Mechel · RUS:MTLR
Mechel — H1 2010 Earnings Presentation
15 slides from Mechel's earnings presentation, Oct 5, 2010
Slide 1: 2010 First Half Results Presentation
2010 First Half Results Presentation October 5, 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
he MECHEL : Financial Review
Slide 4: Segments Overview
Segments Overview EBITDA by segments $ Million Upward dynamics in steel and mining led 600 Steel Mining Ferroalloy Power Cons.adj. Consolidated 523 the 28% growth in consolidated revenue 500 420 400 Export sales grew as markets continued to recover 300 258 200 167 Gross margin up to 38% of the reven
Slide 5: Steel Segment Performance
Steel Segment Performance Revenue, EBITDA $ Million Revenue grew 27% to $1.4 bn in 2Q10 2,800 108 20% 2,400 15% 57% of the Group Group’s s revenue 8% 10% 2,000 6% 4% Growth of cash costs reflects rising raw 1,600 72 57 5% material prices -4% 2,484 52 0% 1,200 -5% EBITDA up 2 2.5x to $118 mn in i 2Q1
Slide 6: Steel Segment Performance
Steel Segment Performance External sales structure Healthy price trends across all main 100% 12% products 21% 21% 20% 80% 15% Flexibility in export sales allowed to 8% 13% 5% 12% 5% 14% 5% 9% change sales markets quickly 60% 3% 8% 4% 8% 4% 9% 4% Resale of 3rd party products reached 21% 40% 31% 22% 2
Slide 7: Mining Segment Performance
Mining Segment Performance Revenue, EBITDA Overall improvement in financial results as $ Million 1,800 60% the markets are moving to pre-crisis levels: 1 500 1,500 387 50% Revenue up 44% q-o-q 42% 1,200 35% 40% EBITDA margin at 42% in 2Q10 900 25% 234 30% 160 Net profit up 63% q-o-q 18% 600 1 287 1,
Slide 8: Mining Segment Performance
Mining Segment Performance External sales structure Strong upward price trends across all 100% 7% 7% 8% 7% products 14% 14% 14% % 15% 80% 2% 5% 9% 7% Coking concentrate sales volumes up 13% 10% 13% 13% 17% in 2Q10 as production volumes 60% 13% 15% 11% reached pre-crisis level 40% 52% Sales of PCI in
Slide 9: Ferroalloys Segment Performance
Ferroalloys Segment Performance Revenue, EBITDA $ Million 2x growth in intersegment revenue as 350 50% a result of recovery in steel production 300 77 16% 25% 250 Gross margin reached 18% in 2Q10 200 13% 9% -4% 0% 150 52 Ni and Cr cash cost ggrew on the back 19 228 25 of rising raw material prices 1
Slide 10: Ferroalloys Segment Performance
Ferroalloys Segment Performance Strong upward price trends q-o-q: External sales structure 1% 1% 1% Ni up 20% 100% 2% 3% 7% 1% 24% 21% 28% 80% FeSi up 24% 27% 17% 60% 19% 25% Cr up 41% 22% 40% Sales of Ni formed 60% of segment’s 45% 53% 60% 20% 43% revenue from 3d parties in 2Q10 0% European share g
Slide 11: Power Segment Performance
Power Segment Performance Revenue, EBITDA $ Million 600 15% Sales decrease 20% in 2Q10 due to seasonal factors 500 12% 209 400 Cash costs slid 7% supporting the level 139 8% 9% 300 of gross margin at 27% 5% 5% 112 6% 200 97 S&D expenses fell 24% helping to keep 256 333 148 3% 100 185 operations marg
Slide 12: Improving Financial Performance
Improving Financial Performance Considerable revenue growth driven by continued markets’ recovery Improved p financial p performance in 2Q10: Revenue increased by 28% to $2.4 bn 1.4x growth in Gross Income 2x 2 increase i iin EBITDA tto $523 mn FX loss of $182 mn resulted in decline of Net Income to
Slide 13: Cash Generation Capacity
Cash Generation Capacity 2Q10 Negative Operating CF of $159 mn as $515 mn reinvested in working capital to facilitate growth of sales Improved economics and liquidity allowed to progress with main investment projects as planned $274 mn cash balance as of June 30, 2010 Operating cash flow Net Cash Fl
Slide 14: Debt Profile
Debt Profile FFO, Net Debt/EBITDA and Interest coverage $700 mn of short-term debt extended into $ Million x the 2H2011 upon a successful refinancing 600 540 25 of a syndicated facility in September 2010 18.2 20 450 $590 mn of unutilized committed short- 15 term and long-term facilities as of 300 23
Slide 15: Financial Results Overview
Financial Results Overview US$ million unless 2Q10 1Q10 Change, % otherwise stated Revenue 2 431 2,431 1 900 1,900 28% Cost of sales (1,504) (1,256) 20% Gross margin 38.1% 33.9% Operating profit 408 148 176% Operating margin 16.8% 7.8% EBITDA 523 258 103% EBITDA margin 21.5% 13.6% Net Income 38 83 -