Consolidated revenue
– 196.4
bln rubles,
EBITDA* -
41.6 bln rubles
Mechel PAO (MICEX:MTLR) (NYSE:MTL)
, a
leading Russian mining and steel group, announces financial results
for the 9M 2016.
Mechel PAO’s Chief Executive Officer Oleg
Korzhov commented on the 9M 2016 results:
“This reporting period is characterized by
significant volatility in prices for our key products. At the
beginning of this year, prices for most of our products hit
historical lows both domestically and internationally. The market
situation fluctuated throughout these three quarters, but mostly
market changes were favorable for Mechel, which found its
reflection in our financial results. As a result of these nine
months, our operating profit went up by 31% if compared to the same
period of the previous year, reaching 28.8 billion rubles, EBITDA
went up by 16% to 41.6 billion rubles, and EBITDA margin reached
21%. The group demonstrated net profit attributable to Mechel PAO’s
shareholders of 5.5 billion rubles and a stable cash flow.
“This spring’s bullish price dynamics on the
global market of steel and coal products also led to a revival of
the domestic market. The group remains dependent on the external
market environment, but on its part did its best to utilize the
favorable market situation by controlling and cutting costs and
improving production and sales efficiency, as well as adapting its
sales policy to growing demand and investing in projects aimed at
diversifying our product range and increasing production
volumes.
“In this favorable market situation, the group
is already generating a cash flow sufficient for servicing its debt
obligations within the framework of agreements on restructuring and
restoring working capital. The effect from the price growth will be
even more tangible as results from the fourth quarter come in. We
will use this opportunity to the maximum to finance our operations
and reach agreements on restructuring our remaining financial debt.
If any free cash flow arises, it will be used to bring down our
debt burden, thus helping to increase our company’s shareholder
value.”
Consolidated Results For The 9M
2016
Mln rubles |
9M’16 |
9M’15 |
% |
3Q’16 |
2Q’16 |
1Q’16 |
Revenuefrom external customers |
|
196,350 |
|
|
194,039 |
|
|
1 |
% |
|
66,153 |
|
|
67,965 |
|
|
62,232 |
|
Operating profit |
|
28,761 |
|
|
22,018 |
|
|
31 |
% |
|
11,561 |
|
|
10,867 |
|
|
6,333 |
|
EBITDA |
|
41,571 |
|
|
35,845 |
|
|
16 |
% |
|
15,850 |
|
|
15,747 |
|
|
9,974 |
|
EBITDA, margin |
|
21 |
% |
|
18 |
% |
|
|
24 |
% |
|
23 |
% |
|
16 |
% |
Net profit (loss) attributable to shareholders of
Mechel PAO |
|
5,543 |
|
|
(74,585 |
) |
|
|
(2,757 |
) |
|
7,988 |
|
|
312 |
|
* EBITDA - Adjusted EBITDA. Please find
the calculation of the Adjusted EBITDA and other non-IFRS measures
used here and hereafter in Attachment A.
Mining Segment
Mechel Mining Management OOO’s Chief Executive
Officer Pavel Shtark noted:
“In early 2016, prices on coking coal, our
division’s main product, were at their longtime lows. Steam coal
prices were also extremely low. Later during the first half of the
year, the market situation gradually improved, as benchmark and
global indexes demonstrated stable growth, with our contract prices
growing accordingly. However, in the second half of this year we
witnessed an unprecedented hike in prices on high-quality coking
coal. If benchmark contract prices for hard coking coal supplied by
Australian producers to Japan were set at 92 US dollars per tonne
in the third quarter, for the fourth quarter they were set at 200
US dollars per tonne. It is impossible to give an unequivocal
explanation to this price hike, but experts mostly agree that it
was caused by a deficit of premium coal grades on China’s domestic
market due to mining limits imposed on Chinese coal producers.
Force majeure events on several Australian facilities as well as
damage to the transport infrastructure in China and Australia added
to this. Coal stocks in Chinese ports were at their historical
lows. At the same time, spot prices on high-quality coking coal
continued to grow and are currently set at their historical highs,
topping 300 US dollars per tonne, at a significant difference with
contract prices set for the fourth quarter. Negotiations for the
first quarter 2017 basic prices will start shortly, and considering
the spot market indicators, we can expect the contract price level
for the first quarter to be significantly higher
quarter-on-quarter.
“The rapid growth of coal prices, which began in
mid-summer, didn’t have time to make a full impact on the third
quarter’s financial results. We saw this hike’s reflection in our
contracts only by the very end of this reporting period. Still, the
division’s EBITDA has grown by 22% quarter-on-quarter, despite a
small slump in revenue. The EBITDA margin reached 34% in the third
quarter. The margin’s growth is largely due to a decrease in costs.
The current favorable market situation will definitely be reflected
in the results of the fourth quarter and future periods.”
Mln rubles |
9M’16 |
9M’15 |
% |
3Q’16 |
2Q’16 |
1Q’16 |
Revenue from external customers |
|
59,990 |
|
|
62,384 |
|
|
-4 |
% |
|
19,931 |
|
|
20,202 |
|
|
19,857 |
|
Revenueinter-segment |
|
22,481 |
|
|
20,661 |
|
|
9 |
% |
|
7,770 |
|
|
7,652 |
|
|
7,059 |
|
EBITDA |
|
23,979 |
|
|
19,908 |
|
|
20 |
% |
|
9,541 |
|
|
7,832 |
|
|
6,606 |
|
EBITDA, margin |
|
29 |
% |
|
24 |
% |
|
|
34 |
% |
|
28 |
% |
|
25 |
% |
Steel Segment
Mechel-Steel Management Company OOO’s Chief
Executive Officer Andrey Ponomarev noted:
“The volume of the division’s product sales in
tonnes has grown by less than 1% if compared to the same period of
the previous year with the divisions revenue up by 6% and EBITDA by
8%. The stable level of prices for our steel products in the second
and third quarters was a key factor in this positive dynamics.
