Revenue amounted to $6.4
billion
Consolidated
EBITDA(a)* amounted to $709
million
Net loss attributable to
shareholders of Mechel OAO amounted to $4.3 billion
Mechel OAO (MICEX:MTLR) (NYSE:MTL), a
leading Russian mining and steel group, announces financial results
for the full year 2014.
Mechel OAO's Chief Executive Officer Oleg Korzhov commented on
the full year 2014 results:
"In 2014 all of Mechel's enterprises demonstrated operating
income and maintained the Group's EBITDA at the previous year's
level, though the 2014 average annual coking coal and iron ore
prices on international markets went down by 20% and 30%
accordingly year-on-year. The program of optimizing our asset
portfolio, which we are implementing, has enabled us to increase
our EBITDA margin from 8.6% in 2013 to 11.1% in 2014, reaching
15.9% in 4Q2014 — which is our best result over the past 10
quarters".
"In the end of 2014, the macroeconomic situation has drastically
changed. Ruble depreciation led to the 23% decrease of the dollar
denominated debt over the accounting period from $8.76 billion to
$6.77 billion and a significant increase in our export sales
profitability — as our adjusted operating income went up by 27% in
4Q2014 as compared to 3Q2014 to reach $157 million. Today Mechel is
one of the world's most efficient coal producers in terms of
production costs, which will enable us to go through the period of
low commodity prices with relative calm".
"The downside of our asset disposal process and national
currency devaluation was the decrease of the Group's revenue by 25%
and a major paper loss of $4.3 billion, which includes $1.5 billion
in asset sale related write-offs and $2.4 billion of foreign
exchange loss.
In 2014, the company launched talks on debt restructuring with
our lenders. As we have not yet reached an agreement with lenders,
our debt was re-classified as short-term. The company's management
is making every effort to resolve our debt issue as soon as
possible".
Consolidated Results For The Full Year 2014
US$
mln. |
FY 2014 |
FY 2013 |
% |
4Q'14 |
3Q'14 |
% |
Revenue from external
customers |
6,406 |
8,506 |
-25% |
1,384 |
1,585 |
-13% |
Adjusted operating
income |
327 |
290 |
13% |
157 |
124 |
27% |
EBITDA (a) |
709 |
732 |
-3% |
220 |
227 |
-3% |
EBITDA (a),
margin |
11.1% |
8.6% |
|
15.9% |
14.3% |
|
Net loss attributable
to shareholders of Mechel OAO |
(4,335) |
(2,928) |
48% |
(3,113) |
(575) |
441% |
Adjusted net (loss)/
income |
(144) |
(527) |
73% |
134 |
17 |
688% |
Net debt (excluding
finance lease liabilities) |
6,774 |
8,758 |
-23% |
6,774 |
7,822 |
-13% |
Trade working
capital |
(442) |
707 |
-163% |
(442) |
(92) |
380% |
- Over 2014, the Group's gross margin was 37%. In 4Q2014, gross
margin went up from 37% in 3Q2014 to 44% in 4Q2014.
- Adjusted operating income in 2014 was $126 million, compared to
$657 million operating loss in 2013.
- EBITDA (a) in 2014 went down by 3% year-on-year. Considering
the 25% year-on-year decrease in revenue, our EBITDA(a) margin
reached 11%. EBITDA (a) margin in 4Q2014 reached 15.9%.
- As of December 31, 2014, our net debt, excluding financial
lease obligations, amounted to $6.77 billion. In 4Q2014, net debt
went down by 13%, largely due to ruble devaluation.
- In 2014, our trade working capital went down by $1.15
billion.
Mining Segment
Mechel Mining Management OOO's Chief Executive Officer Pavel
Shtark noted:
"A major weakening of steelmaking materials markets was
characteristic of the past year. Contract prices for hard coking
coal at the global market went down from $152 FOB in 4Q2013 to $120
FOB in 2Q2014 and remained at this level with minor fluctuations
until the end of the year. The iron ore market suffered an even
worse price slump."
