Revenue amounted to $2.5 billion
Consolidated adjusted EBITDA amounted to $210 million
Net loss attributable to shareholders of Mechel OAO amounted to $321 million
MOSCOW, June 18, 2013 (GLOBE NEWSWIRE) -- Mechel OAO (NYSE:MTL), a leading Russian mining and steel group, today announced financial results for the 1Q 2013.
Evgeny Mikhel, Mechel OAO's Chief Executive Officer, commented on the 1Q 2013 financial results:
"The first quarter was marked by an important step forward toward optimizing Mechel's asset structure. We disposed of Romanian steelmaking assets, which did not fit into the company's reviewed strategy and had a negative impact on our financial results. We expect that the sale of loss-making steel enterprises will have a positive influence on the economics of the steel division and the Group as a whole in the medium-term already."
"As a whole, in the reported period the company demonstrated a marked improvement of its financial results as compared to the previous period. We made operational profit and saw a noticeable increase in EBITDA. This became possible due to a pick-up in the steel raw materials market seen in the beginning of this year, despite a seasonal correction in the steel products markets.
Unfavorable price trends, observed since early this year, make undoubted pressure on the market players' financial results. At the same time, we are certain that optimizing the asset structure, debt portfolio and control over expenditure and investment will enable Mechel to successfully go through the market slowdown."
Consolidated Results For The 1Q 2013 | ||||||
US$ mln |
1Q'13 (1) |
1Q'12 (1)(4) |
Change Y-on-Y |
1Q'13 (1) |
4Q'12(1) |
Change Q-on-Q |
Revenue from external customers | 2,481 | 2,949 | -15.9% | 2,481 | 2,521 | -1.6% |
Intersegment sales | 349 | 456 | -23.5% | 349 | 356 | -2.0% |
Operating income / (loss) | 61 | 317 | -80.8% | 61 | (933) | -- |
Operating margin | 2.5% | 10.7% | -- | 2.5% | -37.0% | -- |
Net (loss) / income attributable to shareholders of Mechel OAO | (321) | 218 | -- | (321) | (1,114) | -71.2% |
Adjusted net (loss) / income (1) (2) | (233) | 220 | -- | (233) | (161) | 44.7% |
Adjusted EBITDA (1) (3) | 210 | 487 | -56.9% | 210 | 123 | 70.7% |
Adjusted EBITDA, margin (1) | 8.5% | 16.5% | -- | 8.5% | 4.9% | -- |
(1) See Attachment A. | ||||||
(2) Adjusted net income is net income adjusted for effects of impairment of long-lived assets and goodwill, loss from discontinued operations, result from companies' disposal and provision for amounts due from related parties (including income tax and amounts attributable to noncontrolling interests effects) | ||||||
(3) Adjusted EBITDA is EBITDA adjusted for effects of remeasurement of contingent liabilities at fair value, loss from discontinued operations, forex gain/(loss), net result on the disposal of non-current assets, impairment of long-lived assets and goodwill, provision for amounts due from related parties, amounts attributable to noncontrolling interests, result of disposed companies (incl the result from their disposal) and interest income. | ||||||
(4) Adjusted to effect from discontinued operations | ||||||
Mining Segment Results For The 1Q 2013 | ||||||
US$ mln | 1Q'13 (1) | 1Q'12 (1)(5) | Change Y-on-Y | 1Q'13 (1) | 4Q'12 (1) | Change Q-on-Q |
Revenue from external customers | 769 | 945 | -18.6% | 769 | 676 | 13.8% |
Intersegment sales | 137 | 213 | -35.7% | 137 | 143 | -4.2% |
Operating income / (loss) | 43 | 276 | -84.4% | 43 | (24) | -- |
Net (loss) / income attributable to shareholders of Mechel OAO | (104) | 242 | -- | (104) | (67) | 55.2% |
Adjusted net (loss) / income (1) (2) | (104) | 242 | -- | (104) | (67) | 55.2% |
Adjusted EBITDA(1) (3) | 124 | 358 | -65.4% | 124 | 33 | 275.8% |
Adjusted EBITDA, margin (4) | 13.7% | 30.9% | -- | 13.7% | 4.0% | -- |
(1) See Attachment A. | ||||||
(2) Adjusted net income is net income adjusted for effects of impairment of long-lived assets and goodwill, loss from discontinued operations, result from companies' disposal and provision for amounts due from related parties (including income tax and amounts attributable to noncontrolling interests effects) | ||||||
(3) Adjusted EBITDA is EBITDA adjusted for effects of remeasurement of contingent liabilities at fair value, loss from discontinued operations, forex gain/(loss), net result on the disposal of non-current assets, impairment of long-lived assets and goodwill, provision for amounts due from related parties, amounts attributable to noncontrolling interests, result of disposed companies (incl the result from their disposal) and interest income. | ||||||
(4) Adjusted EBITDA margin is calculated as a percentage of consolidated revenues of the segment, including intersegment sales. | ||||||
(5) Adjusted to effect from discontinued operations | ||||||
Mining Segment Output and Sales For The 1Q 2013 | ||||
Production: | ||||
Product name |
1Q'13, thousand tonnes |
4Q'12, thousand tonnes |
Change Q-on-Q | |
Run-of-mine coal | 6,406 | 6,970 | -8% | |
Product Sales: | ||||
Product name |
1Q'13, thousand tonnes |
4Q'12, thousand tonnes |
Change Q-on-Q | |
Coking coal concentrate | 2,843 | 2,513 | 13% | |
Including coking coal concentrate supplied to Mechel enterprises | 613 | 640 | -4% | |
PCI | 817 | 725 | 13% | |
Anthracites | 541 | 453 | 19% | |
Including anthracites supplied to Mechel enterprises | 4 | 25 | -84% | |
Steam coal | 1,551 | 1,420 | +9% | |
Including steam coal supplied to Mechel enterprises | 427 | 419 | 2% | |
Iron ore concentrate | 1,039 | 1,171 | -11% | |
Including iron ore concentrate supplied to Mechel enterprises | 5 | 12 | -55% | |
Coke | 796 | 854 | -7% | |
Including coke supplied to Mechel enterprises | 519 | 546 | -5% |
Mechel Mining Management Company OOO's Chief Executive Officer Boris Nikishichev commented on the mining division's results:
"This year's first quarter saw certain volatility in the markets of raw materials for steelmaking. Despite the slump in coking coal prices in long-term contracts, the spot market was characterized by the periods when prices outgrew the long-term contract level. Also, spot prices for iron ore grew rather significantly. This situation, combined with our efforts to expand our client base and redistribute sales into the most attractive markets, enabled us to greatly improve our mining division's operational profit."
