Russia’s Mechel sees net loss in Jan-Sept amid weaker demand and prices

Friday, 20 November 2020 16:41:22 (GMT+3)   |   Istanbul
       

Mechel, one of the leading Russian mining and steel groups, has announced its financial results for the third quarter and first nine months of the current year.

In the third quarter this year, Mechel saw a net loss of RUB 25.96 billion ($340.75 million), compared to a RUB 47.07 billion net profit recorded in the second quarter this year, while its sales revenues decreased by 0.2 percent quarter on quarter to RUB 64.42 billion ($845.57 million). The operating profit of the company was RUB 6.35 billion ($83.34 million). The company’s EBITDA in the given quarter amounted to RUB 9.35 billion ($122.72 million), rising by six percent compared to the second quarter. Following weaker financial results in the second quarter, the company demonstrated stabilized revenue and EBITDA growth in the third quarter, even as the markets for coal were falling. The company faced a challenging situation in the given period due to weaker demand and weaker coal prices.

In the given quarter, the revenue of Mechel’s mining segment fell by six percent quarter on quarter to RUB 17.19 billion ($225.64 million) due to negative price dynamics for nearly all types of coal products, while the division’s EBITDA totaled RUB 6.41 billion ($84.14 million), remaining nearly unchanged compared to the previous quarter as market weakness was offset by lower cost of sales. Meanwhile, the company’s revenues from the steel segment in the third quarter of the current year amounted to RUB 41.35 billion ($542.76 million), up three percent quarter on quarter. EBITDA of the steel segment in the given period was up by 18 percent quarter on quarter to RUB 3.02 billion ($39.64 million).

In the January-September period this year, Mechel saw a net loss of RUB 15.76 billion ($206.88 million), compared to a net profit of RUB 12.17 bililon recorded in the same period of the previous year. This was the result of increased foreign exchange losses on currency liabilities amid the weaker ruble in the given period. In the first nine months this year, Mechel’s sales revenues decreased by 11 percent year on year to RUB 196.19 billion ($2.57 billion). The operating profit of the company fell by 61 percent year on year to RUB 12.02 billion ($157.78 million). The company’s EBITDA in the first nine months of the current year amounted to RUB 31.36 billion ($411.66 million), falling by 29 percent compared to the corresponding period of the previous year, SteelOrbis has learned.

In the first nine months of the current year, the revenue of Mechel’s mining segment fell by 19 percent year on year to RUB 52.47 billion ($688.77 million), while the division’s EBITDA in the given period declined by 41 percent year on year, totaling RUB 19.75 billion ($259.27 million). This was primarily due to a major decline in prices for all types of coal products as compared to the same period of last year. Meanwhile, the company’s revenues from the steel segment in the first nine months of the current year amounted to RUB 123.75 billion ($1.63 billion), down eight percent year on year. EBITDA of the steel segment in the given period went down by five percent year on year to RUB 10.12 billion ($132.85 million). Lower prices for construction products were the main contributing factor.


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