However, changes we made in the production and sales structure had
a most important impact on the results’ improvement. We have
significantly decreased sales of billets and wire rods while
increasing sales of rails and beams. This was mostly due to
increased production at Chelyabinsk Metallurgical Plant’s universal
rolling mill. The increase in revenue from this production segment
is on the whole comparable to the overall growth in the division’s
revenue. Within nine months of 2016, the universal rolling mill
produced over 350,000 tonnes of products, and will reach 500,000
tonnes by the end of this year. Considering that the mill’s load is
planned to grow further next year, the share of high value-added
products in our sales structure will only increase.”
Mln rubles |
9M’16 |
9M’15 |
% |
3Q’16 |
2Q’16 |
1Q’16 |
Revenue from external customers |
|
118,900 |
|
|
112,387 |
|
|
6 |
% |
|
41,296 |
|
|
42,456 |
|
|
35,148 |
|
Revenueinter-segment |
|
5,296 |
|
|
5,028 |
|
|
5 |
% |
|
1,677 |
|
|
1,727 |
|
|
1,892 |
|
EBITDA |
|
15,845 |
|
|
14,636 |
|
|
8 |
% |
|
6,325 |
|
|
7,867 |
|
|
1,653 |
|
EBITDA, margin |
|
13 |
% |
|
12 |
% |
|
|
15 |
% |
|
18 |
% |
|
4 |
% |
Power Segment
Mechel-Energo OOO’s Chief Executive Officer Petr
Pashnin noted:
“Comparatively mild weather conditions led to a
decrease in electricity and heat sales to third parties and thus
the division’s revenue. Additional repairs to Southern Kuzbass
Power Plant’s equipment as part of the overall preparation for the
upcoming fall-winter maximum load, as well as other factors, will
help to improve efficiency of the division’s operations in the
future periods. At the same time, the increase of electricity fees
not only partly compensated the slump in revenue, but also enabled
us to increase EBITDA and EBITDA margin comparing with the same
period of the previous year.”
Mln rubles |
9M’16 |
9M’15 |
% |
3Q’16 |
2Q’16 |
1Q’16 |
Revenue from external customers |
|
17,460 |
|
|
19,268 |
|
|
-9 |
% |
|
4,925 |
|
|
5,307 |
|
|
7,228 |
|
Revenueinter-segment |
|
11,423 |
|
|
10,844 |
|
|
5 |
% |
|
3,524 |
|
|
3,662 |
|
|
4,237 |
|
EBITDA |
|
2,102 |
|
|
1,761 |
|
|
19 |
% |
|
88 |
|
|
370 |
|
|
1,644 |
|
EBITDA, margin |
|
7 |
% |
|
6 |
% |
|
|
1 |
% |
|
4 |
% |
|
14 |
% |
The management of Mechel will host a conference
call today at 18:00 p.m. Moscow time (3:00 p.m. London time, 10
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 9M 2016 financial results
Press Release
Attachment A
Non-IFRS financial measures. This press release
includes financial information prepared in accordance with
International Financial Reporting Standards, or IFRS, as well as
other financial measures referred to as non-IFRS. The non-IFRS
financial measures should be considered in addition to, but not as
a substitute for the information prepared in accordance with
IFRS.
Adjusted EBITDA (EBITDA) represents net profit
(loss) attributable to shareholders of Mechel PAO before
Depreciation, depletion and amortization, Foreign exchange (gain)
loss, net, Finance costs, including fines and penalties on overdue
loans and borrowings and finance leases payments, Finance income,
Net result on the disposal of non-current assets, Impairment of
goodwill and other non-current assets, Write-off of accounts
receivables, Allowance for doubtful accounts, Write-off of
inventories to net realisable value, Loss (profit) after tax from
discontinued operations, net, Net result on the disposal of
subsidiaries, Income (loss) attributable to non-controlling
interests, Income tax expense (benefit), Pension service cost and
actuarial loss, other expenses, Fines and penalties, Gain on
write-off of accounts payable with expired legal term. Adjusted
EBITDA margin is defined as adjusted EBITDA as a percentage of our
Revenue. Our adjusted EBITDA may not be similar to EBITDA measures
of other companies. Adjusted EBITDA is not a measurement under IFRS
and should be considered in addition to, but not as a substitute
for, the information contained in our interim condensed
consolidated statement of profit (loss). 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 expenses, depreciation, depletion and amortization are
considered operating expenses under IFRS, these expenses primarily
represent the non-cash current period allocation of costs
associated with non-current 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 profit (loss) represents net profit
(loss) attributable to shareholders of Mechel PAO before Impairment
of goodwill and other non-current assets, Loss (profit) after tax
from discontinued operations, net, Net result on the disposal of
subsidiaries, Effect on (loss) income attributable to
non-controlling interests, Foreign exchange (gain) loss, net,
Pension service cost and actuarial loss, other expenses, Fines and
penalties, Gain on write-off of accounts payable with expired legal
term. Our adjusted net profit (loss) may not be similar to adjusted
net profit (loss) measures of other companies. Adjusted net profit
(loss) is not a measurement under IFRS and should be considered in
addition to, but not as a substitute for, the information contained
in our interim condensed consolidated statement of profit (loss).