"As part of our strategy on developing ties with the world's major steelmakers and diversifying our markets, early this year we signed long-term contracts for coking coal supplies totaling up to 2.5 million tonnes a year with China's Baosteel Resources and Shasteel Group, as well as South Korea's POSCO. These contracts will help guarantee the sales of our products as the global markets for raw materials remain highly volatile. Apart from signing major contracts, attracting a large number of new Chinese clients interested in smaller coal supplies also helped to increase and diversify our sales."
"In order to ensure necessary production volumes both now and in the future, we continue technical revamping of our enterprises and investment in promising projects. For example, in the first quarter, new mining and transport equipment was brought in at Southern Kuzbass Coal Company and Yakutugol Holding Company, and, in June, we signed an agreement on setting up a joint venture in Yakutia with Mechel Group's longstanding partner BelAZ, which will meet the Group's needs in technical maintenance and repairs of dump trucks both at Yakutugol's current open pits and at the developing Elga coal deposit. Measures aimed to maintain and develop our mining enterprises' technical base are a priority for the division and will enable us not only to preserve and consolidate our company's position in the current situation, but also to promptly react to a possible improvement of the market situation in the medium term."
Steel Segment Results For The 1Q 2013 | ||||||
US$ mln | 1Q'13 (1) | 1Q'12 (1) |
Change Y-on-Y |
1Q'13 (1) | 4Q'12 (1) |
Change Q-on-Q |
Revenue from external customers | 1,430 | 1,649 | --13.3% | 1,430 | 1,557 | -8.2% |
Intersegment sales | 70 | 79 | --11.4% | 70 | 73 | -4.1% |
Operating income / (loss) | 10 | 11 | -9.1% | 10 | (861) | -- |
Net loss attributable to shareholders of Mechel OAO | (205) | (16) | 1,181.3% | (205) | (925) | -77.8% |
Adjusted net loss (1) (2) | (119) | (16) | 643.7% | (119) | (39) | 205.1% |
Adjusted EBITDA (1) (3) | 57 | 71 | -19.7% | 57 | 98 | -41.8% |
Adjusted EBITDA, margin (4) | 3.8% | 4.1% | -- | 3.8% | 6.0% | -- |
(1) See Attachment A. | ||||||
(2) Adjusted net income is net income adjusted for effects of impairment of long-lived assets and goodwill, loss from discontinued operations, result from companies' disposal and provision for amounts due from related parties (including income tax and amounts attributable to noncontrolling interests effects) | ||||||
(3) Adjusted EBITDA is EBITDA adjusted for effects of remeasurement of contingent liabilities at fair value, loss from discontinued operations, forex gain/(loss), net result on the disposal of non-current assets, impairment of long-lived assets and goodwill, provision for amounts due from related parties, amounts attributable to noncontrolling interests, result of disposed companies (incl the result from their disposal) and interest income | ||||||
(4) Adjusted EBITDA margin is calculated as a percentage of consolidated revenues of the segment, including intersegment sales. | ||||||
Steel Segment Output and Sales to 3rd Parties For The 1Q 2013 | ||||
Production: | ||||
Product name |
1Q'13, thousand tonnes |
4Q'12, thousand tonnes |
Change Q-on-Q | |
Pig iron | 972 | 1,054 | -8% | |
Steel | 1,300 | 1,430 | -9% | |
Product Sales: | ||||
Product name |
1Q'13, thousand tonnes |
4Q'12, thousand tonnes |
Change Q-on-Q | |
Flat products | 185 | 184 | 1% | |
Including those produced by third parties | 94 | 94 | 0% | |
Long products | 841 | 966 | -13% | |
Including those produced by third parties | 233 | 242 | -4% | |
Billets | 355 | 652 | -46% | |
Including those produced by third parties | 88 | 130 | -33% | |
Hardware and welded mesh | 204 | 239 | -15% | |
Including those produced by third parties | 12 | 17 | -29% | |
Forgings | 19 | 18 | 5% | |
Stampings | 25 | 28 | -11% |
Mechel-Steel Management Company OOO's Chief Executive Officer Vladimir Tytsky noted in commenting on the steel segment's results:
"As a whole the past quarter was characterized by a certain stability in demand and prices for the construction product range, which the division's enterprises mostly focus their production on. We have to a certain degree decreased the volume of billet and rod sales, which was primarily due to our disposal of the Romanian assets and the halting of our Ukrainian plant. Throughout the quarter we have successfully controlled expenditures and despite the seasonal slump of our key markets, managed to demonstrate operational profit and a positive EBITDA."
"The launch of the universal rolling mill at Chelyabinsk Metallurgical Plant, which currently undergoes hot testing, will be the key event which will have a major impact on the division's future activities. The mill has currently successfully tested the technology of producing several types of structural shapes and sections, including rails. The mill's launch will have a positive effect on the division's profitability, as all of the low-margin billets currently produced will be processed further to produce high-quality structural shapes and rails."