"We have cushioned the influence of the iron ore market's
negative dynamics by redirecting supplies of Korshunov Mining Plant
iron ore to intra-Group consumption. The increase in coke demand
and prices enabled us to increase the share of coking coal
processed within the segment, increase the capacity utilization of
our coke-producing facilities and increase the profitability of our
saleable products. Ruble devaluation as well as seasonal factors
and our ongoing process of cost optimization led to a significant
decrease of production costs at practically every facility. As a
result, we demonstrated a higher EBITDA margin from quarter to
quarter. The exclusion of Mechel Bluestone's negative influence
from our results, as well as the beginning of large-scale coal
mining and processing at the Elga deposit had their positive impact
on the EBITDA as well."
US$
mln. |
FY 2014 |
FY 2013 |
% |
4Q'14 |
3Q'14 |
% |
Revenue from external
customers |
2,087 |
2,619 |
-20% |
483 |
489 |
-1% |
Revenue
intersegment |
553 |
525 |
5% |
106 |
144 |
-26% |
EBITDA(a) |
338 |
500 |
-32% |
87.1 |
87.3 |
-0.2% |
EBITDA (a),
margin(4) |
12.8% |
15.9% |
|
14.8% |
13.8% |
|
- The decrease in production costs on most of our products helped
the growth of EBITDA(a) margin quarter by quarter throughout the
year.
- As a result of the year, the segment demonstrated an adjusted
net income of $56 million as compared to last year's adjusted net
loss of $217 million.
- The export share in segment sales grew to 81% in 4Q2014, which
is significantly exceeding the export share of 70% in 3Q2014 and
the average export share of 73% in 2014.
Steel Segment
Mechel Steel Management Company OOO's Chief Executive Officer
Vladimir Tytsky noted:
"In the second half of last year, became apparent the
positive effect of the company's efforts to optimize the segment's
production and sales structure, of Chelyabinsk Metallurgical
Plant's universal rolling mill launch, as well as of the incoming
commodities price slump and a stronger market yield. The weaker
ruble had its positive impact on the dollar-nominated production
costs, but the same factor proved a negative influence on the
segment's largely ruble-nominated revenue when converted into US
dollars."
"Optimization of the asset structure, as well as a weaker ruble
exchange rate, led to a decrease in the segment's revenue in 2014
by nearly a third year-on-year. At the same time, EBITDA went up by
65% year-on-year and EBITDA margin reached 8.6% over the accounting
period, exceeding 15% in 4Q2014."
"The segment's project which is key to perspective of further
development — the universal rolling mill — has produced and shipped
off over 120,000 tonnes of product last year. This year, the mill
will continue to master new types of products. By the end of 2015,
the mill is due to master production of over 20 new
profiles."
US $ mln. |
FY 2014 |
FY 2013 |
% |
4Q'14 |
3Q'14 |
% |
Revenue from external
customers |
3,644 |
5,132 |
-29% |
740 |
948 |
-22% |
Revenue
intersegment |
213 |
240 |
-11% |
41 |
46 |
-11% |
EBITDA(a) |
333 |
202 |
65% |
120 |
138 |
-13% |
EBITDA(a),
margin |
8.6% |
3.8% |
|
15.4% |
13.9% |
|
- As result of asset optimization, gross margin went up to 21% in
2014 from 16% in 2013.
- The adjusted operating income in 4Q2014 continued to grow (8%
as compared to 3Q2014) and amounted to $201 million as a result of
2014, which is 7 times more than the 2013 result.
Power Segment
Mechel-Energo OOO's Chief Executive Officer Pyotr Pashnin
noted:
"In the past year, the segment demonstrated stable work. We
ensured reliable supply of electricity and heat to our customers,
performed requisite repairs and organized more efficient load of
our facilities. This enables us to expect an increase in
operational results in 2015. Negative dynamics in some financial
results in 2014 as compared to 2013, when accounted in US dollars,
is due to the weakening of the ruble."
US $ mln. |
FY 2014 |
FY 2013 |
% |
4Q'14 |
3Q'14 |
% |
Revenue from external
customers |
675 |
755 |
-11% |
161 |
148 |
9% |
Revenue
intersegment |
357 |
436 |
-18% |
76 |
86 |
-12% |
EBITDA(a) |
25 |
33 |
-24% |
12 |
(7) |
-271% |
EBITDA(a),
margin(4) |
2.4% |
2.8% |
|
5.1% |
-3.0% |
|
- Revenue in 2014 demonstrated growth in rubles as compared to
2013, but due to a currency exchange rate change, dollar
denominated dynamics is negative.
