Mechel Reports 2014 Operational Results
April 28 2015 - 3:45AM
Mechel OAO (MICEX:MTLR) (NYSE:MTL)
, one of
the leading Russian mining and metals companies, announces 2014
operational results.
Production and sales for
2014
Production:
Product Name |
2014, thousand tonnes |
2013, thousand tonnes |
% |
4Q2014, thousand
tonnes |
3Q2014, thousand
tonnes |
% |
Run-of-Mine Coal |
22,624 |
27,516 |
-18 |
5,617 |
5,810 |
-3 |
|
Pig Iron |
3,946 |
3,743 |
+5 |
1,036 |
1,010 |
+3 |
|
Steel |
4,269 |
4,650 |
-8 |
1,087 |
1,055 |
+3 |
|
Sales: |
|
|
|
|
|
|
Product Name |
2014, thousand tonnes |
2013, thousand tonnes |
% |
4Q2014, thousand
tonnes |
3Q2014, thousand
tonnes |
% |
Coking coal concentrate |
10,140 |
11,051 |
-8 |
2,360 |
2,427 |
-3 |
|
PCI |
3,063 |
3,308 |
-7 |
620 |
820 |
-24 |
|
Anthracites |
2,107 |
2,202 |
-4 |
581 |
525 |
+11 |
|
Steam coal |
5,958 |
5,898 |
+1 |
1,790 |
1,640 |
+9 |
|
Iron ore concentrate |
3,120 |
4,166 |
-25 |
615 |
619 |
-1 |
|
Coke |
3,233 |
2,976 |
+9 |
913 |
830 |
+10 |
|
Ferrosilicon |
87 |
94 |
-7 |
22 |
23 |
-4 |
|
Flat products |
451 |
586 |
-23 |
119 |
105 |
+13 |
|
Long products |
2,960 |
3,541 |
-16 |
678 |
695 |
-2 |
|
Billets |
117 |
690 |
-83 |
37 |
19 |
+95 |
|
Hardware |
766 |
852 |
-10 |
183 |
200 |
-9 |
|
Forgings |
53 |
69 |
-21 |
13 |
15 |
-13 |
|
Stampings |
84 |
102 |
-18 |
20 |
20 |
0 |
|
Electric power generation (thousand
kWh) |
3,682,128 |
3,972,285 |
-7 |
1,084,708 |
732,043 |
+48 |
|
Heat power generation
(Gcal) |
5,106,092 |
6,694,467 |
-9 |
1,940,860 |
790,268 |
+146 |
Mechel OAO's Chief Executive Officer Oleg Korzhov commented on
the 2014 operational results:
"In the past year Mechel Group's enterprises operated as prices
for our key products hit their minimum, with a lack of trade
working capital and sweeping cost cuts, as a significant share of
our earnings were used to service our debt. We currently continue
talks with banks on restructuring our debt, which we hope to
complete shortly. Nevertheless, in the mining segment we began
restoring our operational results which slumped with the halting of
Mechel Bluestone, by increasing production at the Elga deposit. We
improved the operation and sales planning system for our steel
products and also increased our own output of high value-added
products while decreasing sales of third-party products.
"The 18-percent decrease in coal production last year was due
largely to the halting of Mechel Bluestone as well as a decrease in
mining at Southern Kuzbass Coal Company, which was linked to our
program of cutting down stockpiles. Meanwhile we attained a
significant increase in coal mining at Elga Coal Complex (over 1.2
million tonnes).
"Despite the volatility at global and domestic markets, sales of
coking coal produced by Mechel's Russian-based enterprises
increased by nearly 3% year-on-year due to exports to high-margin
markets of Japan and South Korea, and topped 10 million tonnes.
"The 7-percent decrease in PCI coal sales in 2014 was due to a
slump in the global market of metallurgical coals. In 2014, we
shifted the focus of our sales from Europe and South America to
Asia Pacific — PCI exports to Asia Pacific went up by 0.5 million
to reach 1.9 million tonnes. The 4-percent decrease in anthracite
sales in 2014 is due to a minor decrease in demand from Asian
countries. Meanwhile, in order to cut down operational costs in
this reporting period, we increased anthracite supplies to
Chelyabinsk Metallurgical Plant's sintering operations.
"The decrease in steam coal sales from Mechel Bluestone in 2014
was fully compensated for by an increase in shipments of Elga steam
coal. As a result, the overall sales went up by 1%. Export sales
went up by 1 million tonnes to reach 1.9 million tonnes, primarily
thanks to China.
"The growth of iron ore concentrate sales in the 4Q2014 as
compared to the previous quarter was due to high demand from
Chinese enterprises.
"The Group's steel segment as a result of 2014 mostly maintained
its production volumes — pig iron production went up by 5%, steel
production went down by 8% mostly due to a decrease in electric
furnace steel production at Chelyabinsk Metallurgical Plant and
Izhstal. Thus, in 2014 we decreased sales of low-profit products to
third parties, taking necessary steps toward increasing billet
supplies to the segment's enterprises. As a whole, we managed to
greatly increase the segment's profitability, partly due to record
low prices for coking coal and iron ore, which are the main raw
materials for steelmaking.
"The decrease in overall sales of flat and long rolls produced
by third parties in 2014 was due to the closure of several Mechel
Service Global subsidiaries in Europe. At the same time, sales of
our own products increased — flat rolls by 7% and long rolls by
3%.
"In 2014, we sold domestically over 120,000 tonnes of products
manufactured by the universal rolling mill, including rails. As of
now, the mill has mastered production of 18 shapes, and in 2015 we
plan to significantly increase the universal rolling mill's range
of high value-added products. I would like to note that our
R65-type rails currently continue to undergo the trials at Russian
Railways OAO's experimental rail ring, and we expect this stage to
be completed in May.
"In 2014, the demand for stampings and forgings went down which
had a negative impact on our sales of these products (-17% and -21%
accordingly).
"Sales of Bratsk Ferroalloy Plant's products to the Group's
enterprises and third parties went down by 7% due to scheduled
major repairs at the plant's facilities. Domestic ferrosilicon
prices have meanwhile demonstrated a positive trend in 2014.
"In our power segment, the chief reason for a 7-percent decrease
in electricity production year-on-year was due to scheduled repairs
at Southern Kuzbass Power Plant. The 9-percent decrease in heat
production was due to our disposal of power facilities in the
Chelyabinsk Region in late 2013."
Mechel is an international mining and steel company which
employs over 70,000 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.
CONTACT: Mechel OAO
Ekaterina Videman
Tel: + 7 495 221 88 88
ekaterina.videman@mechel.com
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