OREANDA-NEWS. June 24, 2013. Mechel (NYSE: MTL), a leading Russian mining and steel group, today announced financial results for the 1Q 2013.
 
Evgeny Mikhel, Mechel Chief Executive Officer, commented on the 1Q 2013 financial results:

“The first quarter was marked by an important step forward toward optimizing Mechel’s asset structure. We disposed of Romanian steelmaking assets, which did not fit into the company’s reviewed strategy and had a negative impact on our financial results. We expect that the sale of loss-making steel enterprises will have a positive influence on the economics of the steel division and the Group as a whole in the medium-term already.”

“As a whole, in the reported period the company demonstrated a marked improvement of its financial results as compared to the previous period. We made operational profit and saw a noticeable increase in EBITDA. This became possible due to a pick-up in the steel raw materials market seen in the beginning of this year, despite a seasonal correction in the steel products markets.

Unfavorable price trends, observed since early this year, make undoubted pressure on the market players’ financial results. At the same time, we are certain that optimizing the asset structure, debt portfolio and control over expenditure and investment will enable Mechel to successfully go through the market slowdown.”

Recent Highlights

In April, Mechel announced signing a memorandum of understanding with Baosteel Resources Int. Co. Ltd. The memorandum stipulates that Mechel OAO, through its subsidiary Mechel Carbon Singapore will supply Baosteel Resources with up to 960,000 tonnes of coking coal annually. The price will be corrected monthly.

In April, Mechel announced the resolutions of Mechel OAO’s Board of Directors to convene the Annual General Shareholders’ Meeting of Mechel OAO on June 28, 2013, to approve the agenda for the Annual General Shareholders’ Meeting, to prepare the list of the shareholders eligible to take part in the Annual General Shareholders’ Meeting based on the data in the Shareholders’ Register as of May 17, 2013.

In April, Mechel announced signing several loan agreements with Gazprombank OAO totaling 1 billion US dollars.

In April, Mechel announced its Board’s dividend recommendation to the annual general shareholders’ meeting regarding the payment of dividends based upon the results of the 2012 fiscal year:

In April, Mechel announced that its mining division's trading subsidiary Mechel Carbon (Singapore) Pte. Ltd. has signed a three-year contract with South Korea's POSCO corporation for supply of coking coal.  The agreement, signed on April 30, 2013, stipulates that Mechel Carbon (Singapore) will supply POSCO with 500,000 tonnes of coking coal per year. Besides that, Mechel Carbon also signed with POSCO a one-year contract for supply of 200,000 tonnes of PCI coal in 2013.

In May, Mechel announced that successful hot testing was held at the complex of Chelyabinsk Metallurgical Plant’s universal rolling mill.

In June, Mechel announced signing a coking coal supply agreement with China’s Shasteel Group. According to the signed agreement, Mechel Carbon (Singapore), trading subsidiary of Mechel OAO’s mining division, will directly supply Shasteel Group with 40,000 to 80,000 tonnes of coking coal a month from Russian Far East ports, starting from June 2013. Coking coal prices will be determined on a monthly basis.

In June, Mechel reported that hot testing of rail rolls production at Chelyabinsk Metallurgical Plant’s universal rolling mill has begun.

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Financial Position
 
Capital expenditure on property, plant and equipment and acquisition of mineral licenses for the 1Q 2013 amounted to USD172.4 million, of which USD 101.7 million was invested in the mining segment, USD 60.2 million was invested in the steel segment, USD 7.0 million was invested in the ferroalloy segment and USD 3.5 million was invested in the power segment.
 
As of March 31, 2013, total debt was USD 9.3 billion. Cash and cash equivalents amounted to USD 170 million and net debt amounted to USD 9.2 billion (net debt is defined as total debt outstanding less cash and cash equivalents) at end of 1Q 2013.
 
The management of Mechel will host a conference call today at 10:00 a.m. New York time (3:00 p.m. London time, 6:00 p.m. Moscow 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.