Revenue amounted to $2.3
billion
Consolidated
EBITDA(a)* amounted to $390 million
Net loss attributable to
shareholders of Mechel OAO amounted to $239 million
Mechel OAO (MICEX:MTLR) (NYSE:MTL), a
leading Russian mining and steel group, announces financial results
for the 1H 2015.
Mechel OAO's Chief Executive Officer Oleg Korzhov commented:
"The company has confidently passed through the first half of the
year. In comparison with the same period last year we have
increased coal mining and pig iron and steel production. Financial
results for this half-a-year period are also good. Despite a
decrease in revenue, we have demonstrated a significant increase in
EBITDA and EBITDA margin, with operational profit increasing
multifold and our debt down by nearly a quarter as compared to the
first half of last year. In 2Q 2015, the company has demonstrated
net profit for the first time since 2012.
"Our investment projects were developing successfully.
Chelyabinsk Metallurgical Plant's rails have passed certification
for supplies to Russian Railways OAO. The Elga deposit continues to
increase its mining volumes. Comparing to the same period last
year, mining volumes have increased by more than eight times, with
the quarter-on-quarter rise at more than 20%.
"At the same time, the company's chief efforts were focused on
restructuring its debt portfolio. Stable operational and financial
results, as well as the ruble's devaluation, lent significant
support to the negotiations. As of now, we have reached major
progress. Negotiations with our largest lenders ― Gazprombank and
VTB Bank ― were concluded by signing agreements. Negotiations with
other lenders, including Sberbank, continue and are conducted in a
constructive way. We may expect that restructuring will be complete
within a few months and the company will move to a new and more
stable stage of its development."
Consolidated
Results For The 1H 2015 |
US$
mln. |
1H'15 |
1H'14 |
% |
2Q'15 |
1Q'15 |
% |
Revenue from external
customers |
2,272 |
3,436 |
-34% |
1,159 |
1,113 |
4% |
Adjusted operating
income |
260 |
47 |
453% |
108 |
152 |
-29% |
EBITDA (a) |
390 |
262 |
49% |
179 |
211 |
-15% |
EBITDA (a),
margin |
17.2% |
7.6% |
|
15.4% |
19.0% |
|
Net (loss) / income
attributable to shareholders of Mechel OAO |
(239) |
(648) |
-63% |
34 |
(273) |
-112% |
Adjusted net loss |
(251) |
(287) |
-13% |
(152) |
(99) |
54% |
Net debt |
6,974 |
9,053 |
-23% |
6,974 |
6,822 |
2% |
Trade working
capital |
(815) |
68 |
-1.299% |
(815) |
(623) |
31% |
- Revenue decrease compared to the first half of 2014 was largely
due to ruble devaluation as most of the Group's revenue was ruble
denominated. At the same time quarter-on-quarter revenue has
increased.
- The decline in dollar denominated production costs enabled us
to increase EBITDA(a) by half if compared to the same period last
year. EBITDA(a) margin over this half-a-year period went up by
17%.
- The significant decrease in debt compared to the first half of
2014 was as well caused by ruble devaluation. The credit portfolio
structure has not changed significantly quarter-on-quarter. The
two-percent growth of net debt was largely due to currency rate
volatility.
_______________________________
*Please find the calculation of the EBITDA(a) and other measures
used here and hereafter in Attachment A
Mining Segment
Mechel Mining Management Company OOO's Chief Executive Officer
Pavel Shtark noted:
"Due to a weaker demand for the division's products on the
export markets and a further decline in global metallurgical coal
prices, our coal sales structure was altered. If in the first
quarter the share of exports in our revenue was 80%, in the second
quarter it slumped to some 70%. The decline in exports was
compensated for by the growth of domestic supplies, including those
to the Group's own facilities. For example, we substituted some
coal grades we used to buy from third parties for our coke and
chemical plants with coal mined at the Elga deposit. At the same
time, we increased coal mining volumes, retained coking coal
concentrate sales on a stable level quarter-on-quarter, and even
increased sales of other types of coal.
