Mechel · RUS:MTLR
Mechel — 9M 2009 Earnings Presentation
15 slides from Mechel's earnings presentation, Dec 8, 2009
Slide 1: 9 Months Results Presentation
9 Months Results Presentation December 8, 2009
Slide 2: Disclaimer
Disclaimer This presentation does not constitute or form part of and should not be construed as, an offer to sell or issue or the solicitation of an offer to buy or acquire securities of Mechel OAO (Mechel) or any of its subsidiaries in any jurisdiction or an inducement to enter into investment acti
Slide 3: Financial Review
Financial Review 3
Slide 4: Improving Financial Performance
Improving Financial Performance Revenue, EBITDA and Net profit Revenue (lhs) EBITDA (lhs) Net profit (lhs) EBITDA margin (rhs) Operating margin (rhs) $ Million Revenue increased by 23% in q-o-q 4,000 3,231 60% 3,000 37% FX gain of $118 mn in 3Q09 2,000 30% 1,370 29% 1,574 27% 40% 1,179 1,281 984 10%
Slide 5: Segments Overview
Segments Overview Operating profit by segments $ Million 180 Steel Mining Ferroalloy Power Cons.adj. Consolidated Strong upward trends in all key 155 150 segments 120 90 Ferroalloys lead revenue growth, 68 50 73 62 60 mining and steel not far behind 30 13 11 12 14 11 0 4 0 All segments demonstrated
Slide 6: Steel Segment Performance
Steel Segment Performance Revenue, EBITDA $ Million Revenue grew 23% to $926 mn q-o-q 2,000 58 100% 1,750 75% 3x growth in gross profit to $246 mn 1,500 50% 28% Sharp reverse in operating result 1,250 25% 20% 16% 10% 7% 1,000 -12% 51 0% 1,825 SG&A expenses fell by 6% q-o-q 750 80 42 35 -9% -25% -49%
Slide 7: Steel Segment Performance
Steel Segment Performance External sales structure 100% 59% of the Group’s revenue in 3Q09 14% 14% 12% 17% 4% 3% 7% 5% 80% 15% 15% Positive price trends and diversification 16% 7% 7% 15% helped to maximise economic effect 60% 7% 11% 8% 9% 3% 6% 8% 3% 3% 3% 40% 29% 31% Recovery in the domestic market
Slide 8: Mining Segment Performance
Mining Segment Performance Revenue, EBITDA $ Million Sales up 26% to $416 mn q-o-q 800 58% 60% 700 134 Half of sales increase comes from 50% 600 Bluestone 38% 36% 67 40% 500 33% 52 Cash costs return to pre-crisis levels 400 53 30% 504 as production restores 300 344 416 20% 200 13% 331 EBITDA up 2x t
Slide 9: Mining Segment Performance
Mining Segment Performance Continuous improvement in the coking coal External sales structure market: 100% 6% 5% 5% 5% 11% sales up 2x q-o-q 80% 15% 18% 17% 25% volumes up 182% 60% 35% 50% 53% Share of coking coal sales – 43% of revenue 40% 58% Iron ore sales up 22% 20% 43% 30% 24% Maximizing value
Slide 10: Ferroalloys Segment Performance
Ferroalloys Segment Performance Revenue, EBITDA 171% $ Million Revenue increased by 54% q-o-q 250 100% 75% 6x growth in gross profit to $28 mn 200 48 50% Administrative expenses fell to 6% of the 15% 25% 150 21 revenue in 3Q09 from 12% in 2Q09 -5% -6% 8% 0% 100 12 Operating result turned positive an
Slide 11: Ferroalloys Segment Performance
Ferroalloys Segment Performance External sales structure Recovery in prices 100% 2% 4% 3% 5% Ni up 46% 16% 27% 26% 80% 34% 17% Cr up 37% 60% 14% 20% 18% Share of nickel sales reached 55% of 40% segment revenue in 3Q09 65% 49% 55% 20% 44% Rising Cr prices together with falling cash 0% cost lead to sh
Slide 12: Power Segment Performance
Power Segment Performance Revenue, EBITDA $ Million 400 20% Sales seasonally flat 350 15% S&D expenses fell 5% helping to keep 300 5% 7% 10% operations marginally profitable 250 1% 4% 6% 3% 3% 5% 82 2.1% 200 74 0.1% 0% Share of intra-group sales increase to 150 -2% 73 73 90 -5% 44% as production in
Slide 13: Cash Generation Capacity
Cash Generation Capacity Net Cash Flow $ Million 4,000 Operating CF of $130 mn for the 3Q09 2007 2008 1Q09 2Q09 3Q09 including $92 mn from changes in working 3,000 2,550 2,230 capital 2,000 1,299 905 727 1,000 Scheduled debt amortisation serviced out 40 332 138 of operating cash flow, as capex is 0
Slide 14: Debt Profile
Debt Profile EBITDA, FFO and Net Debt $ Million x, annualised Growing EBITDA improves debt service 1,200 20 984 19.4 ratios 15 800 656 10.4 420 8.0 10 Improving liquidity help to reduce debt 400 370 316 239 1.1 1.2 2.1 1.7 3.7 5 service and extend maturities 1.0 1.8 1.3 1.5 4.3 1.5 0 0 3Q08 4Q08 1Q0
Slide 15: Financial Results Overview
Financial Results Overview US$ million unless 3Q09 2Q09 Change, % otherwise stated Revenue 1,574 1,281 23% Cost of sales (1,037) (970) 7% Gross margin 34.2% 24.3% Operating profit (loss) 155 (55) -384% Operating margin 9.9% -4.3% EBITDA 420 370 14% EBITDA margin 26.7% 28.9% Net Income (loss) 132 219