Ferroalloys Segment Results For The 1Q 2013 | ||||||
US$ mln | 1Q'13 (1) | 1Q'12 (1) |
Change Y-on-Y |
1Q'13 (1) | 4Q'12 (1) |
Change Q-on-Q |
Revenue from external customers | 54 | 125 | -56.8% | 54 | 69 | -21.7% |
Intersegment sales | 14 | 28 | -50.0% | 14 | 14 | 0.0% |
Operating loss | (15) | (34) | -55.9% | (15) | (66) | -77.3% |
Net loss attributable to shareholders of Mechel OAO | (19) | (56) | -66.1% | (19) | (87) | -78.2% |
Adjusted net loss (1) (2) | (19) | (56) | -66.1% | (19) | (63) | -69.8% |
Adjusted EBITDA (1) (3) | 4 | (7) | -- | 4 | (31) | -- |
Adjusted EBITDA, margin (4) | 5.4% | -4.9% | -- | 5.4% | -36.8% | -- |
(1) See Attachment A. | ||||||
(2) Adjusted net income is net income adjusted for effects of impairment of long-lived assets and goodwill, loss from discontinued operations, result from companies' disposal and provision for amounts due from related parties (including income tax and amounts attributable to noncontrolling interests effects) | ||||||
(3) Adjusted EBITDA is EBITDA adjusted for effects of remeasurement of contingent liabilities at fair value, loss from discontinued operations, forex gain/(loss), net result on the disposal of non-current assets, impairment of long-lived assets and goodwill, provision for amounts due from related parties, amounts attributable to noncontrolling interests, result of disposed companies (incl the result from their disposal) and interest income | ||||||
(4) Adjusted EBITDA margin is calculated as a percentage of consolidated revenues of the segment, including intersegment sales. | ||||||
Product Sales: | |||
Product name |
1Q'13, thousand tonnes |
4Q'12, thousand tonnes |
Change Q-on-Q |
Nickel | 0 | 0.5 | 0% |
Including nickel supplied to Mechel enterprises | 0 | 0 | 0% |
Ferrosilicon | 22.8 | 22 | 4% |
Including ferrosilicon supplied to Mechel enterprises | 8.4 | 7.6 | 11% |
Chrome | 10.1 | 17 | -41% |
Including chrome supplied to Mechel enterprises | 1.4 | 2 | -30% |
Mechel-Ferroalloys Management Company OOO's Chief Executive Officer Sergey Zhilyakov noted:
"Throughout the first quarter the division worked as Southern Urals Nickel Plant's production facilities were fully halted, which among other factors enabled us to attain marked improvement of the ferroalloys division's financial results. The persistent volatility of key sales markets led to changes in the structure of our product sales. We have cut down on supplies of ferrosilicon to the domestic market, where demand slumped, reorienting our volumes toward export, where the market was more stable.
A certain decrease in ferrochrome sales was due primarily to the process of selling accumulated stocks coming to completion. Nevertheless, Tikhvin Ferroalloy Plant continues to successfully manufacture its products using three furnaces, producing more than scheduled in the annual plan. We have also increased sales of chrome ore concentrate, which had a positive effect on our economics as average chrome ore concentrate prices in 1Q2013 were higher than in the previous quarter."
Power Segment Results for The 1Q 2013 | ||||||
US$ mln | 1Q'13 (1) | 1Q'12 (1)(5) |
Change Y-on-Y |
1Q'13 (1) | 4Q'12 (1) |
Change Q-on-Q |
Revenue from external customers | 227 | 230 | -1.3% | 227 | 220 | 3.2% |
Intersegment sales | 129 | 136 | -5.1% | 129 | 126 | 2.4% |
Operating income | 21 | 28 | -25.0% | 21 | 12 | 75.0% |
Net income / (loss) attributable to shareholders of Mechel OAO | 7 | 11 | -36.4% | 7 | (41) | -- |
Adjusted net income (1) (2) | 8 | 14 | -42.9% | 8 | 3 | 166.7% |
Adjusted EBITDA (1) (3) | 24 | 29 | -17.2% | 24 | 15 | 60.0% |
Adjusted EBITDA, margin(4) | 6.7% | 7.8% | -- | 6.7% | 4.5% | -- |
(1) See Attachment A. | ||||||
(2) Adjusted net income is net income adjusted for effects of impairment of long-lived assets and goodwill, loss from discontinued operations, result from companies' disposal and provision for amounts due from related parties (including income tax and amounts attributable to noncontrolling interests effects) | ||||||
(3) Adjusted EBITDA is EBITDA adjusted for effects of remeasurement of contingent liabilities at fair value, loss from discontinued operations, forex gain/(loss), net result on the disposal of non-current assets, impairment of long-lived assets and goodwill, provision for amounts due from related parties, amounts attributable to noncontrolling interests, result of disposed companies (incl the result from their disposal) and interest income. | ||||||
(4) Adjusted EBITDA margin is calculated as a percentage of consolidated revenues of the segment, including intersegment sales. | ||||||
(5) Adjusted to effect from discontinued operations | ||||||
Power Segment Output and Sales For The 1Q 2013 | |||
Product name | 1Q'13 | 4Q'12 | Change Q-on-Q |
Electric power generation (ths. kWh) | 1,194,337 | 1,175,399 | 2% |
Heat power generation (Gcal) | 2,723,119 | 2,536,507 | 7% |
Mechel-Energo OOO's Chief Executive Officer Yuri Yampolsky noted:
"In the reported period, the division demonstrated an expected good result. We had operational and net profit and achieved a significant improvement of EBITDA. It was largely due to the seasonal high demand for our products. The division fulfilled its production plans, providing uninterrupted supply of heat and electricity to its customers during the most important period in the year. We now enter summer, which is traditionally characterized not only by lower electricity consumption, but also active work on technical maintenance and preparation of our production facilities for the next cold season."
Recent Highlights
-
In April, Mechel announced signing a memorandum of understanding with Baosteel Resources Int. Co. Ltd. The memorandum stipulates that Mechel OAO, through its subsidiary Mechel Carbon Singapore will supply Baosteel Resources with up to 960,000 tonnes of coking coal annually. The price will be corrected monthly.
-
In April, Mechel announced the resolutions of Mechel OAO's Board of Directors to convene the Annual General Shareholders' Meeting of Mechel OAO on June 28, 2013, to approve the agenda for the Annual General Shareholders' Meeting, to prepare the list of the shareholders eligible to take part in the Annual General Shareholders' Meeting based on the data in the Shareholders' Register as of May 17, 2013.
-
In April, Mechel announced signing several loan agreements with Gazprombank OAO totaling 1 billion US dollars.
