Mechel · RUS:MTLR
Mechel — 9M 2010 Earnings Presentation
15 slides from Mechel's earnings presentation, Dec 14, 2010
Slide 1: 9 Months Results Presentation
9 Months Results Presentation D December b 1414, 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 Highlights
Financial Highlights 3
Slide 4: Segments Overview
Segments Overview EBITDA(1) by segments $ Million Steel and mining performance leads the 9% 700 Steel Mining Ferroalloy Power Cons.adj. Consolidated growth th iin consolidated Revenue iin 3Q10 lid t d R 600 607 523 Gross margin up to 39% of the Revenue in 3Q10 500 420 439 400 EBITDA(1) up p 16% %qq-
Slide 5: Steel Segment Performance
Steel Segment Performance Revenue, EBITDA(1) $ Million Segment’s Revenue grew 10% to $1.6 bn in 4,500 170 15% 3Q10 4 000 4,000 3,500 12% Cash costs kept under control 3,000 8% 8% 9% 2,500 112 Administrative expenses decreased by 17% 4,020 2 000 2,000 q-o-q – or 3% off th the R Revenue 1,500 7% 57 61
Slide 6: Steel Segment Performance
Steel Segment Performance External sales structure Flat prices across all main products q-o-q 100% 14% 21% 20% 20% MSG’s sales reached $570 mn and stock 80% 16% 13% 14% 13% turnover ratio improved to 2 months in 3Q10 60% 7% 9% 5% 5% 6% 8% 9% 8% 3% 4% 4% 4% 28% of Segment’s Revenue generated by 40% 2
Slide 7: Mining Segment Performance
Mining Segment Performance Revenue, EBITDA(1) $ Million Continuing improvement in financial results: 2,800 60% 2,400 594 9 50% Revenue up 15% q-o-q 2,000 42% 41% 37% 40% EBITDA(1) up 5%, EBITDA(1) margin at 1,600 254 30% 41% in 3Q10 1 200 1,200 19% 2,158 207 234 20% 800 1,207 Net profit up 97% q-o-q
Slide 8: Mining Segment Performance
Mining Segment Performance External sales structure Prices for all major products follow market 100% 8% 8% 8% 8% trends 80% 14% 13% 15% 11% 2% 9% 10% 7% 9% Coking coal sales reached 48% of 60% 12% 13% 10% Segment’s Revenue in 3Q10 42% 13% 11% 13% 40% Sales S l off PCI and d anthracite th it up 24% q
Slide 9: Ferroalloys Segment Performance
Ferroalloys Segment Performance Revenue, EBITDA(1) Intersegment sales share of 32% in 3Q10 is $ Million 500 25% supported by stable ferroalloys consumption in steel production 400 125 20% 16% Cr and FeSi cash cost grew on the back of 300 15% 41 rising power tariffs, Ni cash cost down on 12% 9% lower
Slide 10: Ferroalloys Segment Performance
Ferroalloys Segment Performance External sales structure Ferroalloys prices followed market trends in 3Q10: 1% 100% 3% 1% 1% 1% 1% 3% 2% Ni down 9% 80% 27% 23% 21% 21% 17% FeSi down 4% 60% 20% 20% 23% Cr down 7% 40% 53% 60% 53% 49% Share of FeSi grew to 23% of Revenue in 3Q10 20% 0% Sales to Russia
Slide 11: Power Segment Performance
Power Segment Performance Revenue, EBITDA(1) $ Million 800 12% Segment’s sales decrease 6% q-o-q due to seasonal factors 600 304 8% Falling operating expenses led to an 236 5% 5% operating profit in 3Q10 400 4% 4% 1% Over 4x growth in EBITDA(1) in 3Q10 200 369 468 97 95 0% 148 135 Positive Net resul
Slide 12: Improving Financial Performance
Improving Financial Performance Sensible improvement in 3Q10 financial performance q-o-q: 9% growth in Revenue to $2.6 $2 6 bn 10% growth in Gross Income to $1.0 bn 18% growth in Operating Income to $481 mn 9x increase in Net Income to $341 mn 16% growth in EBITDA(1) to $607 mn Revenue Dynamics Reve
Slide 13: Cash Generation Capacity
Cash Generation Capacity Turnaround in Operating CF: $52 mn after reinvestment of $338 mn in working capital in 3Q10 to facilitate growth of sales Improved economics and liquidity helped to control Net Debt and progress with main investment projects $282 mn cash balance as of September 30, 2010 Oper
Slide 14: Debt Profile
Debt Profile Financial ratios $ Million x $607 mn of short-term debt reclassified to 800 12 long-term upon a successful refinancing of a 8.8 607 10 syndicated facility in September 2010 600 523 8 $1.8 bn of unutilized committed short-term and 400 4.9 6 4.3 long-term long term facilities as of Decemb
Slide 15: Financial Results Overview
Financial Results Overview US$ million unless 3Q10 2Q10 Change, % otherwise stated Revenue 2 645 2,645 2 431 2,431 9% Cost of sales (1,623) (1,504) 8% Gross margin 38.7% 38.1% Operating profit 481 408 18% Operating margin 18.2% 16.8% Adjusted EBITDA((1)) 607 523 16% Adjusted EBITDA(1) margin 23.0% 2