- Positive dynamics of our quarter-to-quarter results was due
primarily to seasonal growth of production and sales.
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.
*Please find the calculation of the EBITDA(a) and other measures
used here and hereafter in Attachment A
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 FY 2014
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 |
31.12.2014 |
31.12.2013 |
31.12.2014 |
30.09.2014 |
Short-term borrowings and current portion of
long-term debt |
6,678 |
1,479 |
6,678 |
7,607 |
Long-term debt, net of current portion |
167 |
7,513 |
167 |
237 |
Derivative instruments |
-- |
39 |
-- |
49 |
less Cash and cash equivalents |
(71) |
(273) |
(71) |
(71) |
Net debt, excluding finance
lease liabilities |
6,774 |
8,758 |
6,774 |
7,822 |
|
|
|
|
|
US $ mln |
31.12.2014 |
31.12.2013 |
31.12.2014 |
30.09.2014 |
Accounts receivable, net of allowance for
doubtful accounts |
330 |
588 |
330 |
471 |
Due from related parties, net of
allowance |
9 |
57 |
9 |
40 |
Inventories |
642 |
1,408 |
642 |
867 |
Prepayments and other current
assets |
238 |
439 |
238 |
303 |
Trade current
assets |
1,219 |
2,492 |
1,219 |
1,681 |
|
|
|
|
|
Trade payable to vendors of goods and
services |
537 |
929 |
537 |
791 |
Advances received |
82 |
141 |
82 |
109 |
Accrued expenses and other current
liabilities |
812 |
343 |
812 |
476 |
Taxes and social charges payable |
215 |
265 |
215 |
360 |
Due to related parties |
15 |
107 |
15 |
37 |
Trade current
liabilities |
1,661 |
1,785 |
1,661 |
1,773 |
|
|
|
|
|
Trade working
capital |
(442) |
707 |
(442) |
(92) |
Adjusted EBITDA can be reconciled to our consolidated statements
of operations as follows:
|
Consolidated
results |
Mining segment
** |
Steel
segment** |
Power
segment** |
US $ thousand |
12m 2014 |
12m 2013 |
12m 2014 |
12m 2013 |
12m 2014 |
12m 2013 |
12m 2014 |
12m 2013 |
Net loss |
(4,335,426) |
(2,928,014) |
(3,315,824) |
(369,014) |
(1,002,211) |
(2,465,035) |
(29,997) |
(91,019) |
Add: |
|
|
|
|
|
|
|
|
Depreciation, depletion and amortization |
370,544 |
425,282 |
228,628 |
260,233 |
133,552 |
155,539 |
8,364 |
9,510 |
Foreign exchange loss / (gain) |
2,396,123 |
164,768 |
1,728,376 |
109,268 |
675,595 |
55,591 |
(7,848) |
(91) |
Interest expense |
793,228 |
740,601 |
388,254 |
380,124 |
402,729 |
372,539 |
31,062 |
37,736 |
Interest income |
(2,398) |
(7,330) |
(19,933) |
(47,267) |
(10,040) |
(9,797) |
(1,242) |
(64) |
Net result on the disposal of non-current
assets, impairment of goodwill and long-lived assets and provision
for amounts due from related parties |
174,011 |
946,058 |
9,194 |
26,056 |
156,011 |
878,679 |
8,803 |
41,323 |
Loss / (income) from discontinued operation,
net of income tax |
1,473,780 |
1,218,097 |
1,480,349 |
35,777 |
(21,635) |
1,158,228 |
15,066 |
24,092 |
Result of disposed companies (incl. the
result from their disposal) |
-- |
88,445 |
-- |
-- |
-- |
91,178 |
-- |
(2,732) |
Net (loss) / gain attributable to
noncontrolling interests |
(24,308) |
5,047 |
(23,456) |
19,142 |
(4,089) |
(17,502) |
3,238 |
3,407 |
Income taxes |
(183,908) |
79,092 |
(166,491) |
85,208 |
(14,158) |
(17,024) |
(3,259) |
10,908 |
Other one-off items |
47,046 |
-- |
29,019 |
-- |
16,869 |
-- |
1,158 |
-- |
Adjusted EBITDA |
708,692 |
732,046 |
338,116 |