We believe that our adjusted net profit (loss) provides useful
information to investors because it is an indicator of the strength
and performance of our ongoing business operations. While
impairment of goodwill and other non-current assets is considered
operating expenses under IFRS, these expenses represent the
non-cash current period allocation of costs associated with assets
acquired or constructed in prior periods. Our adjusted net profit
(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 fines
and penalties on overdue amounts** and trade working capital
are presented below:
Mln rubles |
|
30.09.2016 |
|
|
31.12.2015 |
|
Interest-bearing loans and borrowings, excluding
interest, fines and penalties on overdue amounts |
|
400,754 |
|
|
444,199 |
|
Interest payable |
|
21,463 |
|
|
27,269 |
|
Non-current interest-bearing loans and
borrowings |
|
12,371 |
|
|
4,308 |
|
Other non-current financial liabilities |
|
35,246 |
|
|
- |
|
less Cash and cash equivalents |
|
(2,350 |
) |
|
(3,079 |
) |
Net debt, excluding finance lease liabilities, fines and
penalties on overdue amounts |
|
467,484 |
|
|
472,697 |
|
|
|
|
Finance lease liabilities, current portion |
|
11,558 |
|
|
13,507 |
|
Finance lease liabilities, non-current
portion |
|
106 |
|
|
481 |
|
Net debt, excluding fines and penalties on overdue
amounts |
|
479,148 |
|
|
486,685 |
|
|
|
|
|
|
|
Mln rubles |
|
30.09.2016 |
|
|
31.12.2015 |
|
Trade and other receivables |
|
18,166 |
|
|
16,013 |
|
Inventories |
|
34,042 |
|
|
35,189 |
|
Other current assets |
|
7,743 |
|
|
8,191 |
|
Income tax receivables |
|
437 |
|
|
603 |
|
Trade current assets |
|
60,388 |
|
|
59,996 |
|
|
|
|
Trade and other payables |
|
44,605 |
|
|
54,602 |
|
Advances received |
|
3,242 |
|
|
3,492 |
|
Provisions and other current liabilities |
|
1,833 |
|
|
2,558 |
|
Tax payable other than income tax |
|
9,718 |
|
|
8,034 |
|
Income tax payable |
|
3,439 |
|
|
5,549 |
|
Trade current liabilities |
|
62,837 |
|
|
74,235 |
|
|
|
|
Trade working capital |
|
(2,449 |
) |
|
(14,239 |
) |
** Calculations of Net debt could be
differ from indicators calculated in accordance with loan
agreements upon dependence on definitions in such agreements.
EBITDA can be reconciled to our interim
condensed consolidated statement of profit (loss) as follows:
|
ConsolidatedResults |
|
MiningSegment
*** |
|
SteelSegment *** |
|
PowerSegment *** |
In millions of Russian rubles |
9m 2016 |
9m 2015 |
|
9m 2016 |
9m 2015 |
|
9m 2016 |
9m 2015 |
|
9m 2016 |
9m 2015 |
Net profit
(loss) attributable to shareholders of Mechel PAO |
|
5,543 |
|
|
(74,585 |
) |
|
|
(2,439 |
) |
|
(47,080 |
) |
|
|
8,051 |
|
|
(26,448 |
) |
|
|
284 |
|
|
(598 |
) |
Add: |
|
|
|
|
|
|
|
|
|
|
|
Depreciation, depletion and amortization |
|
10,022 |
|
|
10,253 |
|
|
|
5,813 |
|
|
6,331 |
|
|
|
3,947 |
|
|
3,631 |
|
|
|
262 |
|
|
291 |
|
Foreign
exchange (gain) loss, net |
|
(19,738 |
) |
|
43,011 |
|
|
|
(11,719 |
) |
|
29,851 |
|
|
|
(7,950 |
) |
|
12,927 |
|
|
|
(69 |
) |
|
233 |
|
Finance
costs, including fines and penalties on overdue loans and
borrowings and finance leases payments |
|
43,247 |
|
|
47,956 |
|
|
|
32,134 |
|
|
26,827 |
|
|
|
13,212 |
|
|
20,332 |
|
|
|
794 |
|
|
1,749 |
|
Finance
income |
|
(3,963 |
) |
|
(121 |
) |
|
|
(3,959 |
) |
|
(766 |
) |
|
|
(2,856 |
) |
|
(268 |
) |
|
|
(41 |
) |
|
(39 |
) |
Net
result on the disposal of non-current assets, impairment of
goodwill and other non-current assets, write-off of accounts
receivables, allowance for doubtful accounts and write-off of
inventories to net realisable value |
|
1,818 |
|
|
1,788 |
|
|
|
830 |
|
|
429 |
|
|
|
389 |
|
|
1,259 |
|
|
|
599 |
|
|
100 |
|
Loss
(profit) after tax from discontinued operations, net |
|
343 |
|
|
(1,013 |
) |
|
|
(84 |
) |
|
(723 |
) |
|
|
407 |
|
|
(309 |
) |
|
|
20 |
|
|
19 |
|
Net result on the
disposal of subsidiaries |