-
In April, Mechel announced its Board's dividend recommendation to the annual general shareholders' meeting regarding the payment of dividends based upon the results of the 2012 fiscal year:
-
In April, Mechel announced that its mining division's trading subsidiary Mechel Carbon (Singapore) Pte. Ltd. has signed a three-year contract with South Korea's POSCO corporation for supply of coking coal. The agreement, signed on April 30, 2013, stipulates that Mechel Carbon (Singapore) will supply POSCO with 500,000 tonnes of coking coal per year. Besides that, Mechel Carbon also signed with POSCO a one-year contract for supply of 200,000 tonnes of PCI coal in 2013.
-
In May, Mechel announced that successful hot testing was held at the complex of Chelyabinsk Metallurgical Plant's universal rolling mill.
-
In June, Mechel announced signing a coking coal supply agreement with China's Shasteel Group. According to the signed agreement, Mechel Carbon (Singapore), trading subsidiary of Mechel OAO's mining division, will directly supply Shasteel Group with 40,000 to 80,000 tonnes of coking coal a month from Russian Far East ports, starting from June 2013. Coking coal prices will be determined on a monthly basis.
- In June, Mechel reported that hot testing of rail rolls production at Chelyabinsk Metallurgical Plant's universal rolling mill has begun.
Financial Position
Capital expenditure on property, plant and equipment and acquisition of mineral licenses for the 1Q 2013 amounted to $172.4 million, of which $101.7 million was invested in the mining segment, $60.2 million was invested in the steel segment, $7.0 million was invested in the ferroalloy segment and $3.5 million was invested in the power segment.
As of March 31, 2013, total debt was $9.3 billion. Cash and cash equivalents amounted to $170 million and net debt amounted to $9.2 billion (net debt is defined as total debt outstanding less cash and cash equivalents) at end of 1Q 2013.
The management of Mechel will host a conference call today at 10:00 a.m. New York time (3:00 p.m. London time, 6:00 p.m. Moscow time) to review Mechel's financial results and comment on current operations. The call may be accessed via the Internet at http://www.mechel.com, under the Investor Relations section.
Mechel is one of the leading Russian companies. Its business includes four segments: mining, steel, ferroalloy and power. Mechel unites producers of coal, iron ore concentrate, steel, rolled products, ferroalloys, hardware, heat and electric power. Mechel products are marketed domestically and internationally.
Some of the information in this press release may contain projections or other forward-looking statements regarding future events or the future financial performance of Mechel, as defined in the safe harbor provisions of the U.S. Private Securities Litigation Reform Act of 1995. We wish to caution you that these statements are only predictions and that actual events or results may differ materially. We do not intend to update these statements. We refer you to the documents Mechel files from time to time with the U.S. Securities and Exchange Commission, including our Form 20-F. These documents contain and identify important factors, including those contained in the section captioned "Risk Factors" and "Cautionary Note Regarding Forward-Looking Statements" in our Form 20-F, that could cause the actual results to differ materially from those contained in our projections or forward-looking statements, including, among others, the achievement of anticipated levels of profitability, growth, cost and synergy of our recent acquisitions, the impact of competitive pricing, the ability to obtain necessary regulatory approvals and licenses, the impact of developments in the Russian economic, political and legal environment, volatility in stock markets or in the price of our shares or ADRs, financial risk management and the impact of general business and global economic conditions.
Attachments to the 1Q 2013 Earnings Press Release
Attachment A
Non-GAAP financial measures. This press release includes financial information prepared in accordance with accounting principles generally accepted in the United States of America, or US GAAP, as well as other financial measures referred to as non-GAAP. The non-GAAP financial measures should be considered in addition to, but not as a substitute for, the information prepared in accordance with US GAAP.
Adjusted EBITDA represents earnings before Depreciation, depletion and amortization, Foreign exchange gain/(loss), Loss from discontinued operations, Gain/(loss) from remeasurement of contingent liabilities at fair value, Interest expense, Interest income, Net result on the disposal of non-current assets, Impairment of long-lived assets and goodwill, Provision for amounts due from related parties, Result of disposed companies (incl. the result from their disposal), Amount attributable to noncontrolling interests and Income taxes. Adjusted EBITDA margin is defined as adjusted EBITDA as a percentage of our net revenues. Our adjusted EBITDA may not be similar to EBITDA measures of other companies. Adjusted EBITDA is not a measurement under accounting principles generally accepted in the United States and should be considered in addition to, but not as a substitute for, the information contained in our consolidated statement of operations. We believe that our adjusted EBITDA provides useful information to investors because it is an indicator of the strength and performance of our ongoing business operations, including our ability to fund discretionary spending such as capital expenditures, acquisitions and other investments and our ability to incur and service debt. While interest, depreciation and amortization are considered operating costs under generally accepted accounting principles, these expenses primarily represent the non-cash current period allocation of costs associated with long-lived assets acquired or constructed in prior periods. Our adjusted EBITDA calculation is commonly used as one of the bases for investors, analysts and credit rating agencies to evaluate and compare the periodic and future operating performance and value of companies within the metals and mining industry.
Adjusted net income / (loss) represents net income / (loss) before Loss from discontinued operations, Result from companies' disposal, Impairment of long-lived assets and goodwill and Provision for the amounts due from related parties, including the effect on income tax and amounts attributable to noncontrolling interests. Our adjusted net income / (loss) may not be similar to adjusted net income / (loss) measures of other companies. Adjusted net income / (loss) is not a measurement under accounting principles generally accepted in the United States and should be considered in addition to, but not as a substitute for, the information contained in our consolidated statement of operations. We believe that our adjusted net income / (loss) provides useful information to investors because it is an indicator of the strength and performance of our ongoing business operations. While impairment of long-lived assets and goodwill and provision for the amounts due from related parties are considered operating costs under generally accepted accounting principles, these expenses represent the non-cash current period allocation of costs associated with assets acquired or constructed in prior periods. Our adjusted net income / (loss) calculation is used as one of the bases for investors, analysts and credit rating agencies to evaluate and compare the periodic and future operating performance and value of companies within the metals and mining industry.