499,527 |
332,623 |
202,398 |
25,345 |
33,070 |
Adjusted EBITDA, margin |
11% |
9% |
13% |
16% |
9% |
4% |
2% |
3% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
US $ thousand |
12m 2014 |
12m 2013 |
12m 2014 |
12m 2013 |
12m 2014 |
12m 2013 |
12m 2014 |
12m 2013 |
Net loss |
(4,335,426) |
(2,928,014) |
(3,315,824) |
(369,014) |
(1,002,211) |
(2,465,035) |
(29,997) |
(91,019) |
Add: |
|
|
|
|
|
|
|
|
Impairment of goodwill and long-lived
assets |
120,237 |
215,727 |
-- |
5,658 |
120,237 |
181,925 |
-- |
28,144 |
Provision for amounts due from related
parties |
41,425 |
714,181 |
3,093 |
1,566 |
32,999 |
699,829 |
5,333 |
12,786 |
Loss / (income) from discontinued operation,
net of income tax |
1,473,780 |
1,218,097 |
1,480,349 |
35,777 |
(21,635) |
1,158,228 |
15,066 |
24,092 |
Result of disposed companies (incl. the
result from their disposal) |
-- |
88,445 |
-- |
-- |
-- |
91,178 |
-- |
(2,732) |
Effect on net (loss) / income attributable to
noncontrolling interests |
(18,040) |
(496) |
(1) |
-- |
(17,949) |
(496) |
(89) |
-- |
Foreign exchange loss / (gain) |
2,396,123 |
164,768 |
1,728,376 |
109,268 |
675,595 |
55,591 |
(7,848) |
(91) |
Accrual of income taxes for 2009-2010 |
131,250 |
-- |
131,250 |
-- |
-- |
-- |
-- |
-- |
Other one-off items |
47,046 |
-- |
29,019 |
-- |
16,869 |
-- |
1,158 |
-- |
Adjusted net (loss) / income, net of
income tax |
(143,605) |
(527,292) |
56,262 |
(216,745) |
(196,095) |
(278,780) |
(16,377) |
(28,820) |
|
|
|
|
|
|
|
|
|
Operating income /
(loss) |
126,428 |
(656,757) |
63,682 |
211,895 |
42,120 |
(853,059) |
8,018 |
(12,644) |
Add: |
|
|
|
|
|
|
|
|
Impairment of goodwill and long-lived
assets |
120,237 |
215,727 |
-- |
5,658 |
120,237 |
181,925 |
-- |
28,144 |
Provision for amounts due from related
parties |
41,425 |
714,181 |
3,093 |
1,566 |
32,999 |
699,829 |
5,333 |
12,786 |
Loss on write-off of property, plant and
equipment |
17,395 |
17,254 |
8,560 |
16,358 |
5,975 |
896 |
2,860 |
-- |
Other one-off items |
21,439 |
-- |
21,439 |
-- |
-- |
-- |
-- |
-- |
Adjusted operating income /
(loss) |
326,924 |
290,405 |
96,774 |
235,477 |
201,331 |
29,591 |
16,211 |
28,286 |
|
|
|
|
|
|
|
|
|
** including intersegment
operations |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Consolidated
results |
Mining segment
** |
Steel
segment** |
Power
segment** |
US $ thousand |
4Q 2014 |
3Q 2014 |
4Q 2014 |
3Q 2014 |
4Q 2014 |
3Q 2014 |
4Q 2014 |
3Q 2014 |
Net loss |
(3,112,818) |
(574,659) |
(2,456,971) |
(426,581) |
(641,884) |
(144,742) |
(14,662) |
(12,453) |
Add: |
|
|
|
|
|
|
|
|
Depreciation, depletion and amortization |
70,007 |
100,158 |
44,454 |
61,607 |
23,920 |
36,371 |
1,633 |
2,179 |
Foreign exchange loss / (gain) |
1,661,398 |
551,382 |
1,204,665 |
402,058 |
461,610 |
151,275 |
(4,877) |
(1,950) |
Interest expense |
222,471 |
194,012 |
96,772 |
98,325 |
125,019 |
95,751 |
5,339 |
7,343 |
Interest income |
290 |
(1,467) |
(3,580) |
(6,441) |
(756) |
(1,832) |
(34) |
(601) |
Net result on the disposal of non-current
assets, impairment of goodwill and long-lived assets and provision
for amounts due from related parties |
151,855 |
11,728 |
4,047 |
5,489 |
139,366 |
5,934 |
8,441 |
305 |
Loss / (income) from discontinued operation,
net of income tax |
1,429,974 |
32,493 |
1,428,538 |
32,214 |
