Mechel · RUS:MTLR
Mechel — FY2008 Earnings Presentation
17 slides from Mechel's earnings presentation, Jun 3, 2009
Slide 1: FY 2008 Results Presentation
FY 2008 Results Presentation June 3, 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: Stable Financial Performance
Stable Financial Performance Revenue, EBITDA and Net profit Record operational results: Revenue (lhs) EBITDA (lhs) Operating margin (rhs) Net profit (lhs) EBITDA margin (rhs) Revenues grew by 49% to $10.0 bln $ Million 9,951 Operating profit up 83% to $2,6 bln 10,000 30% 24.8% 25.7% 24.3% EBITDA inc
Slide 5: Segments Overview
Segments Overview Operating profit by segments $ Million 3,000 High degree of diversification and vertical 2,556 1,801 29 6 integration helps mitigate risk and provides 2,500 (51) stability 2,000 Mining and Steel segments dominate in the 1,500 operating result 1,000 770 500 Increase in export share
Slide 6: Steel Segment Performance
Steel Segment Performance Revenue, EBITDA $ Million 6,000 279 100% Revenue up 28% to $5.5 bln 75% 5,000 Operating profit up 43% to $770 mln 108 5,495 50% 25% 24% 28% 4,000 16% High carryover stock affected profitability in 13% 25% 20% 4Q08 3,000 12% 15% 22% 11% 0% 58 -25% Export of semi-finished ste
Slide 7: Steel Segment Performance
Steel Segment Performance External sales structure Product diversification and concentration in $4,307 mn $5,495 mn 100% the long product niche supports sales 17% 12% 7% Increased sales to Europe through new 80% 6% 16% 14% acquisitions 60% 8% 8% Mechel Service - key to stable sales: 10% 11% 4% 3% 40
Slide 8: Mining Segment Performance
Mining Segment Performance Revenue, EBITDA $ Million 33% of the consolidated revenue in FY08 5,000 52% 60% 50% 48% 699 Gross margin rose to 70% 4,000 49% 47% 50% 41% 36% 46% 38% 45% Internal sales rose to 32% in 4Q08 for coking 40% 3,000 coal and 57% for iron ore 29% 30% 33% 2,000 598 Production of
Slide 9: Mining Segment Performance
Mining Segment Performance External sales structure Sales in 4Q08 supported by annual export $1,373 mn $3,333 mn contracts 100% 6% 7% 10% Wider geography of sales: 80% 16% 28% Share of Russia fell to 40% 60% 32% Growth of sales of coal and iron ore to Northern 40% China 56% 20% 45% Acquisition of Bl
Slide 10: Ferroalloys Segment Performance
Ferroalloys Segment Performance Revenue, EBITDA $ Million Visible synergies from vertical integration - 700 100% 136 Internal sales generate 26% of the segment 600 151 75% 55% revenue in FY08 500 33% 50% 51% 22% 25% FX effect contributed $382 mln to the 400 24% 21% -5% -9% 0% negative bottom line in
Slide 11: Ferroalloys Segment Sales
Ferroalloys Segment Sales External sales structure Nickel prices show recovery in the 1H09 $501 mn $434 mn 100% 1% 6% Production at SUNP is back to precrisis level in 16% June 2009 80% 18% Expected recovery of FeCr business: 60% 94% From April 2009 Tikhvin plant completely switched 40% 65% to intern
Slide 12: Power Segment Performance
Power Segment Performance Revenue, EBITDA $ Million 1st year of Net Income - $3 mln 1,200 20% 340 Stable performance during market turbulence 1,000 12% 15% in 4Q08 10% 5% 5% 800 4% 10% Reduction of cash cost q-o-q improves 1% 1% 5% 2% 4% 3% profitability 600 95 0% -2% -2% -5% Electricity market libe
Slide 13: Cash Generation Capacity
Cash Generation Capacity Net Cash Flow $ Million Strong cash flow generation 4,000 2007 2008 3Q08 4Q08 2.5x increase in operating cash flow 3,000 2,550 2,230 Cash flow – record 22% of sales 2,000 1,299 905 980 Following revision of capital expenditure plans 1,000 305 Mechel expects to continue to ge
Slide 14: Debt Metrics
Debt Metrics Operating cash flow was sufficient to service EBITDA, FFO and Net Debt/EBITDA debt in 4Q08 EBITDA (lhs) FFO (lhs) Net Debt/EBITDA, (rhs) All modernisation and expansion capex financed $ Million x, annualised with long-term debt instruments 1,200 1,027 984 3.0 1.9 853 721 Existing debt c
Slide 15: Debt Profile
Debt Profile Debt profile $ Million Cash as of May 1, 2009 - $900 mln – 6,000 Debt payable till Dec.31, 2009 Debt payable after Dec.31, 2009 sufficient to meet repayment schedule 5,000 1,564 4,000 1,610 Additional liquidity source – RUR 30 bln 3,000 1,313 1-year registered commercial papers 922 2,00
Slide 16: Debt Profile
Debt Profile Loans repayment schedule as of May 01, 2009 $ Million 43 2,000 repayment capex finance facilities 135 1,750 repayment of Mechel OAO RUR 5 bln bond repayment of Gazprombank US$1bln loan 1,500 repayment of Yakutugol PXF facility 1,250 repayment of Oriel syndicated facility renewable worki
Slide 17: Financial Results Overview
Financial Results Overview US$ million unless 2008 2007 Change, % otherwise stated Revenue 9,951 6,684 49% Cost of sales (5,260) (4,167) 26% Gross margin 47.1% 37.7% Operating profit 2,556 1,398 83% Operating margin 25.7% 20.9% EBITDA 2,047 1,659 23% EBITDA margin 20.6% 24.8% Net Income 1,141 913 25