Mechel, one of the leading Russian mining and steel groups, has issued its financial results for the first nine months of 2009.
Accordingly, during the period in question, Mechel's revenue decreased by 53 percent year on year to $4.03 billion, its net operating income went down by 95.9 percent year on year to $114.28 million, while its EBITDA for the first nine months of 2009 decreased by 89 percent year on year to $315.65 million.
For January-September 2009, Mechel reported a consolidated net loss of $339.784 million, a decrease of 120.8 percent over the consolidated net income of about $1.64 billion in the same period last year.
Meanwhile, in the third quarter of this year, Mechel increased its net revenues by 22.9 percent quarter on quarter to $1.57 billion and its EBITDA by 13.5 percent quarter on quarter to about $420 million, while its operating income amounted to $155.2 million versus an operating loss of $54.7 million in Q2 2009. In Q3 2009, Mechel reported a second consecutive quarterly consolidated net income, amounting to $131.6 million, which is 40 percent lower compared to the consolidated net income of $219.3 million in Q2 2009. "The third quarter of 2009 appeared to be good evidence of the fact that Mechel has successfully overcome the most difficult period of the world financial crisis," Mechel's CEO Igor Zyuzin said.
"Followed by the recovery of production almost to the pre-crisis levels of 2008, the steel segment has continued to improve its financial performance. In the third quarter, demand continued to grow almost in all major export positions of Mechel steel products, both in the Middle East and in Southeast Asia and Europe," Mechel's senior vice president Vladimir Polin stated.
Commenting on Mechel's mining segment operating results, Mr. Polin said, "Today we can state with confidence that for our mining segment the worst period of 2009 is already behind us. A number of significant contracts with Chinese, Japanese and South Korean companies, as well as active development of spot sales, allowed us to greatly increase our capacity utilization in coking coal concentrate and continue their restoration to pre-crisis levels. The market conditions we witness today give us reason to expect further growth in prices of coal and iron ore, which, together with increased production in 2010, will improve the segment's performance even more." In addition, the company expects to mine first coal at its Elga coking coal deposit as early as next year, as it is preparing to start the construction of the mine itself in 2010.
According to the company's statement, as of September 30, 2009, Mechel's total debt stood at $5.608 billion. The company's cash and cash equivalents amounted to $408.9 million at the end of the first nine months of 2009, while its net debt came to $5.199 billion.
Mechel's capital expenditure on property, plant and equipment and acquisition of mineral licenses for the first nine months of 2009 amounted to $345.9 million, of which $187.5 million was invested in the mining segment, $130.3 million in the steel segment, $23.9 million in the ferroalloy segment, and $4.3 million in the power segment.