"Despite the fact that coal prices in the second quarter slumped
to another historical minimum and production costs grew,
particularly as the ruble strengthened in the second quarter, we
did not allow a significant decrease of our financial results
quarter-on-quarter. If we compare this half-a-year period results
with the same period last year, however, we shall see that EBITDA
has gone up a quarter, while EBITDA margin nearly doubled.
Separately, I would like to note that as a result of this year's
second quarter, the segment demonstrated a net profit."
|
US$ mln |
1H'15 |
1H'14 |
% |
2Q'15 |
1Q'15 |
% |
Revenue from external customers |
753 |
1,115 |
-32% |
363 |
390 |
-7% |
Revenue intersegment |
232 |
302 |
-23% |
131 |
101 |
30% |
EBITDA(a) |
203 |
164 |
24% |
97 |
106 |
-8% |
EBITDA (a), margin(4) |
20.6% |
11.6% |
|
19.6% |
21.6% |
|
Steel Segment
Mechel-Steel Management Company OOO's Chief Executive Officer
Vladimir Tytsky noted:
"The first two quarters of this year were successful for our
division in terms of both operational and financial results. The
1H2015 operational results exceeded those of the same period last
year. Sales of steel products in the second quarter increased
quarter-on-quarter on the back of a seasonal growth in demand from
construction companies and the engineering industry as well as the
increased competitiveness of certain types of products on foreign
markets as the ruble weakened. EBITDA in 1H2015 was more than 2.5
times higher than in the same period last year. The
quarter-on-quarter decrease of EBITDA was due to a growth of
operation costs as incoming commodities became more expensive, as
well as some strengthening of the ruble.
"In the second quarter, we have successfully completed
certification of our rails produced at Chelyabinsk Metallurgical
Plant's universal rolling mill for Russian Railways. We are
currently in talks with Russian Railways and expect to sign an
agreement on rail supplies shortly.
"Due to a constant increase in the share of high value-added
products as the universal rolling mill's load increases, the
segment will retain a high level of capacity utilization of its
facilities, stable sales and good financial results."
|
US$ mln |
1H'15 |
1H'14 |
% |
2Q'15 |
1Q'15 |
% |
Revenue from external customers |
1,283 |
1,956 |
--34% |
682 |
601 |
13% |
Revenue intersegment |
84 |
127 |
-34% |
44 |
40 |
10% |
EBITDA(a) |
188 |
74 |
154% |
83 |
105 |
-21% |
EBITDA(a), margin |
13.8% |
3.6% |
|
11.4% |
16.4% |
|
Power Segment
Mechel-Energo OOO's Chief Executive Officer Pyotr Pashnin
noted:
"In the first half of this year, we increased electricity
production by 22% as compared to the same period last year. This
was due to a more stable operation of Southern Kuzbass Power Plant
after repairs conducted in 2014. At the same time, in the second
quarter we saw a traditional seasonal slump in both operational and
financial results quarter-on-quarter as the heating season ended
and we were implementing routine maintenance works for the next
high-load period."
|
US$ mln |
1H'15 |
1H'14 |
% |
2Q'15 |
1Q'15 |
% |
Revenue from external customers |
236 |
366 |
-36% |
114 |
122 |
-7% |
Revenue intersegment |
130 |
195 |
-33% |
64 |
66 |
-3% |
EBITDA(a) |
7 |
21 |
-67% |
0,1 |
6 |
-98% |
EBITDA(a), margin(4) |
1.9% |
3.7% |
|
0.1% |
3.2% |
|
The management of Mechel will host a conference call today at
18:00 p.m. Moscow time (4:00 p.m. London time, 11 a.m. New York
time) to review Mechel's financial results and comment on current
operations. The call may be accessed via the Internet at
http://www.mechel.com, under the Investor Relations section.
Mechel is one of the leading Russian companies. Its business
includes three segments: mining, steel and power. Mechel unites
producers of coal, iron ore concentrate, steel, rolled products,
ferroalloys, hardware, heat and electric power. Mechel products are
marketed domestically and internationally.
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.
Attachments to the 1H 2015
Earnings Press Release
Attachment A
Non-GAAP financial measures. This press release includes
financial information prepared in accordance with accounting
principles generally accepted in the United States of America, or
US GAAP, as well as other financial measures referred to as
non-GAAP. The non-GAAP financial measures should be considered in
addition to, but not as a substitute for, the information prepared
in accordance with US GAAP.