|
(191 |
) |
|
75 |
|
|
|
- |
|
|
- |
|
|
|
(191 |
) |
|
75 |
|
|
|
- |
|
|
- |
|
Income (loss) attributable to non-controlling interests |
|
1,153 |
|
|
330 |
|
|
|
298 |
|
|
(217 |
) |
|
|
735 |
|
|
467 |
|
|
|
122 |
|
|
80 |
|
Income
tax expense (benefit) |
|
2,427 |
|
|
6,914 |
|
|
|
2,698 |
|
|
4,711 |
|
|
|
(364 |
) |
|
2,282 |
|
|
|
93 |
|
|
(79 |
) |
Pension
service cost and actuarial loss, other expenses |
|
124 |
|
|
126 |
|
|
|
91 |
|
|
92 |
|
|
|
31 |
|
|
29 |
|
|
|
2 |
|
|
5 |
|
Fines and
penalties |
|
847 |
|
|
1,270 |
|
|
|
319 |
|
|
454 |
|
|
|
492 |
|
|
817 |
|
|
|
36 |
|
|
(1 |
) |
Gain on
write-off of accounts payable with expired legal term |
|
(61 |
) |
|
(159 |
) |
|
|
(3 |
) |
|
(1 |
) |
|
|
(58 |
) |
|
(158 |
) |
|
|
- |
|
|
- |
|
EBITDA |
|
41,571 |
|
|
35,845 |
|
|
|
23,979 |
|
|
19,908 |
|
|
|
15,845 |
|
|
14,636 |
|
|
|
2,102 |
|
|
1,761 |
|
EBITDA,
margin |
|
21 |
% |
|
18 |
% |
|
|
29 |
% |
|
24 |
% |
|
|
13 |
% |
|
12 |
% |
|
|
7 |
% |
|
6 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
In millions of Russian rubles |
9m 2016 |
9m 2015 |
|
9m 2016 |
9m 2015 |
|
9m 2016 |
9m 2015 |
|
9m 2016 |
9m 2015 |
Net profit
(loss) attributable to shareholders of Mechel PAO |
|
5,543 |
|
|
(74,585 |
) |
|
|
(2,439 |
) |
|
(47,080 |
) |
|
|
8,051 |
|
|
(26,448 |
) |
|
|
284 |
|
|
(598 |
) |
Add: |
|
|
|
|
|
|
|
|
|
|
|
Impairment of goodwill and other non-current assets |
|
374 |
|
|
- |
|
|
|
374 |
|
|
- |
|
|
|
- |
|
|
- |
|
|
|
- |
|
|
- |
|
Loss
(profit) after tax from discontinued operations, net |
|
343 |
|
|
(1,013 |
) |
|
|
(84 |
) |
|
(723 |
) |
|
|
407 |
|
|
(309 |
) |
|
|
20 |
|
|
19 |
|
Net result on the
disposal of subsidiaries |
|
(191 |
) |
|
75 |
|
|
|
- |
|
|
- |
|
|
|
(191 |
) |
|
75 |
|
|
|
- |
|
|
- |
|
Effect on (loss) income attributable to non-controlling
interests |
|
(61 |
) |
|
49 |
|
|
|
- |
|
|
- |
|
|
|
(61 |
) |
|
49 |
|
|
|
- |
|
|
- |
|
Foreign
exchange (gain) loss, net |
|
(19,738 |
) |
|
43,011 |
|
|
|
(11,719 |
) |
|
29,851 |
|
|
|
(7,950 |
) |
|
12,927 |
|
|
|
(69 |
) |
|
233 |
|
Pension
service cost and actuarial loss, other expenses |
|
124 |
|
|
126 |
|
|
|
91 |
|
|
92 |
|
|
|
31 |
|
|
29 |
|
|
|
2 |
|
|
5 |
|
Fines and
penalties |
|
847 |
|
|
1,270 |
|
|
|
319 |
|
|
454 |
|
|
|
492 |
|
|
817 |
|
|
|
36 |
|
|
(1 |
) |
Gain on
write-off of accounts payable with expired legal term |
|
(61 |
) |
|
(159 |
) |
|
|
(3 |
) |
|
(1 |
) |
|
|
(58 |
) |
|
(158 |
) |
|
|
- |
|
|
- |
|
Net (loss)
profit, net of income tax |
|
(12,820 |
) |
|
(31,226 |
) |
|
|
(13,461 |
) |
|
(17,407 |
) |
|
|
721 |
|
|
(13,018 |
) |
|
|
273 |
|
|
(342 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
Operating
profit |
|
28,761 |
|
|
22,018 |
|
|
|
16,913 |
|
|
12,386 |
|
|
|
10,996 |
|
|
8,741 |
|
|
|
1,207 |
|
|
1,352 |
|
Add: |
|
|
|
|
|
|
|
|
|
|
|
Impairment of goodwill and other non-current assets |
|
374 |
|
|
- |
|
|
|
374 |
|
|
- |
|
|
|
- |
|
|
- |
|
|
|
- |
|
|
- |
|
Loss on
write-off of property, plant and equipment |
|
303 |
|
|
125 |
|
|
|
293 |
|
|
59 |
|
|
|
10 |
|
|
66 |
|
|
|
- |
|
|
- |
|
Pension
service cost and actuarial loss, other expenses |
|
124 |
|
|
126 |
|
|
|
91 |
|
|
92 |
|
|
|
31 |
|
|
29 |
|
|
|
2 |
|
|
5 |
|
Fines and
penalties |
|
847 |
|
|
1,270 |
|
|
|
319 |
|
|
454 |
|
|
|
492 |
|
|
817 |
|
|
|
36 |
|
|
(1 |
) |
Adjusted operating profit |
|
30,409 |
|
|
23,539 |
|
|
|
17,990 |
|
|
12,991 |
|
|
|
11,529 |
|
|
9,653 |
|
|
|
1,245 |
|
|
1,356 |
|
*** including
intersegment operations |
|
|
|
|
|
|
|
|
|
|
|
|
ConsolidatedResults |
|
MiningSegment
*** |
|
SteelSegment *** |
|
PowerSegment *** |
In millions of Russian rubles |
3q 2016 |
2q 2016 |
|
3q 2016 |
2q 2016 |
|
3q 2016 |
2q 2016 |
|
3q 2016 |
2q 2016 |
Net (loss)
profit attributable to shareholders of Mechel PAO |
|
(2,757 |
) |
|
7,988 |
|
|
|
(2,682 |
) |
