Consolidated revenue
– 149.4
bln rubles (+15% compared to
1H2016)EBITDA* -
40.2 bln rubles (+56% compared to
1H2016)Net profit, attributable to equity
shareholders of Mechel PAO
– 5.0 bln
rubles
Mechel PAO
(MOEX:MTLR)
(NYSE:MTL)
, a leading
Russian mining and steel group, announces financial results for the
1H2017.
Mechel PAO’s Chief Executive Officer Oleg
Korzhov commented:
“The company’s 1H2017 results demonstrated a
substantial improvement year-on-year. This became possible due to a
positive dynamics in the coking coal market, significant
diversification of our steel facilities’ products and an increase
in the share of high value-added products — rails, beams and
special steel. The company made every effort to efficiently use
opportunities presented by favorable market conditions to improve
its financial results and free cash flow. The net profit figure was
largely driven by the currency denominated debt revaluation
depending on currency exchange rates fluctuations.
Also, we made significant progress in
repairs of our technological equipment and increase in our
machinery fleet by acquiring new vehicles, lease financing
and contractors outsourcing. Over the last six months, we made
major repairs of our production facilities at our steel and mining
segments, acquired and put into operation new trucks, excavators
and other mining machinery. Capital investment in 1H2017 increased
by more than twofold and reached 5.4 bln rubles. More than several
dozen of vehicles are planned to arrive at our mining facilities by
the end of the year. Considering the specifics of mining, the
results of these efforts will be reflected in our future operating
results.”
Consolidated Results For The 1H
2017
Mln rubles |
1H’ 17 |
1H’ 16 |
% |
2Q’ 17 |
1Q’ 17 |
% |
Revenuefrom external customers |
149,384 |
|
130,197 |
|
15 |
% |
71,970 |
|
77,414 |
|
-7 |
% |
Operating profit |
30,677 |
|
17,200 |
|
78 |
% |
12,588 |
|
18,089 |
|
-30 |
% |
EBITDA |
40,227 |
|
25,721 |
|
56 |
% |
17,421 |
|
22,806 |
|
-24 |
% |
EBITDA, margin |
27 |
% |
20 |
% |
|
24 |
% |
29 |
% |
|
Net profit (loss)attributable to equity
shareholders of Mechel PAO |
4,994 |
|
8,300 |
|
-40 |
% |
(8,908 |
) |
13,902 |
|
|
* 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:
“The coking coal market’s volatility, which we
observed late last year and early this year, remained in the second
quarter. April began with a hike in prices for high-quality hard
coking coal concentrate from around $150 per tonne to over $300 per
tonne after tropical storm Debbie seriously damaged the railroads
used for transportation of coal mined in Australia’s Queensland to
ports. These damages had briefly cut down coal exports from this
region to international markets, creating a supply shortage. By
mid-May, as local infrastructure recovered, coal prices went back
to the level prior to the force majeure and remained there until
the end of the quarter. In the third quarter, coal prices again
began to grow and currently spot prices for hard coking coal are
nearly at the level of $200 per tonne.
Due to uncertain spot market situation,
negotiations between Australian mining companies and Japanese
steelmakers regarding the 2Q2017 contract prices for hard coking
coal had dragged out and ultimately resulted in a transfer to a new
price system linked to spot indices. The ‘benchmark’ for hard
coking coal was replaced by a ‘reference rate’ calculated as an
average spot index over the period a month before the supply
period.
The division took the advantage from the
favorable market situation early in this quarter and increase
coking coal exports to Asia-Pacific Region. We increased mining
volumes by 4% quarter-on-quarter. Sales of coking coal concentrate
also increased by 4%. Coking coal concentrate exports in 2Q2017
went up by over 20% quarter-on-quarter, and we nearly quadrupled
our exports of Elga coal. Nevertheless, average commodity prices in
2Q2017 were lower than in 1Q2017, that led to a decrease in revenue
and EBITDA quarter-on-quarter.”