Adjusted EBITDA represents earnings before Depreciation,
depletion and amortization, Foreign exchange gain / (loss), Loss
from discontinued operations, Gain / (loss) from remeasurement of
contingent liabilities at fair value, Interest expense, Interest
income, Net result on the disposal of non-current assets,
Impairment of goodwill and long-lived assets, Provision for amounts
due from related parties, Result of disposed companies (incl. the
result from their disposal), Amount attributable to noncontrolling
interests, Income taxes and Other one-off items. Adjusted EBITDA
margin is defined as adjusted EBITDA as a percentage of our net
revenues. Our adjusted EBITDA may not be similar to EBITDA measures
of other companies. Adjusted EBITDA is not a measurement under
accounting principles generally accepted in the United States and
should be considered in addition to, but not as a substitute for,
the information contained in our consolidated statement of
operations. We believe that our adjusted EBITDA provides useful
information to investors because it is an indicator of the strength
and performance of our ongoing business operations, including our
ability to fund discretionary spending such as capital
expenditures, acquisitions and other investments and our ability to
incur and service debt. While interest, depreciation and
amortization are considered operating costs under generally
accepted accounting principles, these expenses primarily represent
the non-cash current period allocation of costs associated with
long-lived assets acquired or constructed in prior periods. Our
adjusted EBITDA calculation is commonly used as one of the bases
for investors, analysts and credit rating agencies to evaluate and
compare the periodic and future operating performance and value of
companies within the metals and mining industry.
Adjusted net income / (loss) represents net income / (loss)
before Loss from discontinued operations, Result of disposed
companies, Foreign exchange gain / (loss), Impairment of goodwill
and long-lived assets and Provision for the amounts due from
related parties, including the effect on income tax and amounts
attributable to noncontrolling interests and Other one-off items.
Our adjusted net income / (loss) may not be similar to adjusted net
income / (loss) measures of other companies. Adjusted net income /
(loss) is not a measurement under accounting principles generally
accepted in the United States and should be considered in addition
to, but not as a substitute for, the information contained in our
consolidated statement of operations. We believe that our adjusted
net income / (loss) provides useful information to investors
because it is an indicator of the strength and performance of our
ongoing business operations. While impairment of long-lived assets
and goodwill and provision for the amounts due from related parties
are considered operating costs under generally accepted accounting
principles, these expenses represent the non-cash current period
allocation of costs associated with assets acquired or constructed
in prior periods. Our adjusted net income / (loss) calculation is
used as one of the bases for investors, analysts and credit rating
agencies to evaluate and compare the periodic and future operating
performance and value of companies within the metals and mining
industry.
Our calculations of Net debt, excluding finance lease