|
1,756 |
|
|
|
415 |
|
|
6,890 |
|
|
|
(385 |
) |
|
(340 |
) |
Add: |
|
|
|
|
|
|
|
|
|
|
|
Depreciation, depletion and amortization |
|
3,456 |
|
|
3,644 |
|
|
|
2,025 |
|
|
2,117 |
|
|
|
1,344 |
|
|
1,441 |
|
|
|
87 |
|
|
86 |
|
Foreign
exchange (gain) loss, net |
|
(2,296 |
) |
|
(8,874 |
) |
|
|
(1,711 |
) |
|
(5,084 |
) |
|
|
(592 |
) |
|
(3,771 |
) |
|
|
7 |
|
|
(19 |
) |
Finance
costs, including fines and penalties on overdue loans and
borrowings and finance leases payments |
|
13,447 |
|
|
15,886 |
|
|
|
9,984 |
|
|
11,823 |
|
|
|
5,059 |
|
|
4,371 |
|
|
|
256 |
|
|
269 |
|
Finance
income |
|
(76 |
) |
|
(3,432 |
) |
|
|
(409 |
) |
|
(2,810 |
) |
|
|
(1,519 |
) |
|
(1,124 |
) |
|
|
- |
|
|
(74 |
) |
Net
result on the disposal of non-current assets, impairment of
goodwill and other non-current assets, write-offs of accounts
receivables, allowance for doubtful accounts and write-offs
of inventories to net realisable value |
|
588 |
|
|
586 |
|
|
|
494 |
|
|
215 |
|
|
|
34 |
|
|
59 |
|
|
|
58 |
|
|
314 |
|
Loss
(profit) after tax from discontinued operations, net |
|
99 |
|
|
108 |
|
|
|
(43 |
) |
|
2 |
|
|
|
137 |
|
|
101 |
|
|
|
5 |
|
|
5 |
|
Net result on the
disposal of subsidiaries |
|
(136 |
) |
|
3 |
|
|
|
- |
|
|
- |
|
|
|
(136 |
) |
|
3 |
|
|
|
- |
|
|
- |
|
Income (loss) attributable to non-controlling interests |
|
291 |
|
|
691 |
|
|
|
25 |
|
|
156 |
|
|
|
270 |
|
|
466 |
|
|
|
(3 |
) |
|
69 |
|
Income
tax expense (benefit) |
|
3,057 |
|
|
(1,447 |
) |
|
|
1,877 |
|
|
(675 |
) |
|
|
1,146 |
|
|
(795 |
) |
|
|
34 |
|
|
23 |
|
Pension
service cost and actuarial loss, other expenses |
|
41 |
|
|
42 |
|
|
|
30 |
|
|
31 |
|
|
|
10 |
|
|
10 |
|
|
|
1 |
|
|
1 |
|
Fines and
penalties |
|
179 |
|
|
552 |
|
|
|
(46 |
) |
|
301 |
|
|
|
197 |
|
|
216 |
|
|
|
28 |
|
|
35 |
|
Gain on
write-off of accounts payable with expired legal term |
|
(43 |
) |
|
- |
|
|
|
(3 |
) |
|
- |
|
|
|
(40 |
) |
|
- |
|
|
|
- |
|
|
- |
|
EBITDA |
|
15,850 |
|
|
15,747 |
|
|
|
9,541 |
|
|
7,832 |
|
|
|
6,325 |
|
|
7,867 |
|
|
|
88 |
|
|
370 |
|
EBITDA,
margin |
|
24 |
% |
|
23 |
% |
|
|
34 |
% |
|
28 |
% |
|
|
15 |
% |
|
18 |
% |
|
|
1 |
% |
|
4 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
In millions of Russian rubles |
3q 2016 |
2q 2016 |
|
3q 2016 |
2q 2016 |
|
3q 2016 |
2q 2016 |
|
3q 2016 |
2q 2016 |
Net (loss)
profit attributable to shareholders of Mechel PAO |
|
(2,757 |
) |
|
7,988 |
|
|
|
(2,682 |
) |
|
1,756 |
|
|
|
415 |
|
|
6,890 |
|
|
|
(385 |
) |
|
(340 |
) |
Add: |
|
|
|
|
|
|
|
|
|
|
|
Impairment of goodwill and other non-current assets |
|
374 |
|
|
- |
|
|
|
374 |
|
|
- |
|
|
|
- |
|
|
- |
|
|
|
- |
|
|
- |
|
Loss
(profit) after tax from discontinued operations, net |
|
99 |
|
|
108 |
|
|
|
(43 |
) |
|
2 |
|
|
|
137 |
|
|
101 |
|
|
|
5 |
|
|
5 |
|
Net
result on the disposal of subsidiaries |
|
(136 |
) |
|
3 |
|
|
|
- |
|
|
- |
|
|
|
(136 |
) |
|
3 |
|
|
|
- |
|
|
- |
|
Effect on loss
attributable to non-controlling interests |
|
(22 |
) |
|
(16 |
) |
|
|
- |
|
|
- |
|
|
|
(22 |
) |
|
(16 |
) |
|
|
- |
|
|
- |
|
Foreign exchange (gain) loss, net |
|
(2,296 |
) |
|
(8,874 |
) |
|
|
(1,711 |
) |
|
(5,084 |
) |
|
|
(592 |
) |
|
(3,771 |
) |
|
|
7 |
|
|
(19 |
) |
Pension
service cost and actuarial loss, other expenses |
|
41 |
|
|
42 |
|
|
|
30 |
|
|
31 |
|
|
|
10 |
|
|
10 |
|
|
|
1 |
|
|
1 |
|
Fines and
penalties |
|
179 |
|
|
552 |
|
|
|
(46 |
) |
|
301 |
|
|
|
197 |
|
|
216 |
|
|
|
28 |
|
|
35 |
|
Gain on
write-off of accounts payable with expired legal term |
|
(43 |
) |
|
- |
|
|
|
(3 |
) |
|
- |
|
|
|
(40 |
) |
|
- |
|
|
|
- |
|
|
- |
|
Net (loss)
profit, net of income tax |
|
(4,561 |
) |
|
(197 |
) |
|
|
(4,081 |
) |
|
(2,994 |
) |
|
|
(31 |
) |
|
3,432 |
|
|
|
(344 |
) |
|
(318 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
Operating
profit (loss) |
|
11,561 |
|
|
10,867 |