Adjusted EBITDA can be reconciled to our consolidated statements of operations as follows:
Consolidated results | ||
US$ thousand | 1Q 2013 | 1Q 2012 |
Net (loss) / income | (320,645) | 218,020 |
Add: | ||
Depreciation, depletion and amortization | 149,013 | 154,666 |
Forex loss / (gain) | 75,466 | (170,915) |
Loss from remeasurement of contingent liabilities at fair value | 492 | 460 |
Interest expense | 173,148 | 161,061 |
Interest income | (4,707) | (18,772) |
Net result on disposal of non-current assets, impairment of long-lived assets and goodwill and provision for amounts due from related parties | (4,862) | (527) |
Loss from discontinued operation, net of income tax | 1,121 | 2,250 |
Result of disposed companies (incl. the result from their disposal) | 100,262 | 22,080 |
Amount attributable to non-controlling interests | (8,118) | 15,016 |
Income taxes | 48,406 | 103,317 |
Adjusted EBITDA | 209,576 | 486,656 |
US$ thousand | 1Q 2013 | 4Q 2012 |
Net loss | (320,645) | (1,114,473) |
Add: | ||
Depreciation, depletion and amortization | 149,015 | 135,805 |
Forex loss / (gain) | 75,466 | (82,884) |
Loss from remeasurement of contingent liabilities at fair value | 492 | 493 |
Interest expense | 173,148 | 184,880 |
Interest income | (4,707) | (18,056) |
Net result on disposal of non-current assets, impairment of long-lived assets and goodwill and provision for amounts due from related parties | (4,863) | 916,462 |
Loss from discontinued operation, net of income tax | 1,121 | 43,746 |
Result of disposed companies (incl. the result from their disposal) | 100,262 | 22,390 |
Amount attributable to noncontrolling interests | (8,118) | (7,376) |
Income taxes | 48,405 | 41,791 |
Adjusted EBITDA | 209,576 | 122,778 |
Adjusted Net income / (loss) can be reconciled as follows:
US$ thousand | 1Q 2013 | 1Q 2012 |
Net (loss) / income | (320,645) | 218,019 |
Impairment of long-lived assets and goodwill and provision for amounts due from related parties | (4,397) | -- |
Loss from discontinued operation, net of income tax | 1,121 | 2,250 |
Result from companies' disposal | 91,293 | -- |
Adjusted net (loss) / income | (232,628) | 220,269 |
US$ thousand | 1Q 2013 | 4Q 2012 |
Net loss | (320,645) | (1,114,473) |
Impairment of long-lived assets and goodwill and provision for amounts due from related parties | (4,397) | 909,868 |
Loss from discontinued operation, net of income tax | 1,121 | 43,746 |
Result from companies' disposal | 91,293 | -- |
Adjusted net loss | (232,628) | (160,859) |
Adjusted EBITDA margin can be reconciled as a percentage to our Revenues as follows:
US$ thousand | 1Q 2013 | 1Q 2012 | ||
Revenue, net | 2,480,679 | 2,949,151 | ||
Adjusted EBITDA | 209,576 | 486,656 | ||
Adjusted EBITDA, margin | 8.45% | 16.50% | ||
US$ thousand | 1Q 2013 | 4Q 2012 | ||
Revenue, net | 2,480,679 | 2,521,449 | ||
Adjusted EBITDA | 209,576 | 122,778 | ||
Adjusted EBITDA, margin | 8.45% | 4.87% |
Mining Segment | ||
US$ thousand | 1Q 2013 | 1Q 2012 |
Net (loss) / income | (103,928) | 241,601 |
Add: | ||
Depreciation, depletion and amortization | 85,652 | 81,620 |
Forex loss / (gain) | 69,464 | (102,410) |
Loss from remeasurement of contingent liabilities at fair value | 492 | 460 |
Interest expense | 77,107 | 68,533 |
Interest income | (20,585) | (23,575) |
Net result on disposal of non-current assets | (618) | 418 |
Amount attributable to noncontrolling interests | (6,263) | 17,916 |
Income taxes | 22,551 | 73,650 |
Adjusted EBITDA | 123,872 | 358,213 |
US$ thousand | 1Q 2013 | 4Q 2012 |
Net loss | (103,928) | (67,475) |
Add: | ||
Depreciation, depletion and amortization | 85,652 | 73,994 |
Forex loss / (gain) | 69,464 | (67,635) |
Loss from remeasurement of contingent liabilities at fair value | 492 | 493 |
Interest expense | 77,107 | 75,358 |
Interest income | (20,585) | (17,478) |
Net result on the disposal of non-current assets | (618) | 6,441 |
Amount attributable to noncontrolling interests | (6,263) | 7,402 |
Income taxes | 22,551 | 22,008 |
Adjusted EBITDA | 123,872 | 33,108 |
Adjusted Net income / loss can be reconciled as follows:
US$ thousand | 1Q 2013 | 1Q 2012 |
Net (loss) / income | (103,928) | 241,601 |
Provision for amounts due from related parties | -- | -- |
Adjusted net (loss) / income | (103,928) | 241,601 |
US$ thousand | 1Q 2013 | 4Q 2012 |
Net loss | (103,928) | (67,475) |
Provision for amounts due from related parties | -- | (11) |
Adjusted net loss | (103,928) | (67,486) |
Adjusted EBITDA margin can be reconciled as a percentage to our Revenues as follows:
US$ thousand | 1Q 2013 | 1Q 2012 |
Revenue (including intersegment sales) | 905,697 | 1,158,340 |
Adjusted EBITDA | 123,872 | 358,213 |
Adjusted EBITDA, margin | 13,68% | 30.92% |
US$ thousand | 1Q 2013 | 4Q 2012 |
Revenue (including intersegment sales) | 905,697 | 819,282 |
Adjusted EBITDA | 123,872 | 33,108 |
Adjusted EBITDA, margin | 13,68% | 4.04% |
Steel Segment | ||
US$ thousand | 1Q 2013 | 1Q 2012 |
Net loss | (205,442) | (15,564) |
Add: | ||
Depreciation, depletion and amortization | 42,769 | 43,651 |
Forex loss / (gain) | 11,933 | (91,155) |
Interest expense | 97,950 | 86,864 |
Interest income | (3,653) | (3,023) |
Net result on disposal of non-current assets, impairment of long-lived assets and goodwill and provision for amounts due from related parties | (5,128) | 457 |
