MECHEL REPORTS 1Q2015 OPERATIONAL RESULTS
Moscow, Russia June 23, 2015 Mechel OAO (MICEX: MTLR, NYSE: MTL), one of the leading
Russian mining and metals companies, announces 1Q2015 operational results.
Production and sales for 1Q2015
Production:
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Product Name |
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1Q2015, thousand |
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1Q2014, thousand |
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% |
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1Q2015, thousand |
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4Q2014, thousand |
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% |
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tonnes |
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tonnes |
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tonnes |
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tonnes |
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Run-of-Mine |
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Coal |
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5,506 |
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5,565 |
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-1 |
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5,506 |
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5,617 |
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-2 |
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Pig Iron |
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1,051 |
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935 |
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12 |
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1,051 |
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1,036 |
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+1 |
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Steel |
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1,102 |
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1,031 |
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7 |
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1,102 |
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1,087 |
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1 |
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Sales:
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1Q2015, thousand |
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1Q2014, thousand |
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1Q2015, thousand |
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4Q2014, thousand |
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Product Name |
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tonnes |
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tonnes |
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% |
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tonnes |
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tonnes |
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% |
Coking coal |
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concentrate |
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2,040 |
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2,611 |
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-22 |
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2,040 |
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2,359 |
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-14 |
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PCI |
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653 |
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590 |
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11 |
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653 |
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620 |
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5 |
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Anthracites |
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544 |
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482 |
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13 |
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544 |
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581 |
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-6 |
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Steam coal |
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1,476 |
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1,361 |
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8 |
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1,476 |
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1,790 |
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-18 |
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Iron ore concentrate |
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707 |
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973 |
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-27 |
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707 |
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615 |
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15 |
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Coke |
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767 |
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757 |
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1 |
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767 |
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913 |
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-16 |
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Ferrosilicon |
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22 |
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22 |
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1 |
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22 |
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22 |
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-2 |
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Flat products |
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117 |
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112 |
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4 |
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117 |
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119 |
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-1 |
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Long products |
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637 |
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782 |
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-18 |
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637 |
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678 |
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-6 |
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Billets |
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81 |
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34 |
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137 |
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81 |
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37 |
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119 |
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Hardware |
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171 |
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177 |
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-4 |
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171 |
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183 |
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-7 |
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Forgings |
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14 |
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12 |
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19 |
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14 |
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13 |
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6 |
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Stampings |
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13 |
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22 |
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-43 |
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13 |
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20 |
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-36 |
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Electric power
generation
(thousand kWh) |
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1,168,791 |
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1,011,191 |
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16 |
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1,168,791 |
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1,084,708 |
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8 |
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Heat power
generation (Gcal) |
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2,103,085 |
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2,303,051 |
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-9 |
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2,103,085 |
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1,940,860 |
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8 |
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Key investment projects progress
Universal rolling mill:
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Product Name |
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1Q2014, tonnes |
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2Q2014, tonnes |
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3Q2014, tonnes |
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4Q2014, tonnes |
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2014, tonnes |
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1Q2015, tonnes |
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1Q2015 / 1Q2014, |
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% |
Rails, rebar and |
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shapes |
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21,946 |
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29,707 |
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33,363 |
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39,417 |
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124,433 |
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43,825 |
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100 |
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Elga Coal Complex:
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Product Name |
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1Q2014, thousand
tonnes |
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2Q2014, thousand tonnes |
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3Q2014, thousand
tonnes |
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4Q2014, thousand tonnes |
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2014, thousand
tonnes |
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1Q2015, thousand
tonnes |
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1Q2015 / 1Q2014, |
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% |
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Run-of-mine coal |
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51 |
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173 |
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521 |
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481 |
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1,224 |
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842 |
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1,561 |
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Mechel OAOs Chief Executive Officer Oleg Korzhov commented on the 1Q2015 operational results:
In 1Q2015, the Groups enterprises yielded stable results despite market volatility and low prices
on our mining divisions key products. As a whole, we maintained production at planned levels, and
even improved on several counts. For example, at the Groups key investment project, the Elga
deposit, we nearly doubled coal output as compared to 4Q2014.
In the mining division, coking coal concentrate sales went down by 14% as compared to the previous
quarter due to a reduction in export sales. A large volume of coking coal concentrate was
redirected to the domestic market as domestic prices were more attractive.
At the same time, PCI sales went up by 5% due to the increased demand in Asia Pacific, primarily
in China. Anthracite sales in 1Q2015 went down by 6% due to a decrease in supplies to CIS
customers. Nevertheless, there is an increase in anthracite supplies to Chelyabinsk Metallurgical
Plant as compared to 1Q2014, as using anthracite as fuel instead of expensive coke fines enabled
the plant to significantly cut costs in producing agglomerate (iron-containing ore for pig iron
production).
Steam coal sales went down by 18% quarter-on-quarter, which is due to a weaker European demand.
An increase in price and demand for iron ore concentrate in Asian markets in 1Q2015 stimulated the
15-percent increase in supplies to this regions customers.
The companys steel segment in 1Q2015 continued working on improving the divisions profitability,
which was made possible due to record low prices on chief raw materials for steelmaking coking
coal and iron ore and favorable price dynamics for ready products. Nevertheless, we expect a
slump in demand from construction companies and a narrowing of Russias steel products market
(particularly for rebar and hardware) throughout 2015.
The decrease of overall sales of flat and long rolls in 1Q2015 quarter-on-quarter by 1% and 6%
accordingly was due to the closure of several Mechel Service Global subsidiaries in Western Europe.
At the same time, Chelyabinsk Metallurgical Plant in 1Q2015 increased long rolls sales to state-run
companies partially owned by the state.
At the universal rolling mill, new types of products are continuously mastered, with some 20 new
types to be produced in 2015. In 1Q2015 the mill produced and shipped off double the volume of
products as compared to the same period last year. The mills construction beam currently takes up
more than a quarter of the domestic market. Meanwhile the rail certification procedure is in its
final stage we expect to obtain certificates in a near future, which will enable us to begin
shipping our product to Russian Railways. We expect that such major infrastructure transport
projects like the high-speed Moscow-Kazan railway will give a powerful impulse to the development
of rail production and enable us to bring the universal rolling mill to maximum load.
In 4Q2014 we signed a profitable contract for billet sales and have already supplied in 1Q2015 the
surplus of billets that had accumulated at our European storages. Thus the results for this
products sales show a 119-percent increase quarter-on-quarter.
In 1Q2015 we increased forgings sales by 6% due to an increased demand in Europe. We have seen a
36-percent slump in stampings sales in this accounting period due to a weaker demand from
mechanical engineering companies which are cutting down on acquiring spare parts for production and
repairs of rolling stock.
The power divisions enterprises in 1Q2015 increased production of electricity and heat by 8%,
which is largely due to seasonal highs in demand.
***
Mechel OAO
Ekaterina Videman
Tel: + 7 495 221 88 88
ekaterina.videman@mechel.com
***
Mechel is an international mining and steel company which employs over 70,000 people. Its products
are marketed in Europe, Asia, North and South America, Africa. Mechel unites producers of coal,
iron ore concentrate, steel, rolled products, ferroalloys, heat and electric power. All of its
enterprises work in a single production chain, from raw materials to high value-added products.
***
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.
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