Mechel · RUS:MTLR
Mechel — Q1 2010 Earnings Presentation
15 slides from Mechel's earnings presentation, Jul 14, 2010
Slide 1: 2010 First Quarter Results Presentation
2010 First Quarter Results Presentation July 14, 2010
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: Segments Overview
Segments Overview Operating profit by segments $ Million 180 Steel Mining Ferroalloy Power Cons.adj. Consolidated Recovery in steel led the 10% growth 150 155 148 131 in consolidated revenue 120 91 83 90 68 73 Gross margin up to 34% 60 37 43 2421 30 13 11 11 8 0 4 0 Export sales grew as markets (30)
Slide 5: Steel Segment Performance
Steel Segment Performance Revenue, EBITDA $ Million Revenue grew 18% q-o-q to $1,159 mn 1,400 20% 72 1,200 15% 61% of the Group’s revenue 11% 69 51 6% 10% 1,000 Resale of 3rd party products reached 14% 35 5% 800 5% of revenue 42 0% 600 -5% -5% 1,159 -5% Moderate growth of cash costs reflecting 926 9
Slide 6: Steel Segment Performance
Steel Segment Performance External sales structure Increase in sales to Europe through Mechel Service Global 100% 13% 17% 21% 21% 7% Stable upward price trend across all main 80% 4% 6% 6% 16% 14% products 13% 12% 60% 8% 6% 6% 5% 8% Increase in sales volumes across all the main 11% 3% 8% 7% 4% 3% 3%
Slide 7: Mining Segment Performance
Mining Segment Performance Revenue, EBITDA $ Million Gross profit up 18% q-o-q to $284 mn 700 60% 600 Gross margin reached 49% 50% 500 105 120 40% Increased expenditure on reserves 400 67 32% 52 preparation and seasonal factors pushed 23% 53 23% 25% 30% 300 costs up but allowed coking coal 16% 458 4
Slide 8: Mining Segment Performance
Mining Segment Performance External sales structure Continuous improvement in the coking coal 100% 6% 7% 10% 9% market: 10% 15% 80% 14% 16% prices up 14% on the FCA basis q-o-q 28% 26% 60% 30% 43% export sales volumes from Russia up 40% 54% q-o-q 56% 46% 49% 20% 35% Iron ore FCA price up 17% on stea
Slide 9: Ferroalloys Segment Performance
Ferroalloys Segment Performance Revenue, EBITDA $ Million 175 50% Gross margin 11% in 1Q10 27 150 21 Administrative expenses decreased to 125 25 25% 9% 23% 9% 11% of sales in 1Q10 100 12 -7% 0% Cash cost grew on the back of rising 75 7 119 114 coke prices and seasonal rise in power 50 95 -25% -22% 7
Slide 10: Ferroalloys Segment Performance
Ferroalloys Segment Performance External sales structure Recovery in prices across all products: 100% 1% 4% 3% 8% Ni up 12% q-o-q 16% 26% 23% 80% 27% 18% FeSi up 24% q-o-q 60% 18% 15% 22% Cr up 6% q-o-q 40% 65% 59% 52% Steady growth in international sales 20% 43% Share of sales to China reached 9% i
Slide 11: Power Segment Performance
Power Segment Performance Revenue, EBITDA $ Million Continuing improvement in Segment’s 300 15% results in 1Q10: 250 112 12% 103 Revenue up 12% q-o-q to $185 mn 200 73 8% 9% 90 9% Gross margin up 24% q-o-q to $96 mn 150 73 6% 6% Net income up 4% q-o-q to $10 mn 100 3% 3% 165 185 138 3% 50 118 Inters
Slide 12: Improving Financial Performance
Improving Financial Performance Five consecutive quarters of sustainable growth in revenue Overall positive results in 1Q10: Revenue increased by 10% q-o-q $148 mn Operating Income $258 mn EBITDA $83 mn Net Income attributable to shareholders of Mechel Revenue Dynamics Revenue, EBITDA and Net profit
Slide 13: Cash Generation Capacity
Cash Generation Capacity 1Q10 Negative Operating CF of $97 mn as $219 mn reinvested in working capital to facilitate growth of sales Current debt serviced from operating CF as capex and working capital increase is financed through long-term debt $336 mn cash balance as of March 31, 2010 Operating ca
Slide 14: Debt Profile
Debt Profile FFO, Net Debt/EBITDA and Interest coverage In 1Q10 $480 mn of short-term debt $ Million x extended beyond 2010 750 10 540 8 $490 mn of unutilized committed 500 316 8.0 4.8 4.5 6 239 short-term and long-term facilities as 250 2.1 1.9 203 4 3.7 2 of July 1, 2010 1.0 0.4 1.8 2.1 0 0 1Q09 2
Slide 15: Financial Results Overview
Financial Results Overview US$ million unless 1Q10 4Q09 Change, % otherwise stated Revenue 1,900 1,720 10% Cost of sales (1,256) (1,150) 9% Gross margin 33.9% 33.2% Operating profit 148 131 13% Operating margin 7.8% 7.6% EBITDA 258 240 7% EBITDA margin 13.5% 14.0% Net Income 83 414 -80% Net Income m