Result of disposed companies (incl. the result from their disposal) | 100,248 | 22,080 |
Amount attributable to noncontrolling interests | (1,778) | (3,398) |
Income taxes | 20,406 | 30,757 |
Adjusted EBITDA | 57,305 | 70,669 |
US$ thousand | 1Q 2013 | 4Q 2012 |
Net loss | (205,442) | (925,496) |
Add: | ||
Depreciation, depletion and amortization | 42,769 | 44,925 |
Forex loss / (gain) | 11,933 | (22,973) |
Interest expense | 97,950 | 105,030 |
Interest income | (3,653) | (16,197) |
Net result on disposal of non-current assets, impairment of long-lived assets and goodwill and provision for amounts due from related parties | (5,128) | 887,103 |
Result of disposed companies (incl. the result from their disposal) | 100,248 | 22,390 |
Amount attributable to noncontrolling interests | (1,778) | (11,129) |
Income taxes | 20,406 | 14,300 |
Adjusted EBITDA | 57,305 | 97,953 |
Adjusted Net income / (loss) can be reconciled as follows:
US$ thousand | 1Q 2013 | 1Q 2012 |
Net loss | (205,442) | (15,564) |
Impairment of long-lived assets and goodwill and provision for amounts due from related parties | (4,397) | -- |
Result from companies' disposal | 91,293 | -- |
Adjusted net loss | (118,546) | (15,564) |
US$ thousand | 1Q 2013 | 4Q 2012 |
Net loss | (205,442) | (925,496) |
Impairment of long-lived assets and goodwill and provision for amounts due from related parties | (4,397) | 886,672 |
Result from companies' disposal | 91,293 | -- |
Adjusted net loss | (118,546) | (38,824) |
Adjusted EBITDA margin can be reconciled as a percentage to our Revenues as follows:
US$ thousand | 1Q 2013 | 1Q 2012 |
Revenue (including intersegment sales) | 1,500,127 | 1,728,122 |
Adjusted EBITDA | 57,305 | 70,669 |
Adjusted EBITDA, margin | 3.82% | 4.09% |
US$ thousand | 1Q 2013 | 4Q 2012 |
Revenue (including intersegment sales) | 1,500,127 | 1,629,807 |
Adjusted EBITDA | 57,305 | 97,955 |
Adjusted EBITDA, margin | 3.82% | 6.01% |
Ferroalloys Segment | ||
US$ thousand | 1Q 2013 | 1Q 2012 |
Net loss | (18,719) | (56,040) |
Add: | ||
Depreciation, depletion and amortization | 17,954 | 26,480 |
Forex loss / (gain) | (5,789) | 22,663 |
Interest expense | 7,495 | 8,093 |
Interest income | (5) | (212) |
Net result on disposal of non-current assets, impairment of long-lived assets and goodwill | 956 | 103 |
Result of disposed companies (incl. the result from their disposal) | 14 | -- |
Amount attributable to noncontrolling interests | (828) | (1,430) |
Income taxes | 2,595 | (7,155) |
Adjusted EBITDA | 3,673 | (7,498) |
US$ thousand | 1Q 2013 | 4Q 2012 |
Net loss | (18,719) | (87,288) |
Add: | ||
Depreciation, depletion and amortization | 17,954 | 14,194 |
Forex (gain) / loss | (5,789) | 7,711 |
Interest expense | 7,495 | 11,836 |
Interest income | (5) | (3) |
Net result on disposal of non-current assets, impairment of long-lived assets and goodwill | 956 | 22,915 |
Result of disposed companies (incl. the result from their disposal) | 14 | -- |
Amount attributable to noncontrolling interests | (828) | (4,668) |
Income taxes | 2,595 | 4,765 |
Adjusted EBITDA | 3,673 | (30,538) |
Adjusted Net income / (loss) can be reconciled as follows:
US$ thousand | 1Q 2013 | 1Q 2012 |
Net loss | (18,719) | (56,040) |
Impairment of long-lived assets and goodwill | -- | -- |
Amount attributable to noncontrolling interests | -- | -- |
Income taxes | -- | -- |
Adjusted net loss | (18,719) | (56,040) |
US$ thousand | 1Q 2013 | 4Q 2012 |
Net loss | (18,719) | (87,288) |
Impairment of long-lived assets and goodwill | -- | 23,205 |
Income taxes | -- | 729 |
Adjusted net loss | (18,719) | (63,354) |
Adjusted EBITDA margin can be reconciled as a percentage to our Revenues as follows:
US$ thousand | 1Q 2013 | 1Q 2012 |
Revenue (including intersegment sales) | 67,735 | 152,544 |
Adjusted EBITDA | 3,673 | (7,498) |
Adjusted EBITDA, margin | 5.42% | -4.92% |
US$ thousand | 1Q 2013 | 4Q 2012 |
Revenue (including intersegment sales) | 67,735 | 83,038 |
Adjusted EBITDA | 3,673 | (30,538) |
Adjusted EBITDA, margin | 5.42% | --36.77% |
Power Segment | ||
US$ thousand | 1Q 2013 | 1Q 2012 |
Net income | 6,632 | 11,337 |
Add: | ||
Depreciation, depletion and amortization | 2,640 | 2,917 |
Forex gain | (142) | (13) |
Interest expense | 10,154 | 5,624 |
Interest income | (22) | (15) |
Net result on disposal of non-current assets, impairment of long-lived assets and goodwill | (73) | (1,505) |
Loss from discontinued operation, net of income tax | 1,121 | 2,250 |
Amount attributable to noncontrolling interests | 751 | 1,928 |
Income taxes | 2,853 | 6,063 |
Adjusted EBITDA | 23,914 | 28,586 |
US$ thousand | 1Q 2013 | 4Q 2012 |
Net income / (loss) | 6,632 | (41,026) |
Add: | ||
Depreciation, depletion and amortization | 2,640 | 2,691 |
Forex (gain) / loss | (142) | 12 |
Interest expense | 10,154 | 8,299 |
Interest income | (22) | (21) |
Net result on disposal of non-current assets, impairment of long-lived assets and goodwill | (73) | 3 |
Loss from discontinued operation, net of income tax | 1,121 | 43,746 |
Amount attributable to noncontrolling interests | 751 | 1,019 |
Income taxes | 2,853 | 718 |
Adjusted EBITDA | 23,914 | 15,441 |
Adjusted Net income/loss can be reconciled as follows:
US$ thousand | 1Q 2013 | 1Q 2012 |
Net income | 6,632 | 11,337 |
Loss from discontinued operation, net of income tax | 1,121 | 2,250 |
Adjusted net income | 7,753 | 13,587 |
US$ thousand | 1Q 2013 | 4Q 2012 |
Net income / (loss) | 6,632 | (41,026) |
Loss from discontinued operation, net of income tax | 1,121 | 43,746 |
Adjusted net income | 7,753 | 2,720 |
Adjusted EBITDA margin can be reconciled as a percentage to our Revenues as follows:
US$ thousand | 1Q 2013 | 1Q 2012 |
Revenue (including intersegment sales) | 356,423 | 366,138 |
Adjusted EBITDA | 23,914 | 28,586 |
Adjusted EBITDA, margin | 6.71% | 7.81% |
US$ thousand | 1Q 2013 | 4Q 2012 |
Revenue (including intersegment sales) | 356,423 | 345,299 |
Adjusted EBITDA | 23,914 | 15,441 |
Adjusted EBITDA, margin | 6.71% | 4.47% |
Consolidated Balance Sheets | ||
(in thousands of U.S. dollars, except share amounts) | ||
March 31, 2013 | December 31, 2012 | |
(unaudited) | ||
ASSETS | ||
Cash and cash equivalents | $170,207 | $294,958 |
Accounts receivable, net of allowance for doubtful accounts of $94,750 as of March 31, 2013 and $84,367 as of December 31, 2012 | 813,686 | 705,462 |
Due from related parties, net of allowance of $920,990 as of March 31, 2013 and $919,113 as of December 31, 2012 | 534,900 | 451,377 |
Inventories | 1,821,739 | 2,073,189 |
Deferred income taxes | 29,038 | 31,629 |
Current assets of discontinued operations | 69,979 | 59,223 |
Prepayments and other current assets | 458,314 | 561,789 |
Total current assets | 3,897,863 | 4,177,627 |
Long-term investments in related parties | 174,634 | 7,853 |
Other long-term investments | 13,858 | 14,671 |
Property, plant and equipment, net | 7,665,864 | 7,798,839 |
Mineral licenses, net | 4,595,347 | 4,658,657 |
Other non-current assets | 173,523 | 183,566 |
Deferred income taxes | 53,640 | 55,243 |
Goodwill | 778,023 | 798,847 |
Total assets | $17,352,752 | $17,695,303 |
LIABILITIES AND EQUITY | ||
Short-term borrowings and current portion of long-term debt | $2,465,738 | $1,460,750 |
Accounts payable and accrued expenses: | ||
Trade payable to vendors of goods and services | 976,638 | 1,053,344 |
Advances received | 120,691 | 154,881 |
Accrued expenses and other current liabilities | 491,287 | 337,433 |
Taxes and social charges payable | 248,154 | 314,283 |
Unrecognized income tax benefits | 46,922 | 20,202 |
Due to related parties | 227,815 | 199,097 |
Asset retirement obligation, current portion | 4,463 | 5,023 |
Deferred income taxes | 34,336 | 38,485 |
Current liabilities of discontinued operations | 17,104 | 17,801 |
Pension obligations, current portion | 19,128 | 20,044 |
Dividends payable | 2,536 | 3,086 |
Finance lease liabilities, current portion | 128,781 | 132,090 |
Total current liabilities | 4,783,593 | $3,756,519 |
Long-term debt, net of current portion | 6,856,504 | 7,929,489 |
Asset retirement obligations, net of current portion | 43,902 | 44,831 |
Pension obligations, net of current portion | 172,639 | 177,218 |
Deferred income taxes | 1,485,903 | 1,499,990 |
Finance lease liabilities, net of current portion | 314,048 | 347,768 |
Due to related parties | 15,420 | 16,862 |
Other long-term liabilities | 400,360 | 382,969 |
EQUITY | ||
Common shares (10 Russian rubles par value; 497,969,086 shares authorized, 416,270,745 shares issued and outstanding as of March 31, 2013 and December 31, 2012) | 133,507 | 133,507 |
Preferred shares (10 Russian rubles par value; 138,756,915 shares authorized, 83,254,149 shares issued and outstanding as of March 31, 2013 and December 31, 2012) | 25,314 | 25,314 |
Additional paid-in capital | 844,529 | 845,215 |
Accumulated other comprehensive loss | (284,472) | (326,933) |
Retained earnings | 2,179,633 | 2,500,278 |
Equity attributable to shareholders of Mechel OAO | 2,898,511 | 3,177,381 |
Noncontrolling interests | 381,872 | 362,276 |
Total equity | 3,280,383 | 3,539,657 |
Total liabilities and equity | $17,352,752 | $17,695,303 |
Consolidated Statements of Operations and Comprehensive Income (Loss) | ||
(in thousands of U.S. dollars) | 3 months ended March 31, | |
2013 | 2012 | |
(unaudited) | (unaudited) | |
Revenue, net (including related party amounts of $166,388 and $144,235 during 3 months 2013 and 2012, respectively) | $2,480,679 |
$ $2,949,151 |
Cost of goods sold (including related party amounts of $163,375 and $285,261 during 3 months 2013 and 2012, respectively) | (1,742,786) | (1,971,143) |
Gross profit | 737,893 | 978,008 |
Selling, distribution and operating expenses: | ||
Selling and distribution expenses | (492,076) | (494,596) |
Taxes other than income tax | (23,653) | (31,936) |
Accretion expense | (1,456) | (1,292) |
Loss on write-off of property, plant and equipment | (1,077) | (438) |
Impairment of goodwill and long-lived assets | (980) | -- |
Recovery of provision for amounts due from related parties | 4,397 | -- |
Provision (recovery of provision) for doubtful accounts | (11,036) | 118 |
General, administrative and other operating expenses, net | (151,330) | (133,074) |
Total selling, distribution and operating expenses | (677,211) | (661,218) |
Operating income | 60,682 | 316,790 |
Other income and (expense): | ||
Income from equity investments | 1,333 | 705 |
