Mechel reports Q1 results

Mechel, a leading Russian integrated mining and steel group, announced the results for the first quarter of 2006 today. According to the release, the company's revenue decreased 17.9 percent, net operation income decreased 74 percent, net income decreased 62.9 percent and EBITDA decreased 51.9 percent year on year to $ 853.518 million, to $59 million, to $62.9 million and to $134.411 million respectively in the first quarter of 2006. The net operation margin decreased from 62.9 percent in the first quarter of 2005 to 62.89 in the first quarter of 2006. EBITDA margin decreased from 26.9 percent to 15.7 percent. In the mining sector, Mechel's revenues from external customers decreased 7.7 percent to $289.459 million, intersegment sales decreased 26 percent to $75.871 million, operational income decreased 84.1 percent to $29.289 million, net income decreased 81.2 percent to $27.467 million and EBIDTA decreased 68.8 percent to $58 million. EBIDTA margin decreased from 44.68 percent to 15.9 percent. In January-March of 2006, Mechel's mining segment show 2 percent decrease in production of coal to 4.011 million tons, 5 percent decrease in production of coking coal to 2.225 million tons but 8 percent increase in production of iron ore concentrate to 1.127 million tons from the same period of 2005. Alexey Ivanushkin, Mechel's Chief Operating Officer commented that decline in prices for coking coal, one of the main products of Mechel's mining segment, together with severe weather condition during this year winter are responsible for decrease in the production and revenues in the mining segment. In steel segment, Mechel's revenue from external customers decreased 22.3 percent, intersegment sales decreased 65.9 percent, operational income decreased 30 percent, net income incresed 52.3 percent, EBITDA decreased 18.4 percent year on year to $564.059 million, to $5.173 million, to $29.707 million, to $35.414 million and to $76.411 million in the first quarter of 2006. EBIDTA margin increased from 12.6 percent to 13.4 percent. The output of the segment show 18 percent decrease in the production of pig iron to 820,000 tons, 15 percent decrease in the production of crude steel to 1.37 million tons and 20 percent decrease in production of rolled products to 1.067 million tons.