(12,087) |
159 |
13,523 |
120 |
Result of disposed companies (incl. the
result from their disposal) |
-- |
-- |
-- |
-- |
-- |
-- |
-- |
-- |
Net (loss) / gain attributable to
noncontrolling interests |
(28,311) |
2,116 |
(18,779) |
(2,811) |
(9,916) |
4,009 |
384 |
918 |
Income taxes |
(198,421) |
(88,485) |
(219,628) |
(76,519) |
20,540 |
(8,665) |
665 |
(3,301) |
Other one-off items |
23,222 |
(1) |
7,581 |
-- |
14,485 |
(1) |
1,156 |
-- |
Adjusted EBITDA |
219,667 |
227,277 |
87,100 |
87,341 |
120,297 |
138,259 |
11,568 |
(7,440) |
Adjusted EBITDA, margin |
16% |
14% |
15% |
14% |
15% |
14% |
5% |
-3% |
|
|
|
|
|
|
|
|
|
US $ thousand |
4Q 2014 |
3Q 2014 |
4Q 2014 |
3Q 2014 |
4Q 2014 |
3Q 2014 |
4Q 2014 |
3Q 2014 |
Net loss |
(3,112,818) |
(574,659) |
(2,456,971) |
(426,581) |
(641,884) |
(144,742) |
(14,662) |
(12,453) |
Add: |
|
|
|
|
|
|
|
|
Impairment of goodwill and long-lived
assets |
120,237 |
-- |
-- |
-- |
120,237 |
-- |
-- |
-- |
Provision for amounts due from related
parties |
25,827 |
6,948 |
2,676 |
(206) |
18,046 |
6,974 |
5,105 |
179 |
Loss / (income) from discontinued operation,
net of income tax |
1,429,974 |
32,493 |
1,428,538 |
32,214 |
(12,087) |
159 |
13,523 |
120 |
Result of disposed companies (incl. the
result from their disposal) |
-- |
-- |
-- |
-- |
-- |
-- |
-- |
-- |
Effect on net (loss) / income attributable to
noncontrolling interests |
(13,817) |
1,242 |
2 |
-- |
(13,822) |
1,242 |
3 |
-- |
Foreign exchange loss / (gain) |
1,661,398 |
551,382 |
1,204,665 |
402,058 |
461,610 |
151,275 |
(4,877) |
(1,950) |
Accrual of income taxes for 2009-2010 |
-- |
-- |
-- |
-- |
-- |
-- |
-- |
-- |
Other one-off items |
23,222 |
(1) |
7,581 |
-- |
14,485 |
(1) |
1,156 |
-- |
Adjusted net (loss) / income, net of
income tax |
134,023 |
17,405 |
186,491 |
7,485 |
(53,415) |
14,907 |
248 |
(14,104) |
Operating (loss) /
income |
(2,568) |
113,843 |
38,121 |
20,294 |
(42,165) |
94,724 |
770 |
(10,291) |
Add: |
|
|
|
|
|
|
|
|
Impairment of goodwill and long-lived
assets |
120,237 |
-- |
-- |
-- |
120,237 |
-- |
-- |
-- |
Provision for amounts due from related
parties |
25,827 |
6,948 |
2,676 |
(206) |
18,046 |
6,974 |
5,105 |
179 |
Loss on write-off of property, plant and
equipment |
13,117 |
2,770 |
6,000 |
2,414 |
4,257 |
357 |
2,860 |
-- |
Other one-off items |
-- |
-- |
-- |
-- |
-- |
-- |
-- |
-- |
Adjusted operating income /
(loss) |
156,613 |
123,561 |
46,797 |
22,502 |
100,375 |
102,055 |
8,735 |
(10,112) |
|
|
|
|
|
|
|
|
|
** including intersegment
operations |
|
Consolidated Balance
Sheets |
(in thousands of U.S. dollars,
except share amounts) |
|
|
December 31, 2014 |
December 31,
2013 |
ASSETS |
|
|
Cash and cash equivalents |
$ 70,800 |
$ 272,936 |
Accounts receivable, net of allowance for
doubtful accounts of $68,493 in 2014 and $81,803 in 2013 of $68,493
in 2014 and $81,803 in 2013 |
330,371 |
587,999 |
Due from related parties, net of allowance
of $1,458,296 in 2014 and $1,623,661 in 2013 |
9,303 |
56,792 |
Inventories |
640,671 |
1,407,868 |
Deferred income taxes |
91,223 |
25,092 |
Current assets of discontinued
operations |
151,602 |
25,159 |
Prepayments and other current assets |
238,314 |
439,624 |
Total current assets |
1,532,284 |
2,815,470 |
|
|
|
Long-term investments in related parties |
6,142 |