liabilities, and trade working capital are presented below:
|
|
US $ mln |
30.06.2015 |
30.06.2014 |
30.06.2015 |
31.03.2015 |
Short-term borrowings and current portion of
long-term debt |
6,742 |
8,192 |
6,742 |
6,470 |
Long-term debt, net of current portion |
16 |
454 |
16 |
161 |
Derivative instruments |
-- |
58 |
-- |
-- |
less Cash and cash equivalents |
(45) |
(68) |
(45) |
(63) |
Net debt |
6,713 |
8,636 |
6,713 |
6,568 |
Finance lease liabilities, current
portion |
261 |
395 |
261 |
254 |
Finance lease liabilities, non-current
portion |
-- |
22 |
-- |
-- |
Net debt |
6,974 |
9,053 |
6,974 |
6,822 |
|
|
US $ mln |
30.06.2015 |
30.06.2014 |
30.06.2015 |
31.03.2015 |
Accounts receivable, net of allowance for
doubtful accounts |
328 |
543 |
328 |
361 |
Due from related parties, net of
allowance |
9 |
51 |
9 |
10 |
Inventories |
586 |
1,041 |
586 |
590 |
Prepayments and other current
assets |
230 |
372 |
230 |
241 |
Trade current
assets |
1,153 |
2,007 |
1,153 |
1,202 |
Trade payable to vendors of goods and
services |
523 |
977 |
523 |
542 |
Advances received |
76 |
139 |
76 |
59 |
Accrued expenses and other current
liabilities |
1,073 |
391 |
1,073 |
988 |
Taxes and social charges payable |
279 |
398 |
279 |
224 |
Due to related parties |
17 |
34 |
17 |
12 |
Trade current
liabilities |
1,968 |
1,939 |
1,968 |
1,825 |
Trade working
capital |
(815) |
68 |
(815) |
(623) |
Adjusted EBITDA can be reconciled to our consolidated statements
of operations as follows:
|
Consolidated
results |
Mining
segment** |
Steel
segment** |
Power
segment** |
US $ thousand |
6m 2015 |
6m 2014 |
6m 2015 |
6m 2014 |
6m 2015 |
6m 2014 |
6m 2015 |
6m 2014 |
Net loss |
(239,238) |
(647,950) |
(92,445) |
(432,272) |
(131,199) |
(215,584) |
(8,193) |
(2,883) |
Add: |
|
|
|
|
|
|
|
|
Depreciation, depletion and
amortization |
123,565 |
200,379 |
76,027 |
122,568 |
44,188 |
73,260 |
3,349 |
4,552 |
Foreign exchange (gain) / loss |
(35,382) |
183,342 |
(45,149) |
121,654 |
10,897 |
62,710 |
(1,131) |
(1,021) |
Interest expense |
491,634 |
376,744 |
246,516 |
193,157 |
230,617 |
181,959 |
21,319 |
18,380 |
Interest income |
(1,282) |
(1,222) |
(5,437) |
(9,912) |
(2,192) |
(7,452) |
(471) |
(607) |
Net result on the disposal of
non-current assets, impairment of goodwill and long-lived assets
and provision for amounts due from related parties |
1,569 |
10,428 |
1,969 |
(340) |
(393) |
10,712 |
(7) |
56 |
Loss / (income) from discontinued
operations, net of income tax |
3,377 |
11,312 |
1,668 |
19,597 |
1,448 |
(9,708) |
262 |
1,424 |
Net gain / (loss) attributable to
noncontrolling interests |
13,956 |
1,888 |
6,908 |
(1,866) |
7,892 |
1,818 |
(844) |
1,936 |
Income taxes |
11,780 |
102,999 |
12,532 |
129,653 |
6,958 |
(26,033) |
(7,708) |
(622) |
Other one-off items |
20,132 |
23,826 |
1 |
21,439 |
20,131 |
2,384 |
-- |
3 |
Adjusted EBITDA |
390,111 |
261,746 |
202,590 |
163,678 |
188,347 |
74,066 |
6,576 |
21,218 |
Adjusted EBITDA,
margin |
17% |
8% |
21% |
12% |
14% |
4% |
2% |
4% |
|
US $ thousand |
6m 2015 |
6m 2014 |
6m 2015 |
6m 2014 |
6m 2015 |
6m 2014 |
6m 2015 |
6m 2014 |
Net loss |
(239,238) |
(647,950) |
(92,445) |
(432,272) |
(131,199) |
(215,584) |
(8,193) |
(2,883) |
Add: |
|
|
|
|
|
|
|
|
Provision for amounts due from related
parties |
231 |
8,650 |
(188) |
623 |
427 |
7,979 |
(8) |
48 |
Loss / (income) from discontinued
