Mechel PAO (MICEX:MTLR) (NYSE:MTL)
, one of
the leading Russian mining and metals companies, announces 9M2016
operational results.
Production and sales for
9M2016
Production:
Product
Name |
9M2016,thousandtonnes |
9M2015,thousandtonnes |
% |
3Q2016,thousandtonnes |
2Q2016,thousandtonnes |
% |
Run-of-mine
coal |
17,087 |
17,404 |
-2 |
5,559 |
5,864 |
-5 |
Pig
iron |
3,012 |
3,059 |
-2 |
968 |
1,039 |
-7 |
Steel |
3,131 |
3,240 |
-3 |
1,019 |
1,067 |
-5 |
Sales:
Product
Name |
9M2016,thousandtonnes |
9M2015,thousandtonnes |
% |
3Q2016,thousandtonnes |
2Q2016,thousandtonnes |
% |
Coking coal
concentrate |
6,491 |
6,201 |
+5 |
2,021 |
2,249 |
-10 |
Including coking coal
concentrate supplied to third parties |
4,230 |
3,982 |
+6 |
1,320 |
1,489 |
-11 |
PCI |
1,317 |
1,794 |
-27 |
383 |
413 |
-7 |
Including PCI supplied to
third parties |
1,317 |
1,794 |
-27 |
383 |
413 |
-7 |
Anthracites |
1,365 |
1,570 |
-13 |
457 |
488 |
-6 |
Including anthracites
supplied to third parties |
1,165 |
1,389 |
-16 |
389 |
413 |
-6 |
Steam
coal |
5,363 |
4,906 |
+9 |
1,788 |
1,863 |
-4 |
Including steam coal
supplied to third parties |
4,543 |
3,538 |
+28 |
1,511 |
1,571 |
-4 |
Iron ore
concentrate |
2,078 |
2,069 |
0 |
736 |
658 |
+12 |
Including iron ore
concentrate supplied to third parties |
18 |
480 |
-96 |
10 |
6 |
+70 |
Coke |
2,151 |
2,241 |
-4 |
703 |
743 |
-5 |
Including coke supplied to
third parties |
710 |
787 |
-10 |
226 |
250 |
-10 |
Ferrosilicon |
59 |
61 |
-3 |
20 |
18 |
+6 |
Long
rolls |
2,258 |
2,101 |
+7 |
758 |
767 |
-1 |
Flat
rolls |
353 |
357 |
-1 |
99 |
126 |
-22 |
Billets |
125 |
168 |
-26 |
17 |
40 |
-56 |
Hardware |
498 |
530 |
-6 |
167 |
173 |
-4 |
Forgings |
30 |
43 |
-29 |
11 |
9 |
+29 |
Stampings |
55 |
50 |
+10 |
18 |
22 |
-17 |
Electric power
generation (thousand kWh) |
2,474,113 |
3,103,609 |
-20 |
759,347 |
751,332 |
+1 |
Heat power
generation (Gcal) |
3,770,622 |
3,890,904 |
-3 |
665,048 |
964,652 |
-31 |
Key investment projects progress
Universal rolling mill:
|
9M2016,thousandtonnes |
9M2015,thousandtonnes |
% |
3Q2016,thousandtonnes |
2Q2016,thousandtonnes |
% |
Rails, beams and shapes |
357 |
120 |
+199 |
144 |
117 |
+23 |
Elga coal
complex:
|
9M2016,thousandtonnes |
9M2015,thousandtonnes |
% |
3Q2016,thousandtonnes |
2Q2016,thousandtonnes |
% |
Run-of-mine coal |
2,884 |
2,989 |
-4 |
872 |
1,018 |
-14 |
Mechel PAO’s Chief Executive Officer
Oleg Korzhov commented on the 9M2016 operational
results:
“In this accounting period, prices on the global
coal market demonstrated an explosive hike. Starting in mid-August,
indexes for spot prices for premium coking coal went up
dramatically and topped the psychologically important milestone of
200 US dollars per tonne by mid-September. In early November, spot
prices topped 300 US dollars, which means that spot prices for
Australian premium coking coal have quadrupled from 75 dollars per
tonne in November 2015. Global steam coal prices also showed solid
growth. We have prepared a propitious base for increasing exports
and boosting our operational and financial results, and we expect
significant effect from the current market trend in the fourth
quarter.