7,604 |
Other long-term investments |
4,060 |
14,787 |
Property, plant and equipment, net |
3,944,427 |
6,726,116 |
Mineral licenses, net |
719,951 |
1,293,470 |
Other non-current assets |
30,453 |
127,861 |
Deferred income taxes |
72,966 |
5,066 |
Goodwill |
403,207 |
687,763 |
Non-current assets of discontinued
operations |
-- |
2,156,373 |
Total assets |
6,713,490 |
13,834,510 |
|
|
|
LIABILITIES AND EQUITY |
|
|
Short-term borrowings and current portion of
long-term debt |
6,678,549 |
1,478,154 |
Accounts payable and accrued expenses: |
|
|
Trade payable to vendors of
goods and services |
537,004 |
929,375 |
Advances received |
81,599 |
140,919 |
Accrued expenses and other
current liabilities |
811,345 |
343,457 |
Taxes and social charges
payable |
215,251 |
264,861 |
Unrecognized income tax
benefits |
31,444 |
78,332 |
Due to related parties |
15,494 |
106,943 |
Asset retirement obligations, current
portion |
3,478 |
2,001 |
Deferred income taxes |
7,893 |
37,775 |
Current liabilities of discontinued
operations |
150,033 |
57,781 |
Pension obligations, current portion |
18,656 |
18,578 |
Dividends payable |
1,843 |
3,293 |
Finance lease liabilities, current
portion |
270,980 |
122,754 |
Total current
liabilities |
8,823,569 |
3,584,223 |
|
|
|
Long-term debt, net of current portion |
166,532 |
7,513,277 |
Asset retirement obligations, net of current
portion |
43,712 |
50,567 |
Pension obligations, net of current
portion |
60,222 |
104,525 |
Deferred income taxes |
179,987 |
506,241 |
Finance lease liabilities, net of current
portion |
2,813 |
296,875 |
Due to related parties |
38 |
21 |
Long-term liabilities of discontinued
operations |
-- |
673,591 |
Other long-term liabilities |
81,288 |
293,370 |
|
|
|
EQUITY |
|
|
Common shares (10 Russian rubles par value;
497,969,086 shares authorized, 416,270,745 shares issued and
outstanding as of December 31, 2014 and 2013) |
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 December 31, 2014 and 2013) |
25,314 |
25,314 |
Additional paid-in capital |
834,136 |
834,118 |
Accumulated other comprehensive income
(loss) |
972,381 |
(47,601) |
Accumulated deficit |
(4,763,413) |
(427,863) |
Equity attributable to shareholders of Mechel
OAO |
(2,798,075) |
517,475 |
Noncontrolling interests |
153,404 |
294,345 |
Total equity |
(2,644,671) |
811,820 |
Total liabilities and
equity |
6,713,490 |
13,834,510 |
|
|
|
*there were certain
reclassifications to conform with the current period
presentation |
|
Consolidated Statements
of Operations and Comprehensive Income |
(Loss) |
(in thousands of U.S. dollars) |
Year ended
December 31, |
|
2014 |
2013 |
Revenue, net (including related party amounts
of $112,010 and $237,071 during 2014 and 2013,
respectively) |
$ 6,405,767 |
$ 8,505,931 |
Cost of goods sold (including related party
amounts of $111,178 and $594,421 during 2014 and 2013,
respectively) |
(4,031,657) |
(5,845,752) |
Gross profit |
2,374,110 |
2,660,179 |
|
|
|
Selling, distribution and operating
expenses: |
|
|
Selling and distribution expenses |
(1,460,641) |
(1,720,411) |
Taxes other than income tax |
(172,447) |
(125,572) |
Accretion expense |
(4,963) |
(4,524) |
Loss on write-off of property, plant and
equipment |
(17,395) |
(17,254) |
Impairment of goodwill and long-lived
assets |
(120,237) |