Mln rubles |
1H’ 17 |
1H’ 16 |
% |
2Q’ 17 |
1Q’
17 |
% |
Revenue from external customers |
51,519 |
|
40,059 |
|
29 |
% |
23,531 |
|
27,988 |
|
-16 |
% |
Revenueinter-segment |
23,268 |
|
14,711 |
|
58 |
% |
10,803 |
|
12,465 |
|
-13 |
% |
EBITDA |
34,563 |
|
14,438 |
|
139 |
% |
14,607 |
|
19,956 |
|
-27 |
% |
EBITDA, margin |
46 |
% |
26 |
% |
|
43 |
% |
49 |
% |
|
Steel Segment
Mechel-Steel Management Company OOO’s Chief
Executive Officer Andrey Ponomarev noted:
“In 2Q2017, we continued to increase the share
of high value-added products in the division’s sales structure. We
have almost given up selling billets and reduced sales of wire rod
by more than a quarter. Flat products sales remained at the
previous quarter’s level. Sales of products made at Chelyabinsk
Metallurgical Plant’s universal rolling mill, rebar and hardware
went up. At the same time, the division’s revenue growth was
limited by the second quarter’s market situation, which was weaker
than in the first quarter. Since April, Russia’s rebar market has
been hit by a negative price dynamics due to high stock, weak
demand and the price slump on global markets of semi-finished and
finished products. Prices began to recover only by the end of the
quarter. This positive dynamics still persists, but effect from
current prices will be reflected in the third quarter’s results.
Meanwhile, even as revenue from sales to third parties grew, the
division’s EBITDA decreased. Diversification of our product range
improved the division’s financial results, but high commodity
prices, including prices for raw materials acquired within the
group, negated this effect.
In 2Q2017, we made a range of repairs to our
facilities’ equipment. At Chelyabinsk Metallurgical Plant, we
repaired two sintering machines and completed equipment repairs in
the oxygen-converter workshop. At Izhstal, we conducted major
repairs of the arc furnace for alloyed, stainless and high-speed
steels. These measures will ensure stable and efficient work of
those facilities and increase the level of ecological safety. We
also continued to master production of new types of products. For
example, Chelyabinsk Metallurgical Plant implemented technical
solutions enabling the plant to produce bulk ingots. This
production technology was successfully tested early in the third
quarter 2017. The universal rolling mill also mastered production
of new types of profiles, including rails compliant with the
European railroad standards.”
Mln rubles |
1H’ 17 |
1H’ 16 |
% |
2Q’ 17 |
1Q’ 17 |
% |
Revenue from external customers |
84,955 |
|
77,604 |
|
9 |
% |
42,926 |
|
42,029 |
|
2 |
% |
Revenueinter-segment |
3,740 |
|
3,619 |
|
3 |
% |
1,776 |
|
1,964 |
|
-10 |
% |
EBITDA |
6,074 |
|
9,520 |
|
-36 |
% |
2,518 |
|
3,556 |
|
-29 |
% |
EBITDA, margin |
7 |
% |
12 |
% |
|
6 |
% |
8 |
% |
|
Power Segment
Mechel-Energo OOO’s Chief Executive Officer Petr
Pashnin noted:
“The second quarter’s financial results
demonstrated a foreseen decrease quarter-on-quarter, as heat and
electricity generation and sales went down with the closure of the
heating season and beginning of repairs. The weakening of 1H2017
financial results year-on-year, even with a positive dynamics in
our revenue, is due to the growth of tariffs on electricity for
resale.”
Mln rubles |
1H’ 17 |
1H’ 16 |
% |
2Q’ 17 |
1Q’ 17 |
% |
Revenue from external customers |
12,910 |
|
12,535 |
|
3 |
% |
5,514 |
|
7,396 |
|
-25 |
% |
Revenueinter-segment |
8,473 |
|
7,899 |
|
7 |
% |
3,835 |
|
4,638 |
|
-17 |
% |
EBITDA |
966 |
|
2,014 |
|
-52 |
% |
261 |
|
705 |
|
-63 |
% |
EBITDA, margin |
5 |
% |
10 |
% |
|
3 |
% |
6 |
% |
|
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 an international mining and steel
company. 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.