|
|
|
7,061 |
|
|
5,098 |
|
|
|
4,705 |
|
|
6,151 |
|
|
|
(99 |
) |
|
(63 |
) |
Add: |
|
|
|
|
|
|
|
|
|
|
|
Impairment of goodwill and other non-current assets |
|
374 |
|
|
- |
|
|
|
374 |
|
|
- |
|
|
|
- |
|
|
- |
|
|
|
- |
|
|
- |
|
Loss on
write-off of property, plant and equipment |
|
182 |
|
|
114 |
|
|
|
182 |
|
|
103 |
|
|
|
- |
|
|
11 |
|
|
|
- |
|
|
- |
|
Pension
service cost and actuarial loss, other expenses |
|
41 |
|
|
42 |
|
|
|
30 |
|
|
31 |
|
|
|
10 |
|
|
10 |
|
|
|
1 |
|
|
1 |
|
Fines and
penalties |
|
179 |
|
|
552 |
|
|
|
(46 |
) |
|
301 |
|
|
|
197 |
|
|
216 |
|
|
|
28 |
|
|
35 |
|
Adjusted
operating profit (loss) |
|
12,337 |
|
|
11,575 |
|
|
|
7,601 |
|
|
5,533 |
|
|
|
4,912 |
|
|
6,388 |
|
|
|
(70 |
) |
|
(27 |
) |
*** including
intersegment operations |
|
|
|
|
|
|
|
|
|
|
|
Attachment B
Interim condensed consolidated statement of financial
position |
(All
amounts are in millions of Russian rubles) |
|
|
September
30,2016 |
|
December
31,2015 |
|
|
(unaudited) |
|
**** |
Assets |
|
|
|
|
Current
assets |
|
|
|
|
Cash and cash
equivalents |
|
|
2,350 |
|
|
|
3,079 |
|
Trade and other
receivables |
|
|
18,166 |
|
|
|
16,013 |
|
Inventories |
|
|
34,042 |
|
|
|
35,189 |
|
Income tax
receivables |
|
|
437 |
|
|
|
603 |
|
Other current financial
assets |
|
|
94 |
|
|
|
45 |
|
Other current
assets |
|
|
7,743 |
|
|
|
8,191 |
|
Total current
assets |
|
|
62,832 |
|
|
|
63,120 |
|
|
|
|
|
|
Non-current
assets |
|
|
|
|
Property, plant and
equipment |
|
|
209,254 |
|
|
|
215,844 |
|
Mineral licenses |
|
|
37,132 |
|
|
|
38,517 |
|
Non-current financial
assets |
|
|
151 |
|
|
|
194 |
|
Investments in
associates |
|
|
300 |
|
|
|
284 |
|
Deferred tax
assets |
|
|
1,352 |
|
|
|
1,492 |
|
Goodwill |
|
|
21,305 |
|
|
|
21,378 |
|
Other non-current
assets |
|
|
987 |
|
|
|
1,243 |
|
Total
non-current assets |
|
|
270,481 |
|
|
|
278,952 |
|
Total
assets |
|
|
333,313 |
|
|
|
342,072 |
|
|
|
|
|
|
Equity and
liabilities |
|
|
|
|
Current
liabilities |
|
|
|
|
Interest-bearing loans
and borrowings, including Interest payable, fines and penalties on
overdue amounts of RUB 41,535 million and RUB 47,475 million as of
September 30, 2016 and December 31, 2015. |
|
|
442,289 |
|
|
|
491,674 |
|
Trade and other
payables |
|
|
44,605 |
|
|
|
54,602 |
|
Advances received |
|
|
3,242 |
|
|
|
3,492 |
|
Provisions |
|
|
1,799 |
|
|
|
2,532 |
|
Pension
obligations |
|
|
1,120 |
|
|
|
1,120 |
|
Finance lease
liabilities |
|
|
11,558 |
|
|
|
13,507 |
|
Income tax payable |
|
|
3,439 |
|
|
|
5,549 |
|
Tax payable other than
income tax |
|
|
9,718 |
|
|
|
8,034 |
|
Other current
liabilities |
|
|
34 |
|
|
|
26 |
|
Total current
liabilities |
|
|
517,804 |
|
|
|
580,536 |
|
|
|
|
|
|
Non-current
liabilities |
|
|
|
|
Interest-bearing loans
and borrowings |
|
|
12,371 |
|
|
|
4,308 |
|
Provisions |
|
|
3,686 |
|
|
|
3,439 |
|
Pension
obligations |
|
|
3,688 |
|
|
|
3,746 |
|
Finance lease
liabilities |
|
|
106 |
|
|
|
481 |
|
Deferred tax
liabilities |
|
|
13,624 |
|
|
|
11,090 |
|
Other non-current
liabilities |
|
|
555 |
|
|
|
189 |
|
Other non-current
financial liabilities |
|
|
35,246 |
|
|
|
- |
|
Income tax payable |
|
|
- |
|
|
|
137 |
|
Total
non-current liabilities |
|
|
69,276 |
|
|
|
23,390 |
|
Total
liabilities |
|
|
587,080 |
|
|
|
603,926 |
|
|
|
|
|
|
Equity |
|
|
|
|
Common shares |
|
|
4,163 |
|
|
|
4,163 |
|
Preferred shares |
|
|
833 |
|
|
|
833 |
|
Additional paid-in
capital and other reserves |
|
|
28,216 |
|
|
|
28,322 |
|
Accumulated other
comprehensive income |
|
|
1,773 |
|
|
|
445 |
|
Accumulated
deficit |
|
|
(295,954 |
) |
|
|
(301,565 |
) |
Equity
attributable to equity shareholders of Mechel PAO |
|
|
(260,969 |
) |
|
|
(267,802 |
) |
Non-controlling
interests |
|
|
7,202 |
|
|
|
5,948 |
|
Total
equity |
|
|
(253,767 |
) |
|
|
(261,854 |
) |
Total equity
and liabilities |
|
|
