MECHEL REPORTS 1H2015 OPERATIONAL RESULTS
Moscow, Russia September 11, 2015 Mechel OAO (MICEX: MTLR, NYSE: MTL), one of the
leading Russian mining and metals companies, announces 1H2015 operational results.
Production and sales for 1H2015
Production:
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Product Name |
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1H2015, thousand |
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1H2014, thousand |
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% |
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2Q2015, thousand |
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1Q2015, thousand |
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% |
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tonnes |
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tonnes |
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tonnes |
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tonnes |
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Run-of-Mine Coal |
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11 448 |
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11 198 |
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+2 |
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5 941 |
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5 506 |
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+8 |
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Pig Iron |
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2 045 |
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1 900 |
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+8 |
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994 |
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1 051 |
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-5 |
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Steel |
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2 147 |
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2 127 |
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+1 |
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1 045 |
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1 102 |
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-5 |
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Sales:
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Product Name |
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1H2015, thousand |
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1H2014, thousand |
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% |
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2Q2015, thousand |
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1Q2015, thousand |
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% |
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tonnes |
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tonnes |
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tonnes |
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tonnes |
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Coking coal |
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concentrate |
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4 068 |
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5 354 |
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-24 |
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2 028 |
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2 040 |
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-1 |
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PCI |
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1 322 |
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1 623 |
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-19 |
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669 |
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653 |
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+3 |
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Anthracites |
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1 109 |
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1 001 |
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+11 |
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564 |
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544 |
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+4 |
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Steam coal |
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3 039 |
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2 528 |
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+20 |
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1 563 |
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1 476 |
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+6 |
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Iron ore concentrate |
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1 317 |
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1 886 |
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-30 |
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609 |
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707 |
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-14 |
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Coke |
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1 484 |
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1 491 |
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0 |
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718 |
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767 |
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-6 |
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Ferrosilicon |
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39 |
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42 |
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-7 |
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17 |
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22 |
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-22 |
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Flat products |
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237 |
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227 |
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+4 |
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120 |
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117 |
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+2 |
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Long products |
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1 367 |
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1 588 |
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-14 |
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730 |
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637 |
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+15 |
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Billets |
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112 |
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61 |
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+84 |
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31 |
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81 |
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-62 |
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Hardware |
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340 |
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384 |
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-11 |
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170 |
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171 |
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0 |
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Forgings |
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28 |
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26 |
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+8 |
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14 |
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14 |
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+2 |
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Stampings |
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32 |
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44 |
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-27 |
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20 |
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13 |
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+57 |
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Electric power
generation
(thousand kWh) |
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2 284 107 |
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1 865 378 |
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+22 |
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1 115 317 |
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1 168 791 |
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-5 |
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Heat power
generation (Gcal) |
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3 139 076 |
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3 374 964 |
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-7 |
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1 035 991 |
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2 103 085 |
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-51 |
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Key investment projects progress
Universal rolling mill:
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Product Name |
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1H2015, thousand |
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1H2014, thousand tonnes |
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% |
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2Q2015, thousand tonnes |
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1Q2015, thousand |
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% |
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tonnes |
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tonnes |
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Rails, beams |
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and shapes |
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78 |
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52 |
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+50 |
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34 |
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44 |
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-23 |
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Elga Coal Complex:
Product Name 1H2015, thousand 1H2014, thousand tonnes % 2Q2015, thousand tonnes 1Q2015, thousand %
tonnes tonnes
Run-of-mine coal 1 864 223 +734 1 022 841 +21
Mechel OAOs Chief Executive Officer Oleg Korzhov commented on the 2Q2015 operational results:
Throughout the second quarter, global commodity prices continued to slump, reaching their 13-year
minimum in June. Nevertheless, the fundamental leadership of most of Mechels Russian assets on the
global cost curve enables us to preserve stable production and sales levels since the years
beginning.
Despite highly complicated market factors, in this accounting period Mechel not only retained coal
mining volumes, but demonstrated an 8-percent growth on this point.
