Mechel · RUS:MTLR
Mechel — H1 2009 Earnings Presentation
15 slides from Mechel's earnings presentation, Nov 9, 2009
Slide 1: 2009 First Half Results Presentation
2009 First Half Results Presentation November 9, 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) Production and sales volumes grow $ Million 4,000 60% 3,021 3,231 3,000 Revenue increased by 9% in 2Q09 34% 37% 30% 29% 40% 2,000 32% 1,370 1,281 1,02
Slide 5: Segments Overview
Segments Overview Operating profit by segments $ Million 100 High degree of diversification and vertical Steel Mining Ferroalloy Power Cons.adj. Consolidated 80 integration helps mitigate risk and provides 62 60 50 stability 40 20 13 12 11 14 0 Despite market and production downturn 0 (6) Mining seg
Slide 6: Steel Segment Performance
Steel Segment Performance Revenue, EBITDA $ Million Revenue grew 17% to $755 mn in 2Q09 2,000 74 58 100% vs 1Q09 1,750 75% 1,500 50% 1.5x growth in gross profit to $84 mn 24% 28% 1,250 10% 25% 22% Continuous improvement in operating 1,000 20% -12% -9% 0% 1,743 1,825 35 result 750 80 42 -25% -49% 500
Slide 7: Steel Segment Performance
Steel Segment Performance External sales structure 100% 59% of the Group’s revenue in 2Q09 13% 12% 13% 12% 3% 2% 3% 7% Focus on production of higher-margin 80% 15% 14% 15% 16% products 8% 8% 7% 60% 8% 8% 8% 9% 3% 3% 3% 10% Own distribution helps fast production 4% 40% recovery and growth of market s
Slide 8: Mining Segment Performance
Mining Segment Performance Revenue, EBITDA $ Million Despite sharp fall in average prices the 2,000 60% gross margin still at 48% of revenue 1,800 49% 50% 1,600 48% Cash costs fall back at Yakutugol as 1,400 189 38% 40% production restores 1,200 36% 1,000 33% 30% EBITDA grew 233% to $139 mn in 2Q09
Slide 9: Mining Segment Performance
Mining Segment Performance External sales structure Flexibility to change output to adapt to demand 100% trends in the marketplace 7% 5% 12% 4% 5% 12% 14% 18% 80% As markets restore coking coal sales are up 24% 19%, iron ore sales up 43%, steam coal sales 60% down 21% q-o-q 59% 64% 53% 40% Change in
Slide 10: Ferroalloys Segment Performance
Ferroalloys Segment Performance Revenue, EBITDA 171% $ Million Revenue increased by 43% q-o-q 250 100% 53 75% Gross margin turns positive as operations 200 50% restore and prices stabilize 22% 48 150 25% SG&A expenses fell to 11% of the 21% -5% -6% 0% revenue in 2Q09 from 17% in 1Q09 100 -12% 12 -25
Slide 11: Ferroalloys Segment Performance
Ferroalloys Segment Performance External sales structure Recovery in nickel prices and full control 100% 1% 2% 4% over FeCr production chain help to restore 18% 18% 28% production and exceed the pre-crises level 80% 13% 34% 36% Share of chrome sales reached 34% of 60% 25% 18% segment revenue in 2Q09
Slide 12: Power Segment Performance
Power Segment Performance Revenue, EBITDA $ Million 400 20% Sales decrease 14% as warmer season 350 15% approaches 300 7% 10% 5% S&D expenses fell 15% helping to keep 250 1% 1% 4% 6% 3% 5% 85 82 operations marginally profitable 200 74 73 0.1% 0% -2% -2% 150 73 -5% Share of intra-group sales increase
Slide 13: Cash Generation Capacity
Cash Generation Capacity Net Cash Flow $ Million 4,000 Operating CF jumped 8x to $332 mn in 2Q09 2007 2008 4Q08 1Q09 2Q09 3,000 2,550 Investment CAPEX is financed through long- 2,230 2,000 term debt instruments 1,299 905 727 1,000 $270 mn recovered from receivables and 305 179 40 332 0 inventory (15
Slide 14: Debt Profile
Debt Profile EBITDA, FFO and Net Debt $ Million x, annualised $3.1 bln debt successfully refinanced 1,200 5 1,027 984 in July 2009 3.7 4 800 721 656 2.1 3 RUB 10 bln in bonds raised to resume 1.3 1.8 370 316 2 400 1.2 financing of Elga project 1.3 1.7 1.5 1 1.1 1.1 0 0 With ca. $660 mn cash in accou
Slide 15: Financial Results Overview
Financial Results Overview US$ million unless 2Q09 1Q09 Change, % otherwise stated Revenue 1,281 1,179 9% Cost of sales (970) (804) 21% Gross margin 24.3% 31.8% Operating profit (loss) (55) 14 -493% Operating margin -4.3% 1.2% EBITDA 370 (474) -178% EBITDA margin 28.9% -40.2% Net Income (loss) 219 (