“Meanwhile, in the third quarter our domestic
market faced complications with deliveries — due to major two-month
lack of rolling stock in Kuzbass delivery of coal to Far Eastern
ports was significantly limited, which reflected on our production
and sales results.
“Despite an overall 10-percent decrease in
shipments of coking coal concentrate in the third quarter
quarter-on-quarter, in absolute terms we have increased sales to
China, Japan and India in this accounting period, selling over 1
million tonnes of coking coal concentrate on Asian markets.
“As for PCI, in the third quarter we have
completely re-oriented our exports toward Asia Pacific. Today
Korean companies are chief customers of this type of coal. In this
accounting period we saw a seven-percent drop quarter-on-quarter in
sales for technical reasons — as due to aforementioned transport
problems as well as delays in arrival of South Korean vessels to
Port Posiet, some of September volumes were transferred to the
fourth quarter.
“The six-percent drop in anthracite sales is due
to the decrease of production at Krasnogorsky Open Pit and the
decrease in supply of this type of coal to the Group’s facilities.
Nevertheless, we noted an increase in export sales — primarily to
Europe, where we sold 53% of anthracite in the third quarter.
“Transport limitations accounted for the minor
decrease in sales of Southern Kuzbass Coal Company’s steam coal. At
Elga Coal Complex the downward dynamics were due to planned repairs
at the washing plant.
“Weakening demand for coke had a negative impact
on our sales (-5%).
“Sales of iron ore concentrate from Korshunov
Mining Plant went up by 12%, all of it shipped to Chelyabinsk
Metallurgical Plant.
“The steel segment decreased production of pig
iron and steel by 7% and 5% accordingly quarter-on-quarter due to
planned repairs in the blast furnace facility.
“In the third quarter we cut production of flat
rolls by 22% quarter-on-quarter, redirecting these resources to
more profitable products, also increasing sales of such a highly
profitable product as flat stainless rolls.
“Further development of production at the
universal rolling mill remained a key focus for this accounting
period. We have increased sales of high value-added products
produced at the universal rolling mill by 23%. Over this year’s
first nine months, production volumes nearly tripled, reaching
357,000 tonnes. In the third quarter we produced and shipped to
Russian Railways the agreed-upon amount of rails, reaching the
planned figure of 150,000 tonnes well ahead of schedule. We
continue our cooperation with Russian Railways and plan to supply
100,000 tonnes of rails more by the end of the year. Currently our
rolling mill’s workload is at more than 50% and has tripled since
the beginning of the year.
“We use nearly all of the billets from our own
facilities to make products with a higher profit margin, so billet
sales to third parties went down by 56%. In line with our strategy
we intend to continue minimizing billet sales.
“A slump in construction business led to a
proportionate decrease in consumption of wire and other hardware on
the Russian market. Beloretsk Metallurgical Plant managed to partly
compensate this slump by increasing production and sales of wire
ropes for the mining and oil industries.
“The 29-percent increase in forgings sales was
due to the transfer of shipment dates from the end of 2Q2016 to
early 3Q2016, as well as the seasonal hike in demand at the markets
of our Mechel Service Global office in Belgium.
“In the power segment, the 20-percent slump in
electricity generation over these nine months year-on-year was due
to planned repairs at Southern Kuzbass Power Plant as the facility
was preparing for the fall-winter maximum load. The three-percent
decrease in heat generation was due to an earlier end to the
heating season.”
Mechel is an international mining and steel
company which employs over 66,000 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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