operations, net of income tax |
3,377 |
11,312 |
1,668 |
19,597 |
1,448 |
(9,708) |
262 |
1,424 |
Effect on net (loss) / income
attributable to noncontrolling interests |
(358) |
2,929 |
(1) |
-- |
(357) |
2,929 |
-- |
-- |
Foreign exchange (gain) / loss |
(35,382) |
183,342 |
(45,149) |
121,654 |
10,897 |
62,710 |
(1,131) |
(1,021) |
Accrual of income taxes for
2009-2010 |
-- |
131,250 |
-- |
131,250 |
-- |
-- |
-- |
-- |
Other one-off items |
20,132 |
23,826 |
1 |
21,439 |
20,131 |
2,384 |
-- |
3 |
Adjusted net loss, net of
income tax |
(251,238) |
(286,641) |
(136,114) |
(137,709) |
(98,653) |
(149,290) |
(9,070) |
(2,429) |
Operating income /
(loss) |
238,054 |
15,153 |
121,933 |
5,264 |
120,399 |
(10,439) |
3,124 |
17,539 |
Add: |
|
|
|
|
|
|
|
|
Provision for amounts due from related
parties |
231 |
8,650 |
(188) |
623 |
427 |
7,979 |
(8) |
48 |
Loss on write-off of property, plant
and equipment |
1,680 |
1,508 |
620 |
146 |
1,060 |
1,361 |
-- |
-- |
Other one-off items |
20,127 |
21,439 |
-- |
21,439 |
20,127 |
-- |
-- |
-- |
Adjusted operating income /
(loss) |
260,092 |
46,750 |
122,365 |
27,472 |
142,013 |
(1,099) |
3,116 |
17,587 |
|
|
|
|
|
|
|
|
|
** including intersegment operations |
|
|
|
|
|
|
|
|
|
Consolidated
results |
Mining
segment** |
Steel
segment** |
Power
segment** |
US $ thousand |
2Q 2015 |
1Q 2015 |
2Q 2015 |
1Q 2015 |
2Q 2015 |
1Q 2015 |
2Q 2015 |
1Q 2015 |
Net income /
(loss) |
33,969 |
(273,207) |
52,631 |
(145,070) |
(9,181) |
(122,022) |
(9,050) |
857 |
Add: |
|
|
|
|
|
|
|
|
Depreciation, depletion and
amortization |
65,170 |
58,395 |
40,475 |
35,552 |
22,905 |
21,283 |
1,790 |
1,559 |
Foreign exchange (gain) / loss |
(189,078) |
153,696 |
(141,705) |
96,557 |
(47,678) |
58,575 |
305 |
(1,436) |
Interest expense |
235,473 |
256,161 |
115,881 |
130,635 |
112,599 |
118,018 |
9,970 |
11,349 |
Interest income |
(563) |
(719) |
(2,114) |
(3,323) |
(1,166) |
(1,026) |
(260) |
(211) |
Net result on the disposal of
non-current assets, impairment of goodwill and long-lived assets
and provision for amounts due from related parties |
(239) |
1,808 |
(1,085) |
3,054 |
853 |
(1,246) |
(8) |
1 |
Loss / (income) from discontinued
operations, net of income tax |
3,359 |
18 |
1,081 |
587 |
2,180 |
(732) |
99 |
163 |
Net gain / (loss) attributable to
noncontrolling interests |
6,349 |
7,607 |
5,233 |
1,675 |
1,580 |
6,312 |
(464) |
(380) |
Income taxes |
24,320 |
(12,540) |
26,038 |
(13,508) |
518 |
6,441 |
(2,235) |
(5,473) |
Other one-off items |
5 |
20,127 |
-- |
-- |
4 |
20,127 |
-- |
-- |
Adjusted EBITDA |
178,765 |
211,346 |
96,435 |
106,159 |
82,614 |
105,730 |
147 |
6,429 |
Adjusted EBITDA,
margin |
15% |
19% |
20% |
22% |
11% |
16% |
0% |
3% |
|
US $ thousand |
2Q 2015 |
1Q 2015 |
2Q 2015 |
1Q 2015 |
2Q 2015 |
1Q 2015 |
2Q 2015 |
1Q 2015 |
Net income /
(loss) |
33,969 |
(273,207) |
52,631 |
(145,070) |
(9,181) |
(122,022) |
(9,050) |
857 |
Add: |
|
|
|
|
|
|
|
|
Provision for amounts due from related
parties |
(191) |
422 |
(187) |
(1) |
4 |
423 |
(8) |
-- |
Loss / (income) from discontinued
operations, net of income tax |
3,359 |
18 |
1,081 |
587 |
2,180 |
(732) |
99 |
163 |
Effect on net income / (loss)
attributable to noncontrolling interests |
43 |
(400) |
-- |
1 |
43 |
(401) |
-- |
-- |
Foreign exchange (gain) / loss |
(189,078) |
153,696 |
(141,705) |
96,557 |
(47,678) |
58,575 |
305 |
(1,436) |
Other one-off items |
