of its strategy to grow the company both organically and through acquisitions, and due to favorable market conditions for mining and steel products.
"The global economic slowdown has placed pressure on pricing and demand for many of our products, and we have been taking the actions necessary to adapt the business for the challenges associated with this environment," Mechel's CEO Igor Zyuzin stated.
In the fourth quarter of 2008, Mechel plans to cut its overall production by 20-25 percent, to increase its sales of ferroalloys and thermal coal and to reduce nickel and coking coal production, as the crisis has cut the company's coking coal sales by more than 50 percent. In the first half of the next year Mechel expects coking and thermal coal prices to decrease by 20-30 percent.
Due to the crisis, Mechel has suspended almost all of its investment programs until January 2010, excepting the construction of a new rolling mill at the Chelyabinsk Steel Plant and the construction of a rail link to its Elga coal deposit and to the open pit at this site.