(215,727) |
Provision for amounts due from related
parties |
(41,425) |
(714,181) |
Provision for doubtful accounts |
(37,968) |
(9,162) |
General, administrative and other operating
expenses, net |
(392,606) |
(510,105) |
Total selling, distribution and operating
expenses, net |
(2,247,682) |
(3,316,936) |
Operating income (loss) |
126,428 |
(656,757) |
|
|
|
Other income and (expense): |
|
|
Income from equity investments |
276 |
3,589 |
Interest income |
2,398 |
7,330 |
Interest expense |
(793,228) |
(740,601) |
Foreign exchange loss |
(2,396,123) |
(164,768) |
Other (expenses) income, net |
(9,613) |
(74,571) |
Total other income and (expense), net |
(3,196,290) |
(969,021) |
Loss from continuing operations, before
income tax |
(3,069,862) |
(1,625,778) |
Income tax benefit (expense) |
183,908 |
(79,092) |
Net loss from continuing
operations |
(2,885,954) |
(1,704,870) |
Loss from discontinued operations, net of
income tax |
(1,473,780) |
(1,218,097) |
Net loss |
(4,359,734) |
(2,922,967) |
Less: Net loss (income) attributable to
noncontrolling interests |
24,308 |
(5,047) |
Net loss attributable to shareholders
of Mechel OAO |
(4,335,426) |
(2,928,014) |
Less: Dividends on preferred shares |
(124) |
(127) |
Net loss attributable to common
shareholders of Mechel OAO |
(4,335,550) |
(2,928,141) |
|
|
|
Net loss |
(4,359,734) |
(2,922,967) |
Currency translation adjustment |
923,929 |
(96,848) |
Transfer of currency translation adjustment
due to disposal of subsidiaries |
-- |
340,014 |
Change in pension benefit obligation |
(21,889) |
8,244 |
Adjustment of available-for-sale
securities |
1,293 |
2,171 |
Comprehensive loss |
(3,456,401) |
(2,669,386) |
Comprehensive loss attributable to
noncontrolling interests |
140,957 |
20,704 |
Comprehensive loss attributable to
shareholders of Mechel OAO |
(3,315,444) |
(2,648,682) |
|
*there were certain
reclassifications to conform with the current period
presentation |
|
Consolidated Statements
of Cash Flows |
(in thousands of U.S. dollars) |
Year ended
December 31, |
|
2014 |
2013* |
Cash Flows from Operating
Activities |
|
|
Net loss |
$ (4,359,734) |
$ (2,922,967) |
Loss from discontinued operations, net of
income tax |
1,473,780 |
1,218,097 |
Net loss from continuing
operations |
(2,885,954) |
(1,704,870) |
Adjustments to reconcile net loss from
continuing operations to net cash provided by operating
activities: |
|
|
Depreciation |
322,747 |
366,850 |
Depletion and amortization |
47,797 |
58,432 |
Foreign exchange loss |
2,396,123 |
164,768 |
Deferred income taxes |
(354,918) |
(29,750) |
Allowance for doubtful accounts |
37,968 |
9,162 |
Change in inventory reserves |
5,779 |
3,414 |
Accretion expense |
4,963 |
4,524 |
Loss on write-off of property, plant and
equipment |
17,395 |
17,254 |
Impairment of goodwill and long-lived
assets |
120,237 |
215,727 |
Income from equity investments |
(276) |
(3,589) |
Provision for taxes restructuring |
31,950 |
-- |
Allowance for amounts due from related
parties |
41,425 |
714,181 |
Non-cash interest on pension liabilities |
5,513 |
9,463 |
Loss on sale of property, plant and
equipment |
1,709 |
4,907 |
Gain on sale of investments |
(14,050) |
(2,466) |
Change in asset retirement obligations |
(1,505) |
(7,123) |
Gain on accounts payable with expired legal