5 |
20,127 |
-- |
-- |
4 |
20,127 |
-- |
-- |
Adjusted net loss, net of
income tax |
(151,893) |
(99,344) |
(88,181) |
(47,926) |
(54,628) |
(44,030) |
(8,654) |
(416) |
Operating income /
(loss) |
107,332 |
130,723 |
54,045 |
67,888 |
55,360 |
65,040 |
(1,644) |
4,768 |
Add: |
|
|
|
|
|
|
|
|
Provision for amounts due from related
parties |
(191) |
422 |
(187) |
(1) |
4 |
423 |
(8) |
-- |
Loss on write-off of property, plant
and equipment |
993 |
687 |
97 |
522 |
896 |
164 |
-- |
-- |
Other one-off items |
-- |
20,127 |
-- |
-- |
-- |
20,127 |
-- |
-- |
Adjusted operating income /
(loss) |
108,134 |
151,959 |
53,955 |
68,409 |
56,260 |
85,754 |
(1,652) |
4,768 |
|
|
|
|
|
|
|
|
|
** including intersegment operation |
|
|
|
|
|
|
|
|
|
|
|
Consolidated Balance
Sheets |
|
|
(in thousands of U.S. dollars, except share
amounts) |
|
|
|
June 30,
2015 |
December 31, |
|
(unaudited) |
2014 |
ASSETS |
|
|
Cash and cash equivalents |
$ 45,052 |
$ 70,800 |
Accounts receivable, net of allowance for
doubtful accounts of $62,646 as of June 30, 2015 and $68,493 as of
December 31, 2014 |
328,096 |
330,371 |
Due from related parties, net of allowance
of $1,465,638 as of June 30, 2015 and $1,458,296 as of
December 31, 2014 |
9,219 |
9,303 |
Inventories |
585,878 |
640,671 |
Deferred income taxes |
100,921 |
91,223 |
Current assets of discontinued
operations |
-- |
151,602 |
Prepayments and other current assets |
230,065 |
238,314 |
Total current assets |
1,299,231 |
1,532,284 |
|
|
|
Long-term investments in related parties |
6,428 |
6,142 |
Other long-term investments |
4,277 |
4,060 |
Property, plant and equipment, net |
3,980,340 |
3,944,427 |
Mineral licenses, net |
715,124 |
719,951 |
Other non-current assets |
27,467 |
30,453 |
Deferred income taxes |
49,793 |
72,966 |
Goodwill |
408,439 |
403,207 |
Total assets |
6,491,099 |
6,713,490 |
|
|
|
LIABILITIES AND EQUITY |
|
|
Short-term borrowings and current portion of
long-term debt |
6,742,186 |
6,678,549 |
Accounts payable and accrued expenses: |
|
|
Trade payable to vendors of goods and
services |
523,445 |
537,004 |
Advances received |
75,716 |
81,599 |
Accrued expenses and other current
liabilities |
1,073,406 |
811,345 |
Taxes and social charges payable |
279,007 |
215,251 |
Unrecognized income tax benefits |
17,769 |
31,444 |
Due to related parties |
16,904 |
15,494 |
Asset retirement obligations, current
portion |
6,969 |
3,478 |
Deferred income taxes |
5,863 |
7,893 |
Current liabilities of discontinued
operations |
-- |
150,033 |
Pension obligations, current portion |
19,172 |
18,656 |
Dividends payable |
1,911 |
1,843 |
Finance lease liabilities, current
portion |
260,851 |
270,980 |
Total current
liabilities |
9,023,199 |
8,823,569 |
|
|
|
Long-term debt, net of current portion |
15,947 |
166,532 |
Asset retirement obligations, net of current
portion |
44,577 |
43,712 |
Pension obligations, net of current
portion |
60,372 |
60,222 |
Deferred income taxes |
185,950 |
179,987 |
Finance lease liabilities, net of current
portion |
330 |
2,813 |
Due to related parties |
39 |
38 |
Other long-term liabilities |
3,455 |
81,288 |
|
|
|
EQUITY |
|
|
Common shares (10 Russian rubles par value;
497,969,086 shares authorized, 416,270,745 shares issued and
outstanding as of June 30, 2015 and December 31, 2014) |
133,507 |
133,507 |
Preferred shares (10 Russian rubles par