333,313 |
|
|
|
342,072 |
|
****there were certain reclassifications to
conform with the current period presentation
Interim condensed consolidated statement of profit (loss)
and other comprehensive income |
(All amounts are in
millions of Russian rubles) |
|
9 months ended September 30, |
|
|
|
2016 |
|
|
|
2015 |
|
|
|
(unaudited) |
|
(unaudited) |
Continuing
operations |
|
|
|
|
Revenue |
|
|
196,350 |
|
|
|
194,039 |
|
Cost of goods sold |
|
|
(108,274 |
) |
|
|
(114,123 |
) |
Gross
profit |
|
|
88,076 |
|
|
|
79,916 |
|
|
|
|
|
|
|
|
|
|
|
Selling and
distribution expenses |
|
|
(41,237 |
) |
|
|
(39,427 |
) |
Loss on write-off of of
property, plant and equipment |
|
|
(303 |
) |
|
|
(125 |
) |
Impairment of goodwill
and other non-current assets |
|
|
(374 |
) |
|
|
- |
|
Allowance for doubtful
accounts |
|
|
(740 |
) |
|
|
(1,049 |
) |
Taxes other than income
taxes |
|
|
(4,197 |
) |
|
|
(4,471 |
) |
Administrative
and other operating expenses |
|
|
(12,975 |
) |
|
|
(12,941 |
) |
Other operating
income |
|
|
511 |
|
|
|
115 |
|
Total selling,
distribution and operating income and (expenses), net |
|
|
(59,315 |
) |
|
|
(57,898 |
) |
Operating
profit |
|
|
28,761 |
|
|
|
22,018 |
|
|
|
|
|
|
Finance income |
|
|
3,963 |
|
|
|
121 |
|
Finance costs including
fines and penalties on overdue loans and borrowings and finance
leases payments of RUB 5,254 million, RUB 15,883 million for the
periods ended September 30, 2016 and 2015, respectively |
|
|
(43,247 |
) |
|
|
(47,956 |
) |
Foreign exchange gain
(loss), net |
|
|
19,738 |
|
|
|
(43,011 |
) |
Share of profit of
associates |
|
|
22 |
|
|
|
19 |
|
Other income |
|
|
379 |
|
|
|
593 |
|
Other expense |
|
|
(150 |
) |
|
|
(139 |
) |
Total other
income and (expense), net |
|
|
(19,295 |
) |
|
|
(90,373 |
) |
Profit (loss)
before tax from continuing operations |
|
|
9,466 |
|
|
|
(68,355 |
) |
|
|
|
|
|
Income tax expense |
|
|
(2,427 |
) |
|
|
(6,914 |
) |
Profit (loss)
from continuing operations |
|
|
7,039 |
|
|
|
(75,269 |
) |
|
|
|
|
|
Discontinued
operations |
|
|
|
|
(Loss) profit after tax
from discontinued operations, net |
|
|
(343 |
) |
|
|
1,013 |
|
Profit (loss)
for the period |
|
|
6,696 |
|
|
|
(74,256 |
) |
|
|
|
|
|
Attributable
to: |
|
|
|
|
Equity holders of the
parent |
|
|
5,543 |
|
|
|
(74,586 |
) |
Non-controlling
interests |
|
|
1,153 |
|
|
|
330 |
|
|
|
|
|
|
Other
comprehensive income |
|
|
|
|
Other comprehensive
income to be reclassified to profit or loss in subsequent periods,
net of income tax: |
|
|
1,244 |
|
|
|
48 |
|
Exchange differences on
translation of foreign operations |
|
|
1,244 |
|
|
|
40 |
|
Net gain on available
for sale financial assets |
|
|
- |
|
|
|
8 |
|
Other comprehensive
income not to be reclassified to profit or loss in subsequent
periods, net of income tax: |
|
|
- |
|
|
|
7 |
|
Re-measurement gain on
defined benefit plans |
|
|
- |
|
|
|
7 |
|
Other
comprehensive income for the period, net of tax |
|
|
1,244 |
|
|
|
55 |
|
Total
comprehensive income (loss), net of tax |
|
|
7,940 |
|
|
|
(74,201 |
) |
|
|
|
|
|
Attributable
to: |
|
|
|
|
Equity holders of the
parent |
|
|
6,787 |
|
|
|
(74,546 |
) |
Non-controlling
interests |
|
|
1,153 |
|
|
|
345 |
|
Interim condensed consolidated statement of cash
flows |
(All amounts are in
millions of Russian rubles) |
|
9 months ended September 30, |
|
|
|
2016 |
|
|
|
2015 |
|
|
|
(unaudited) |
|
(unaudited) |
Cash Flows from
Operating Activities |
|
|
|
|
Net profit (loss) |
|
|
6,696 |
|
|
|
(74,256 |
) |
Loss (profit) after tax
from discontinued operations, net |
|
|
343 |
|
|
|
(1,013 |
) |
Net profit
(loss) from continuing operations |
|
|
7,039 |
|
|
|
(75,269 |
) |
Adjustments to
reconcile net profit (loss) from continuing operations to net cash
provided by operating activities: |
|
|
|
|
Depreciation |
|
|
8,607 |
|
|
|
8,976 |
|
Depletion and
