Mechel · RUS:MTLR
Mechel — H1 2011 Earnings Presentation
15 slides from Mechel's earnings presentation, Oct 11, 2011
Slide 1: 1H2011 Results Presentation
1H2011 RESULTS PRESENTATION OCTOBER 11, 2011
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 Positive price dynamics increase the share of Steel division $ Mln in 3rd party revenue in 1H2011 2Q10 3Q10 4Q10 1Q11 2Q11 620609 612 558 567 532 452 Mining segment demonstrated highest revenue and EBITDA 428 416 361 dynamics in Q2 – 33% and 54% of respective
Slide 5: Mining Segment Performance
MINING SEGMENT PERFORMANCE REVENUE, EBITDA(1) Dynamic improvement in financial results: • EBITDA up 54% q-o-q $ Mln 60% • EBITDA margin reaches 40% in 1Q 2011 1 200 277 • Lower FX gain behind Net Income 12% q-o-q increase to 43% 207 211 $326m 260 40% 800 234 42% 38% 40% Cash costs decreased across a
Slide 6: Mining Segment Performance
MINING SEGMENT PERFORMANCE EXTERNAL SALES STRUCTURE Positive price dynamics across coking coal, iron ore and coke 7% 6% 7% 6% 9% 10% 9% 14% 7% 4% 3rd parties anthracites and PCI sales volumes up by 98% 10% 9% 13% 11% q-o-q increasing to 17% of Segment‟s Revenue in Q2 14% 17% 13% 15% 12% 9% Coking co
Slide 7: Steel Segment Performance
STEEL SEGMENT PERFORMANCE REVENUE, EBITDA(1) Segment‟ revenue up 17% to $2.1 bn q-o-q on growing $ Mln prices and volumes. 75 12% 2 000 Cash costs under pressure: 89 78 9% - Significant growth of raw material prices 1 500 61 57 - Shutdown of blast furnace for scheduled maintenance 8% 8% 8% 8% - Rubl
Slide 8: Steel Segment Performance
STEEL SEGMENT PERFORMANCE EXTERNAL SALES STRUCTURE Improved pricing environment across most of our steel products q-o-q 19% 15% 18% 12% 3% 3% 4% 6% 3% 6% Sales volumes up as MSG grows distribution and the 5% 6% 10% 8% 10% 10% 4% investment program shows result: 4% 4% 6% 4% 6% 4% 6% • Rebar – up 46%
Slide 9: Ferroalloys Segment Performance
FERROALLOYS SEGMENT PERFORMANCE REVENUE, EBITDA(1) Revenue from 3rd parties up by 6% q-o-q to $132 mn $ Mln 250 23% 25% Intersegment revenue grew by 34% q-o-q as the Steel 20% 200 18% 20% Segment increased output of stainless and alloyed steel 71 150 52 49 53 15% Cash cost dynamics: 48 9% 100 10% -
Slide 10: Ferroalloys Segment Performance
FERROALLOYS SEGMENT PERFORMANCE EXTERNAL SALES STRUCTURE Generally downward price trend 1% 3% 4% 3% 4% 1% 3% 4% 24% 18% 17% 19% Cr 3rd party sales up 29% as mining at Voskhod ramped up 21% 24% 18% 19% FeSi 3rd party sales volumes down14% as one furnace idled for a complete revamp 53% 54% 51% 58% Ni
Slide 11: Power Segment Performance
POWER SEGMENT PERFORMANCE REVENUE, EBITDA(1) $ Mln Low season resulted in a 21% q-o-q drop in sales. 400 10% 7% 8% 300 143 5% 105 124 200 97 Cash costs under control despite rising raw material prices 95 4% 2% 225 177 100 186 148 135 2% 0 0% 2Q10 3Q10 4Q10 1Q11 2Q11 EBITDA down to $5m Revenues (lhs)
Slide 12: Stable Financial Performance
STABLE FINANCIAL PERFORMANCE Improvement in 2Q2011 financial performance q-o-q: Revenue – up 18% q-o-q to $3.5 bn - gross margin flat q-o-q at 34% EBITDA(1) - up 8% q-o-q to $612 mn - margin flat at 18% Net Income – down 38% q-o-q to $192 - FX gain $11m in Q2 vs $153m in Q1 REVENUE DYNAMICS REVENUE,
Slide 13: Cash Generation Capacity
CASH GENERATION CAPACITY Operating cash-flow improved significantly to post $314m on higher coal and steel sales: - higher PCI, anthracite and HCC sales as washing plant at Yakutugol resumed operation - improved stock turnover at MSG as construction season began Investments of 808 mln dollars in 1H2
Slide 14: Debt Profile
DEBT PROFILE Substantial part of repayments shifted to 2012 FINANCIAL RATIOS $ Mln 620 609 612 6,0 600 567 Over $1.7bn in cash and available credit lines sufficient to 532 5,1 4,4 4,2 5,0 meet scheduled repayments in 2011 4,2 4,9 4,0 400 4,0 3,5 3,0 Credit portfolio evenly split between RUR, $ and E
Slide 15: Financial Results Overview
FINANCIAL RESULTS OVERVIEW US$ MILLION UNLESS OTHERWISE STATED 2Q11 1Q11 CHANGE, % Revenue 3,472 2,934 18.3% Cost of sales (2,288) (1,913) 19.6% Gross margin 34.1% 34.8% Operating profit 476 448 6.3% Operating margin 13.7% 15.3% Adjusted EBITDA(1) 612 567 7.9% Adjusted EBITDA(1) margin 17.6% 19.3% N