value; 138,756,915 shares authorized, 83,254,149 shares issued and
outstanding as of June 30, 2015 and December 31, 2014) |
25,314 |
25,314 |
Additional paid-in capital |
834,172 |
834,136 |
Accumulated other comprehensive income |
1,009,710 |
972,381 |
Accumulated deficit |
(5,015,240) |
(4,763,413) |
Equity attributable to shareholders
of Mechel OAO |
(3,012,537) |
(2,798,075) |
Noncontrolling interests |
169,767 |
153,404 |
Total equity |
(2,842,770) |
(2,644,671) |
Total liabilities and
equity |
6,491,099 |
6,713,490 |
|
|
|
Consolidated Statements of Operations
and Comprehensive Income (Loss) |
|
|
(in thousands of U.S. dollars) |
6 months ended
June 30, |
|
2015 |
2014 |
|
(unaudited) |
(unaudited) |
Revenue, net (including related party amounts
of $51,622 and $54,755 during 6 months 2015 and 2014,
respectively) |
$ 2,271,719 |
$ 3,436,299 |
Cost of goods sold (including related party
amounts of $30,341 and $66,115 during 6 months 2015 and 2014,
respectively) |
(1,324,154) |
(2,254,307) |
Gross profit |
947,565 |
1,181,992 |
|
|
|
Selling, distribution and operating
expenses: |
|
|
Selling and distribution expenses |
(487,974) |
(812,991) |
Taxes other than income tax |
(49,379) |
(99,039) |
Accretion expense |
(3,598) |
(2,681) |
Loss on write-off of property, plant and
equipment |
(1,680) |
(1,508) |
Provision for amounts due from related
parties |
(231) |
(8,650) |
Provision for doubtful accounts |
(19,659) |
(30,081) |
General, administrative and other operating
expenses, net |
(146,990) |
(211,889) |
Total selling, distribution and operating
expenses, net |
(709,511) |
(1,166,839) |
Operating income |
238,054 |
15,153 |
|
|
|
Other income and (expense): |
|
|
Income from equity investments |
205 |
107 |
Interest income |
1,282 |
1,222 |
Interest expense |
(491,634) |
(376,744) |
Foreign exchange gain (loss) |
35,382 |
(183,342) |
Other income (expenses), net |
6,587 |
11,854 |
Total other income and (expense), net |
(448,178) |
(546,903) |
Loss from continuing operations, before
income tax |
(210,124) |
(531,751) |
|
|
|
Income tax expense |
(11,781) |
(102,998) |
Net loss from continuing
operations |
(221,905) |
(634,749) |
Loss from discontinued operations, net of
income tax |
(3,377) |
(11,313) |
Net loss |
(225,282) |
(646,062) |
Less: Net income attributable to
noncontrolling interests |
(13,956) |
(1,888) |
Net loss attributable to shareholders
of Mechel OAO |
(239,238) |
(647,950) |
Less: Dividends on preferred shares |
(75) |
(124) |
Net loss attributable to common
shareholders of Mechel OAO |
(239,313) |
(648,074) |
|
|
|
Net loss |
(225,282) |
(646,062) |
Currency translation adjustment |
27,658 |
(29,806) |
Change in pension benefit obligation |
(522) |
(1,176) |
Adjustment of available-for-sale
securities |
137 |
286 |
Comprehensive loss |
(198,009) |
(676,758) |
Comprehensive (loss) income attributable to
noncontrolling interests |
(16,414) |
5,581 |
Comprehensive loss attributable to
shareholders of Mechel OAO |
(214,423) |
(671,177) |
|
|
|
Consolidated Statements of Cash
Flows |
|
|
(in thousands of U.S. dollars) |
6 months ended
June 30, |
|
2015 |
2014 |
|
(unaudited) |
(unaudited) |
Cash Flows from Operating
Activities |
|
|
Net loss |
$ (225,282) |
$ (646,062) |
Loss from discontinued operations, net of
income tax |
3,377 |
11,313 |
Net loss from continuing
operations |
(221,905) |
(634,749) |
Adjustments to reconcile net loss from