amortization |
|
|
1,415 |
|
|
|
1,277 |
|
Foreign exchange gain
(loss), net |
|
|
(19,738 |
) |
|
|
43,011 |
|
Deferred income
taxes |
|
|
2,632 |
|
|
|
6,882 |
|
Allowance for doubtful
accounts |
|
|
740 |
|
|
|
1,049 |
|
Write-off of accounts
receivable |
|
|
80 |
|
|
|
122 |
|
Write-off of
inventories to net realisable value |
|
|
292 |
|
|
|
684 |
|
Revision in estimated
cash flows of rehabilitation provision |
|
|
(44 |
) |
|
|
(40 |
) |
Loss on write-off of
property, plant and equipment |
|
|
303 |
|
|
|
125 |
|
Impairment of goodwill
and other non-current assets |
|
|
374 |
|
|
|
- |
|
Loss (gain) on sale of
property, plant and equipment |
|
|
29 |
|
|
|
(70 |
) |
Gain on sale of
investments |
|
|
(130 |
) |
|
|
- |
|
Gain on write-off of
accounts payable with expired legal term |
|
|
(61 |
) |
|
|
(159 |
) |
Pension service cost
and actuarial loss, other expenses |
|
|
124 |
|
|
|
126 |
|
Finance income |
|
|
(3,963 |
) |
|
|
(121 |
) |
Finance costs,
including fines and penalties on overdue loans and borrowings and
finance leases payments |
|
|
43,247 |
|
|
|
47,956 |
|
Other |
|
|
159 |
|
|
|
458 |
|
Changes in working
capital items: |
|
|
|
|
Trade and other
receivables |
|
|
(3,633 |
) |
|
|
1,743 |
|
Inventories |
|
|
(430 |
) |
|
|
3,040 |
|
Trade and other
payables |
|
|
(3,419 |
) |
|
|
(2,593 |
) |
Advances received |
|
|
(51 |
) |
|
|
(1,110 |
) |
Taxes payable and other
current liabilities |
|
|
644 |
|
|
|
(463 |
) |
Other current
assets |
|
|
349 |
|
|
|
358 |
|
Income tax paid |
|
|
(1,364 |
) |
|
|
(1,086 |
) |
Net operating cash
flows of discontinued operations |
|
|
(436 |
) |
|
|
177 |
|
Net cash
provided by operating activities |
|
|
32,765 |
|
|
|
35,073 |
|
|
|
|
|
|
Cash Flows from
Investing Activities |
|
|
|
|
Monthly installments
for acquisition of DEMP |
|
|
(3,636 |
) |
|
|
(3,557 |
) |
Proceeds from disposal
of securities |
|
|
3 |
|
|
|
143 |
|
Loans issued and other
investments |
|
|
(5 |
) |
|
|
(22 |
) |
Interest received |
|
|
25 |
|
|
|
61 |
|
Proceeds from disposal
of subsidiaries |
|
|
227 |
|
|
|
168 |
|
Proceeds from loans
issued |
|
|
20 |
|
|
|
10 |
|
Proceeds from disposals
of property, plant and equipment |
|
|
156 |
|
|
|
301 |
|
Purchases of property,
plant and equipment |
|
|
(2,398 |
) |
|
|
(3,143 |
) |
Interest paid,
capitalized |
|
|
(459 |
) |
|
|
(679 |
) |
Net cash used
in investing activities |
|
|
(6,067 |
) |
|
|
(6,718 |
) |
|
|
|
|
|
Cash Flows from
Financing Activities |
|
|
|
|
Proceeds from loans and
borrowings |
|
|
4,133 |
|
|
|
2,515 |
|
Repayment of loans and
borrowings |
|
|
(37,922 |
) |
|
|
(9,641 |
) |
Interest paid,
including fines and penalties |
|
|
(25,756 |
) |
|
|
(19,412 |
) |
Dividends paid |
|
|
(5 |
) |
|
|
(4 |
) |
Dividends paid to
non-controlling interest |
|
|
(2 |
) |
|
|
(1 |
) |
Proceeds from disposal
of non-controlling interest in subsidiaries with put option granted
to non-controlling interest shareholders |
|
|
34,300 |
|
|
|
- |
|
Repayment of
obligations under finance lease |
|
|
(1,868 |
) |
|
|
(1,531 |
) |
Net cash used
in financing activities |
|
|
(27,120 |
) |
|
|
(28,074 |
) |
|
|
|
|
|
Effect of exchange rate
changes on cash and cash equivalents |
|
|
(122 |
) |
|
|
(1,075 |
) |
|
|
|
|
|
Net decrease in
cash and cash equivalents |
|
|
(544 |
) |
|
|
(794 |
) |
|
|
|
|
|
Cash and cash
equivalents at the beginning of period |
|
|
3,079 |
|
|
|
3,983 |
|
Cash and cash
equivalents net of overdrafts at the beginning of
period |
|
|
891 |
|
|
|
1,344 |
|
Cash and cash
equivalents at the end of period |
|
|
2,350 |
|
|
|
2,377 |
|
Cash and cash
equivalents net of overdrafts at the end of
period |
|
|
347 |
|
|
|
550 |
|
Alexey Lukashov
Director of Investor Relations
Mechel PAO
Phone: 7-495-221-88-88
Fax: 7-495-221-88-00
alexey.lukashov@mechel.com
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