term |
(930) |
(11,324) |
Gain on forgiveness of fines and
penalties |
(28) |
(2,550) |
Loss on disposal of subsidiaries |
-- |
76,814 |
Amortization of loan origination fee |
56,864 |
51,017 |
Pension benefit plan curtailment gain |
(1,914) |
(3,906) |
Pension service cost, amortization of prior
service cost and actuarial (gain) loss, other expenses |
(898) |
3,853 |
Other |
23,051 |
-- |
Changes in working capital items, net of
effects from acquisition of new subsidiaries: |
|
|
Accounts receivable |
53,627 |
63,113 |
Inventories |
400,901 |
486,635 |
Trade payable to vendors of goods and
services |
3,216 |
114,153 |
Advances received |
4,530 |
(9,382) |
Accrued taxes and other liabilities |
516,996 |
91,113 |
Settlements with related parties |
(58,195) |
(481,118) |
Other current assets |
21,345 |
26,281 |
Unrecognized income tax benefits |
(30,378) |
61,230 |
Net operating cash flows of discontinued
operations |
(20,463) |
39,757 |
Net cash provided by operating
activities |
744,627 |
326,570 |
|
|
|
Cash Flows from Investing
Activities |
|
|
Acquisition of DEMP, less cash acquired |
(85,215) |
(66,049) |
Acquisition of Port Vanino |
-- |
(662,911) |
Disposal of Port Vanino |
-- |
664,006 |
Acquisitions of other subsidiaries, less cash
acquired |
-- |
894 |
Proceeds from disposal of securities |
15,855 |
1,111 |
Purchase of trading and investments
securities |
(2,160) |
-- |
Loans issued and other investments |
(983) |
(1,524) |
Proceeds from disposal of TPP Rousse, less
cash disposed of |
2,152 |
27,506 |
Proceeds from disposal of Invicta, less cash
disposed of |
690 |
-- |
Proceeds from disposal of TFP, Voskhod-Oriel,
Voskhod-Chrome, Voskhod Trading, less cash disposed of |
15,096 |
414,197 |
Cash of other subsidiaries disposed of, less
proceeds from disposal |
-- |
(731) |
Proceeds from loans issued |
1,860 |
7,328 |
Proceeds from disposals of property, plant
and equipment |
24,191 |
15,170 |
Purchases of mineral licenses and other
related payments |
-- |
(2,238) |
Purchases of property, plant and
equipment |
(443,668) |
(550,188) |
Net investing cash flows of discontinued
operations |
(114) |
(26,160) |
Net cash used in investing activities |
(472,296) |
(179,589) |
|
|
|
Cash Flows from Financing
Activities |
|
|
Proceeds from borrowings |
1,815,966 |
2,958,658 |
Repayment of borrowings |
(2,185,343) |
(2,935,382) |
Dividends paid |
(112) |
(222) |
Dividends paid to noncontrolling
interest |
(136) |
(7,496) |
Acquisition of noncontrolling interest in
subsidiaries |
(40,043) |
(45,536) |
Repayment of obligations under finance
lease |
(44,312) |
(138,225) |
Sale leaseback proceeds |
18,210 |
74,340 |
Net financing cash flows of discontinued
operations |
(2,719) |
(68,208) |
Net cash used in financing activities |
(438,489) |
(162,071) |
|
|
|
Effect of exchange rate changes on cash and
cash equivalents |
(35,965) |
(5,328) |
|
|
|
Net decrease in cash and cash
equivalents |
(202,123) |
(20,418) |
|
|
|
Cash and cash equivalents at beginning of
period |
274,539 |
294,957 |
Cash and cash equivalents at end of
period |
72,416 |
274,539 |
|
*there were certain
reclassifications to conform with the current period
presentation |
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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