continuing operations to net cash provided by operating
activities: |
|
|
Depreciation |
109,365 |
174,498 |
Depletion and amortization |
14,200 |
25,881 |
Foreign exchange (gain) loss |
(35,382) |
183,342 |
Deferred income taxes |
16,523 |
(25,015) |
Allowance for doubtful accounts |
19,659 |
30,081 |
Change in inventory reserves |
9,830 |
2 |
Accretion expense |
3,598 |
2,681 |
Loss on write-off of property, plant and
equipment |
1,680 |
1,508 |
Income from equity investments |
(205) |
(107) |
Allowance for amounts due from related
parties |
231 |
8,650 |
Non-cash interest on pension liabilities |
2,027 |
3,919 |
(Gain) loss on sale of property, plant and
equipment |
(366) |
1,265 |
Gain on sale of investments |
-- |
(14,822) |
Gain on accounts payable with expired legal
term |
(2,194) |
(359) |
Gain on forgiveness of fines and
penalties |
(5) |
(13) |
Amortization of loan origination fee |
13,593 |
31,469 |
Pension service cost, amortization of prior
service cost and actuarial (gain) loss, other expenses |
4,642 |
2,328 |
Other |
6,628 |
-- |
Changes in working capital items: |
|
|
Accounts receivable |
(1,945) |
11,109 |
Inventories |
44,628 |
317,079 |
Trade payable to vendors of goods and
services |
(3,648) |
102,690 |
Advances received |
(2,179) |
10,426 |
Accrued taxes and other liabilities |
227,487 |
301,687 |
Settlements with related parties |
921 |
(50,751) |
Other current assets |
(2,925) |
32,741 |
Unrecognized income tax benefits |
(10,345) |
(28,913) |
Net operating cash flows of discontinued
operations |
(2,893) |
(10,882) |
Net cash provided by operating
activities |
191,020 |
475,745 |
|
|
|
Cash Flows from Investing
Activities |
|
|
Acquisition of DEMP, less cash acquired |
(40,115) |
(43,303) |
Proceeds from disposal of securities |
-- |
15,599 |
Loans issued and other investments |
(1,208) |
(2) |
Proceeds from disposal of TPP Rousse, less
cash disposed of |
1,087 |
1,393 |
Proceeds from disposal of Invicta, less cash
disposed of |
-- |
190 |
Proceeds from disposal of Bluestone, less
cash disposed of |
1,502 |
-- |
Proceeds from loans issued |
274 |
1,326 |
Proceeds from disposals of property, plant
and equipment |
4,242 |
5,610 |
Purchases of property, plant and
equipment |
(91,487) |
(274,444) |
Net investing cash flows of discontinued
operations |
-- |
59 |
Net cash used in investing activities |
(125,705) |
(293,572) |
|
|
|
Cash Flows from Financing
Activities |
|
|
Proceeds from borrowings |
40,134 |
1,721,332 |
Repayment of borrowings |
(123,958) |
(2,017,504) |
Dividends paid |
-- |
(4) |
Dividends paid to noncontrolling
interest |
(33) |
(121) |
Acquisition of noncontrolling interest in
subsidiaries |
(7) |
(35,821) |
Repayment of obligations under finance
lease |
(15,141) |
(32,434) |
Net financing cash flows of discontinued
operations |
-- |
(1,503) |
Net cash used in financing activities |
(99,005) |
(366,055) |
|
|
|
Effect of exchange rate changes on cash and
cash equivalents |
6,325 |
(21,683) |
|
|
|
Net decrease in cash and cash
equivalents |
(27,364) |
(205,565) |
|
|
|
Cash and cash equivalents at beginning of
period |
72,416 |
274,539 |
Cash and cash equivalents at end of
period |
45,052 |
68,974 |
CONTACT: Alexey Lukashov
Director of Investor Relations
Mechel OAO
Phone: 7-495-221-88-88
Fax: 7-495-221-88-00
alexey.lukashov@mechel.com
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