Mechel Reports 1Q2016 Operational Results
June 23 2016 - 10:01AM
Mechel PAO (MICEX:MTLR) (NYSE:MTL)
one of
the leading Russian mining and metals companies, announces 1Q2016
operational results.
Production and sales for
1Q2016
Production:
Product
Name |
1Q2016,
thousand tonnes |
1Q2015, thousand tonnes |
% |
1Q2016, thousand tonnes |
4Q2015,
thousand tonnes |
% |
Run-of-Mine
Coal |
5,663 |
5,506 |
+3 |
5,663 |
5,776 |
-2 |
|
Pig
Iron |
1,005 |
1,051 |
-4 |
1,005 |
1,006 |
0 |
|
Steel |
1,041 |
1,102 |
-6 |
1,041 |
1,081 |
-4 |
Electric power
generation (thousand kWh) |
963,434 |
1,168,791 |
-18 |
963,434 |
1,033,832 |
-7 |
Heat power generation
(Gcal) |
2,140,923 |
2,103,085 |
+2 |
2,140,923 |
1,775,478 |
+21 |
|
|
|
|
|
|
|
Sales:
Product
Name |
1Q2016,
thousand tonnes |
1Q2015, thousand tonnes |
% |
1Q2016, thousand tonnes |
4Q2015,
thousand tonnes |
% |
Coking coal
concentrate |
2,156 |
2,040 |
+6 |
2,156 |
2,014 |
+7 |
|
PCI |
530 |
653 |
-19 |
530 |
457 |
+16 |
|
Anthracites |
409 |
544 |
-25 |
409 |
506 |
-19 |
|
Steam
coal |
1,779 |
1,476 |
+21 |
1,779 |
1,657 |
+7 |
|
Iron ore
concentrate |
684 |
707 |
-3 |
684 |
737 |
-7 |
|
Coke |
705 |
767 |
-8 |
705 |
670 |
+5 |
|
Ferrosilicon |
25 |
22 |
+14 |
25 |
19 |
+27 |
|
Flat
products |
128 |
117 |
+9 |
128 |
121 |
+6 |
|
Long
products |
735 |
637 |
+15 |
735 |
641 |
+15 |
|
Billets |
67 |
81 |
-17 |
67 |
64 |
+5 |
|
Hardware |
159 |
171 |
-7 |
159 |
162 |
-2 |
|
Forgings |
10 |
14 |
-24 |
10 |
12 |
-12 |
|
Stampings |
15 |
13 |
+18 |
15 |
17 |
-10 |
|
Key investment projects
progressUniversal rolling mill:
|
|
|
|
|
|
|
|
1Q2016,
thousand tonnes |
1Q2015, thousand tonnes |
% |
1Q2016, thousand tonnes |
4Q2015,
thousand tonnes |
% |
Rails, beams and shapes |
96 |
44 |
+120 |
96 |
56 |
+74 |
|
|
|
|
|
|
|
Elga Coal Complex:
|
|
|
|
|
|
|
|
1Q2016,
thousand tonnes |
1Q2015, thousand tonnes |
% |
1Q2016, thousand tonnes |
4Q2015,
thousand tonnes |
% |
Run-of-mine coal |
993 |
841 |
+18 |
993 |
962 |
+3 |
|
|
|
|
|
|
|
Mechel PAO’s Chief Executive Officer Oleg
Korzhov commented on the 1Q2016 operational results:
“In this reporting period, our company operated
smoothly and stably, with positive results on many counts. Mechel’s
coal mining remained at the previous quarter’s level. It is
important to note that the share of coking coal in the first
quarter’s mining volumes has increased. As for the situation in the
coal markets, it has not changed — international coal producers are
still under pressure from low prices. Nevertheless, in this year’s
second quarter, coking coal prices have grown, albeit slightly,
both domestically and internationally, and we consider that as an
optimistic sign for the entire industry.
“Coking coal concentrate sales in 1Q2016 went up
by 7% versus previous quarter due to contract sales to Asian
steelmaking holdings. Most of our exports went to South Korea (+92%
volumes versus previous quarter) and Japan (+57% volumes versus
previous quarter), with Japan being our leading consumer in terms
of volumes. Figures show that Japanese, South Korean and India’s
demand for quality coking coal concentrate grows.
“The 16-percent increase in PCI sales comparing
to the previous quarter was due to our cinching a new deal with one
South Korean company. We have almost entirely redirected our PCI
export flows from Europe to Southeast Asia which can currently
offer more attractive margins.
“Our anthracite sales were negatively affected
in this accounting period by the accumulation of our product stock
in Temryuk due to our key European anthracite consumer’s request to
put off shipments until this year’s second quarter. Most of our
anthracite exports (over 80%) was directed to European clients.
“The notable seven-percent increase in steam
coal sales versus previous quarter was primarily due to the
increase of sales to China during the winter period. Steam coal
from the Elga deposit is among the coals shipped to China.
“Our iron ore concentrate is used by the Group’s
own enterprises which reduced consumption levels of iron ore in
1Q2016.
“Pig iron production in 1Q2016 remained at the
same level as in the previous quarter, while steel production went
slightly down due to planned repairs at one of Chelyabinsk
Metallurgical Plant’s converters. At the same time, in 1Q2016 the
plant’s universal rolling mill reached 50% of its project load and
its maximum production level since launch. Rolls production at the
mill went up by 74% comparing to 4Q2015. The mill has mastered
production of two types of rails and 27 profiles of structural
shapes widely used in construction. We plan to continue expanding
our product range, including production of European-standard
rails.
“In 1Q2016, as the new construction season
began, we saw the so-called inertia of pent-up demand, which helped
revitalize the rolls market and pushed up the rebar prices. We
managed to increase sales of rebar and other types of long rolls by
15%. Moreover, due to our beginning to work according to the
contract with Russian Railways, we have increased rail sales eight
times comparing to previous quarter (from 7,300 tonnes in 4Q2015 to
53,700 tonnes in 1Q2016). Mechel’s share of Russia’s rail market
has already reached 22%.
“Sales of flat rolls went up by 6% due to the
expansion of Chelyabinsk Metallurgical Plant’s client base and
growth of the plant’s direct sales, as well as the efficiency of
our Mechel Service Global sales network in Europe.
“With the current ruble exchange rate, selling
billets abroad is commercially viable. Free volumes of billets that
are not involved in the group’s internal production chains are
mostly directed to the European market (+5% in 1Q2016 as compared
to 4Q2015).
“The growth of ferrosilicon sales is due to
stable demand in Asia Pacific and the United States. In 1Q2016,
after the anti-dumping investigation was halted, Bratsk Ferroalloy
Plant resumed ferrosilicon sales to the United States.
“European Union’s weaker demand for forgings
affected our forgings sales (-12% vs. 4Q2015). The 10-percent
decrease of stampings sales comparing to 4Q2015 is due to the
seasonal slump in demand from Russian engineering industries.
Quarter-on-quarter, demand for stampings went up by 18% due to
positive trends in Russian wagon making. We received more orders
for parts used for production and repairs of railway wagons.
“In 1Q2016, the power segment’s facilities
decreased production of electricity by 7% comparing to the previous
period due to repairs at Southern Kuzbass Power Plant. The
21-percent increase in heat generation was due to the seasonal
spike in demand.”
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.
Mechel PAO
Ekaterina Videman
Tel: + 7 495 221 88 88
ekaterina.videman@mechel.com
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