Mechel · RUS:MTLR
Mechel — H1 2012 Earnings Presentation
15 slides from Mechel's earnings presentation, Oct 2, 2012
Slide 1: 1H2012 Results Presentation
1H2012 RESULTS PRESENTATION OCTOBER 2, 2012
Slide 2: Disclaimer
DISCLAIMER This presentation does not constitute or form part of and should not be construed as, This presentation may contain projections or other forward-looking statements an offer to sell or issue or the solicitation of an offer to buy or acquire securities of regarding future events or the futu
Slide 3: Financial Highlights
FINANCIAL HIGHLIGHTS
Slide 4: Segments Overview
SEGMENTS OVERVIEW EBITDA(1) BY SEGMENTS $ Mln Reduction of the Mining and Power segments top line offset 2Q11 3Q11 4Q11 1Q12 2Q12 by growth in Steel and Ferroalloys revenue, which translated 678 612 into a 5% q-o-q sales growth $3,086 mn 558 593 536 512 463 358 385 302 153 Steel segment increased it
Slide 5: Mining Segment
MINING SEGMENT REVENUE, EBITDA(1) Downward price trends and weak European market drove $ Mln 3rd party revenue down 6% and EBITDA down 16% to $302 mn Revenues (lhs) Intersegment revenues (lhs) Adj. EBITDA margin (rhs) 60% 277 251 Despite high sales and price volatility EBITDA margin only 1 200 264 s
Slide 6: Mining Segment: External Sales Structure
MINING SEGMENT EXTERNAL SALES STRUCTURE Coking coal prices down 9% and coke down 10% as prices for Coking coal Anthracites and PCI Coke Coking products Steam coal Iron ore Other other products remained flat 5% 5% 4% 5% 9% 13% 12% 13% 6% 4% 3% 2% 2% 3% 2% 2% Shifting sales of PCI and anthracite from
Slide 7: Steel Segment
STEEL SEGMENT REVENUE, EBITDA(1) High season for construction and acceleration of stock reduction drove 3rd party revenue 15% up q-o-q $ Mln Revenues (lhs) Intersegment revenues (lhs) Adj. EBITDA margin (rhs) EBITDA doubled q-o-q to $91 mn 8% 75 2 000 67 70 7% 79 5% Lower commodity prices and capaci
Slide 8: Steel Segment: External Sales Structure
STEEL SEGMENT EXTERNAL SALES STRUCTURE Semi-finished products Rebar Hardware Carbon flat Alloyed long Engineering steel Share of Russia and CIS up to 63% of sales as demand Forgings and stampings Stainless flat products Other remained robust vs Europe whose share decreased to 18% 8% 9% 10% 13% 3% 2%
Slide 9: Ferroalloys Segment
FERROALLOYS SEGMENT REVENUE, EBITDA(1) Stock reduction of FeCr drove 3rd party revenue 6% up q-o-q $ Mln compensating for negative price and volume trend in FeNi and Revenues (lhs) Intersegment revenues (lhs) Adj. EBITDA margin (rhs) FeSi 210 20% Cash costs down due to lower cost of feedstock and RU
Slide 10: Ferroalloys Segment: External Sales Structure
FERROALLOYS SEGMENT EXTERNAL SALES STRUCTURE Nickel Ferrosilicon Chrome Chrome ore Other Share of Europe down to 50% of revenue, as sales redirected 3% 9% 2% 5% 1% 4% 12% to Asia, whose share of sales up to record 18% 18% 25% 31% 35% 21% 12% 11% 10% 54% 56% Sales of Cr and chrome ore up to 47% of re
Slide 11: Power Segment
POWER SEGMENT REVENUE, EBITDA(1) Seasonal slowdown resulted in a 28% decrease in the $ Mln Revenues (lhs) Intersegment revenues(lhs) Adj. EBITDA margin (rhs) revenue from 3rd parties, EBITDA down to just $287 ths 400 9% 136 7% 300 Cash costs slightly up as volumes decrease 126 7% 113 5% 124 113 200
Slide 12: Withstanding Market Volatility
WITHSTANDING MARKET VOLATILITY 2Q2012 FINANCIAL PERFORMANCE Q-O-Q HIGHLIGHTS: Consolidated EBITDA down 17% q-o-q to $385 mn Q2 result affected by $673 mn of one-off write-downs and $292 of forex loss totaling $823 mn of net loss REVENUE DYNAMICS REVENUE, EBITDA(1) AND NET PROFIT $ Mln $ Mln 4 000 Re
Slide 13: Cash Generation Capacity
CASH GENERATION CAPACITY Production adjustment and better inventory management continued to bring effect, resulting in a $304 mn cashflow from operations in Q2 Investments of $303 mn in line with the planned capex OPERATING CASH FLOW DYNAMICS NET CASH FLOW $ Mln FY’10 FY’11* 1H12 345 350 314 304 2 0
Slide 14: Debt Profile
DEBT PROFILE FINANCIAL RATIOS Total debt (excl. leasing) amounted to USD 9.4 bn as of September 1, 2012 $ Mln 5,5 5,0 600 4,2 4,2 4,4 4,4 4,2 4,5 Net Debt reduced by USD 111 mn in the 1H2012 excluding 4,0 the FX effect on balance sheet. 3,9 3,8 3,5 400 3,5 3,5 3,3 3,0 612 678 2,5 Financial ratios st
Slide 15: Financial Results Overview
FINANCIAL RESULTS OVERVIEW US$ MILLION UNLESS OTHERWISE STATED 2Q12 1Q12 CHANGE, % Revenue 3,086 2,950 4.6% Cost of sales (2,195) (1,977) 11.0% Gross margin 28.9% 33.0% Operating profit / (loss) (471) 314 -250.0% Operating margin -15.3% 10.6% Adjusted EBITDA(1) 385 463 -16.8% Adjusted EBITDA(1) marg