Interest income | 4,707 | 18,772 |
Interest expense | (173,148) | (161,061) |
Foreign exchange (loss) gain | (75,466) | 170,915 |
Other income (expenses), net | (97,344) | (7,518) |
Total other income and (expense), net | (339,918) | 21,813 |
(Loss) income from continuing operations, before income tax and discontinued operations | (279,236) | 338,603 |
Income tax expense | (48,406) | (103,317) |
(Loss) income from continuing operations | (327,642) | 235,286 |
Net loss from discontinued operations, net of income tax | (1,121) | (2,250) |
Net (loss) income | (328,763) | 233,036 |
Less: Net loss (income) attributable to noncontrolling interests | 8,118 | (15,016) |
Net (loss) income attributable to shareholders of Mechel OAO | $(320,645) | $218,020 |
Less: Dividends on preferred shares | -- | -- |
Net (loss) income attributable to common shareholders of Mechel OAO | (320,645) | 218,020 |
Net (loss) income | (328,763) | 233,036 |
Currency translation adjustment | (26,821) | 252,864 |
Change of currency translation adjustment due to disposal of subsidiaries | 59,545 | |
Change in pension benefit obligation | (502) | 3,330 |
Adjustment of available-for-sale securities | (428) | 354 |
Comprehensive (loss) income | $(296,969) | $489,584 |
Comprehensive loss (income) attributable to noncontrolling interests | 18,786 | (55,408) |
Comprehensive (loss) income attributable to shareholders of Mechel OAO | (278,183) | 434,176 |
Consolidated Statements of Cash Flows | ||
(in thousands of U.S. dollars) | ||
3 months ended March 31 | ||
2013 | 2012 | |
(unaudited) | (unaudited) | |
Cash Flows from Operating Activities | ||
Net (loss) income from continuing operations attributable to shareholders of Mechel OAO | (319,524) | 220,270 |
Net (loss) income from continuing operations attributable to non-controlling interests | (8,118) | 15,016 |
Net (loss) income from continuing operations | $(327,642) | $235,286 |
Adjustments to reconcile net (loss) income from continuing operations to net cash provided by operating activities: | ||
Depreciation | 117,878 | 114,401 |
Depletion and amortization | 31,135 | 40,265 |
Foreign exchange loss (gain) | 75,466 | (170,915) |
Deferred income taxes | (2,286) | (25,179) |
Provision (recovery of provision) for doubtful accounts | 11,036 | (118) |
Change in inventory reserves | 8,564 | 19,849 |
Accretion expense | 1,456 | 1,292 |
Change in asset retirement obligations | (1,702) | (1,228) |
Loss on write-off of property, plant and equipment | 1,077 | 438 |
Impairment of long-lived assets | 980 | -- |
Recovery of provision for amounts due from related parties | (4,397) | -- |
Income from equity investments | (1,333) | (705) |
Non-cash interest on pension liabilities | 3,161 | 2,964 |
Gain on sale of property, plant and equipment | (2,758) | (1,040) |
Gain on accounts payable with expired legal term | (147) | (329) |
Gain on forgiveness of fines and penalties | (6) | (22) |
Loss on disposal of subsidiaries | 91,293 | -- |
Amortization of loan origination fee | 14,663 | 11,255 |
Loss resulting from accretion and remeasurement of contingent obligation | 492 | 460 |
Pension service cost, amortization of prior service cost and actuarial (gain) loss, other expenses | 1,726 | 1,451 |
Changes in working capital items, net of effects from acquisition of new subsidiaries: | ||
Accounts receivable | (135,338) | (84,140) |
Inventories | 155,124 | 176,661 |
Trade payable to vendors of goods and services | 4,162 | (2,834) |
Advances received | (31,172) | (1,337) |
Advances received | 55,709 | 24,900 |
Settlements with related parties | (58,310) | (71,237) |
Other current assets | 46,962 | 73,912 |
Net operation cash flows of discontinued operations | (14,146) | (2,896) |
Unrecognized income tax losses | 27,724 | -- |
Net cash provided by operating activities | 69,371 | 341,154 |
Cash Flows from Investing Activities | ||
Acquisition of DEMP, less cash acquired | (8,068) | (8,158) |
Acquisition of Port Vanino | (518,823) | -- |
Disposal of Port Vanino | 500,058 | -- |
Short-term loans issued and other investments | (798) | (310) |
Proceeds from short-term loans issued | 5,379 | 600 |
Proceeds from disposals of property, plant and equipment | 3,023 | 7,752 |
Purchases of mineral licenses | (824) | (515) |
Cash flows from discontinued operations | 246 | |
Purchases of property, plant and equipment | (171,549) | (270,709) |
Net cash used in investing activities | (191,602) | (271,094) |
Cash Flows from Financing Activities | ||
Proceeds from borrowings | 688,517 | 998,502 |
Repayment of borrowings | (602,771) | (1,273,091) |
Dividends paid | (112) | -- |
Dividends paid to noncontrolling interest | (378) | -- |
Acquisition of noncontrolling interest in subsidiaries | (34) | (33) |
Repayment of obligations under finance lease | (35,665) | (29,648) |
Cash flows from discontinued operations | -- | (524) |
Net cash provided by (used in) financing activities | 49,557 | (304,794) |
Effect of exchange rate changes on cash and cash equivalents | (52,077) | 30,357 |
Net (decrease) increase in cash and cash equivalents | (124,751) | (204,377) |
Cash and cash equivalents at beginning of period | 294,958 | 642,648 |
Cash and cash equivalents at end of period | $170,207 | $438,271 |