Mechel reports first-half earnings
Mechel, a leading Russian integrated mining and steel group, announced today results for the first half ended June 30, 2005. Net revenue in the first half of 2005 rose 33.2 year on year to $2.14 billion. Consolidated EBITDA rose 0.5 percent year on year to $422.74 million in the first half of 2005, and net income was $243.62 million. Mining segment revenue for the first half of 2005 rose 64 percent year on year to $594.09 million, or 27.7 percent of consolidated net revenue. The company said that the increase in revenues reflects solid output, strong market positions, and an increase in sales of mining products to third parties. First-half revenue from Mechel's steel segment increased 24.2 percent year on year to $1.55 billion, or 72.3 percent of consolidated net revenue. EBITDA in the steel segment for the first half of 2005 was $102.77 million, with the margin declining to 6.6 percent from 16.6 percent. Increasing raw material prices and the changing market environment for steel products contributed to the shrinking margin. Vladimir Iorich, Mechel's Chief Executive Officer, commented: "In the second quarter 2005 we saw negative pricing trends for both our mining and steel products. Although this was a challenging time for us, we believe that it also confirms that our dual strategy of seeking to continue to increase our mining segment through organic growth and acquisitions, while working to improve the bottom line in our steel segment through a comprehensive efficiency program, is exactly the right focus for us. We will continue to work hard to achieve these goals, and we believe that our efforts, along with an improving price environment, will yield results."