Sales of coking coal concentrate from Southern Kuzbass Coal Company and Yakutugol went down only
slightly (by 1%) due to re-orientation of supplies from export to the domestic market. In 2Q2015
mining at Mechels key investment project ¯ the Elga deposit ¯ went up by 21%.
The 3-percent increase of PCI sales is primarily due to a hike in acquisitions from Chinese
steelmakers. The 4-percent quarter-on-quarter rise in anthracite sales was due to a seasonal
increase in supplies to Chelyabinsk Metallurgical Plants agglomeration workshop.
Steam coal sales went up by 6% as compared to 1Q2015 due to an increase in shipments from the Elga
deposit.
Iron ore concentrate sales in 2Q2015 went down by 14% quarter-on-quarter due to the cessation of
supplies to Asia Pacific for reasons of unfavorable market situation, as well as planned repairs at
Korshunov Mining Plants washing facilities.
The steel segments production levels went down quarter-on-quarter, with steelmaking down by 5%
and pig iron production down by 5%. The reason for the decrease lay in planned equipment repairs in
Chelyabinsk Metallurgical Plants blast furnace and oxygen converter facilities.
In 2Q2015, Mechel received a certificate of compliance with the Customs Unions technical
requirements for rails of up to 100 meters in length produced at Chelyabinsk Metallurgical Plants
universal rolling mill. The company is currently negotiating the date when our supplies to Russias
largest consumer of this product type, Russian Railways OAO, will begin.
In keeping with our strategy of developing the companys steel business, we increased the share of
high value-added products in our overall sales structure. In 2Q2015 sales of flat rolls went up by
2% and long rolls ¯ by 15% quarter-on-quarter due to a seasonal hike in demand from construction
companies. On the domestic market, the share of our universal rolling mills structural beams is
some 20%. We intend to continue our active expansion into new product niches.
The 62-percent decrease in billet sales is due to the fact that this products sales to third
parties are made residually. Today the billets we produce are mostly used in the technological
cycle of the Groups steelmaking facilities to produce high-margin end products.
In 2Q2015, the market showed an increased demand for stampings from engineering companies, which
enabled us to increase stampings sales by 57%. We also increased forgings sales by 2% due to a rise
in this products consumption in Western Europe.
Sales of ferrosilicon from Bratsk Ferroalloys Plant to the Groups facilities and third parties
remained at the previous quarters level. The 22-percent difference is due to some shipments being
transferred to the next accounting period.
In the power division, in 1H2015 electricity production went up by 22% as compared to the same
period last year due to stable and accident-free operations at Southern Kuzbass Power Plant where
facilities are being modernized. The 7-percent decrease in heat production is due to the cessation
of our lease of Beloretsks heat network complex starting in 2H2014.
***
Mechel OAO
Ekaterina Videman
Tel: + 7 495 221 88 88
ekaterina.videman@mechel.com
***
Mechel is an international mining and steel company which employs over 67,000 people. Its products
are marketed in Europe, Asia, North and South America, Africa. Mechel unites producers of coal,
iron ore concentrate, steel, rolled products, ferroalloys, heat and electric power. All of its
enterprises work in a single production chain, from raw materials to high value-added products.
***
Some of the information in this press release may contain projections or other forward-looking
statements regarding future events or the future financial performance of Mechel, as defined in the
safe harbor provisions of the U.S. Private Securities Litigation Reform Act of 1995. We wish to
caution you that these statements are only predictions and that actual events or results may differ
materially. We do not intend to update these statements. We refer you to the documents Mechel files
from time to time with the U.S. Securities and Exchange Commission, including our Form 20-F. These
documents contain and identify important factors, including those contained in the section
captioned Risk Factors and Cautionary Note Regarding Forward-Looking Statements in our Form
20-F, that could cause the actual results to differ materially from those contained in our
projections or forward-looking statements, including, among others, the achievement of anticipated
levels of profitability, growth, cost and synergy of our recent acquisitions, the impact of
competitive pricing, the ability to obtain necessary regulatory approvals and licenses, the impact
of developments in the Russian economic, political and legal environment, volatility in stock
markets or in the price of our shares or ADRs, financial risk management and the impact of general
business and global economic conditions.
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