Attachments to the 1H 2017 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 equity shareholders of Mechel PAO before
Depreciation and depletion, Foreign exchange (gain) loss, net,
Finance costs including fines and penalties on overdue loans and
borrowings and finance lease payments, Finance income, Net result
on the disposal of non-current assets, Impairment of goodwill and
other non-current assets, Write-off of accounts receivable,
Provision (reversal of provision) 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, Profit (loss) attributable to
non-controlling interests, Income tax expense (benefit), Pension
service cost and actuarial loss, other related expenses, Other
fines and penalties, Gain on write-off of accounts payable with
expired legal term and Other one-off items. 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 and depletion and impairment of goodwill and other
non-current assets 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 equity 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 attributable to
non-controlling interests, Foreign exchange (gain) loss, net,
Pension service cost and actuarial loss, other related expenses,
Other fines and penalties, Gain on write-off of accounts payable
with expired legal term and Other one-off items. 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 |
30.06.2017 |
|
31.12.2016 |
|
Interest-bearing loans
and borrowings, excluding interest payable, fines and penalties on
overdue amounts |
390,629 |
|
395,571 |
|
Interest payable |
18,867 |
|
16,916 |
|
Non-current
interest-bearing loans and borrowings |
10,209 |
|
11,644 |
|
Other non-current
financial liabilities |
38,201 |
|
36,197 |
|
Other current financial
liabilities |
618 |
|
- |
|
less Cash and cash
equivalents |
(2,951 |
) |
(1,689 |
) |
Net debt, excluding finance lease liabilities, fines and
penalties on overdue amounts |
455,573 |
|
458,639 |
|
|
|
|
Finance lease
liabilities, current portion |
8,232 |
|
10,175 |
|
Finance lease
liabilities, non-current portion |
775 |
|
421 |
|
Net debt, excluding fines and penalties on overdue
amounts |
464,580 |
|
469,235 |
|
|
|
|
|
|
|
Mln rubles |
30.06.2017 |
|
31.12.2016 |
|
Trade and other
receivables |
18,938 |
|
19,054 |
|
Inventories |
36,748 |
|
35,227 |
|
Other current
assets |
7,430 |
|
6,942 |
|
Income tax
receivables |
582 |
|
686 |
|
Trade current assets |
63,698 |
|
61,909 |
|
|
|
|
Trade and other
payables |
38,186 |
|
40,985 |
|
Advances received |
4,432 |
|
3,815 |
|
Provisions and other
current liabilities |
3,165 |
|
3,515 |
|
Tax and similar charges
payable other than income tax |
8,971 |
|
9,195 |
|
Income tax payable |
3,632 |
|
2,552 |
|
Trade current liabilities |
58,386 |
|
60,062 |
|
|
|
|
Trade working capital |
5,312 |
|
1,847 |
|
** 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:
|
Consolidated Results |
|
Mining
Segment*** |
|
Steel Segment*** |
|
Power Segment*** |
Mln rubles |
6m 2017 |
6m 2016 |
|
6m 2017 |
6m 2016 |
|
6m 2017 |
6m 2016 |
|
6m 2017 |
6m 2016 |
Net profit
(loss) attributable to equity shareholders of Mechel
PAO |
4,994 |
|
8,300 |
|
|
10,698 |
|
250 |
|
|
(4,312 |
) |
7,629 |
|
|
(13 |
) |
669 |
|
Add: |
|
|
|
|
|
|
|
|
|
|
|
Depreciation and depletion |
7,228 |
|
6,566 |
|
|
4,077 |
|
3,788 |
|
|
2,919 |
|
2,603 |
|
|
232 |
|
175 |
|
Foreign
exchange (gain) loss, net |
(1,804 |
) |
(17,442 |
) |
|
(1,496 |
) |
(10,009 |
) |
|
(308 |
) |
(7,358 |
) |
|
- |
|
(76 |
) |
Finance
costs including fines and penalties on overdue loans and borrowings
and finance leases payments |
24,096 |
|
29,800 |
|
|
17,725 |
|
22,150 |
|
|
6,975 |
|
8,153 |
|
|
447 |
|
587 |
|
Finance
income |
(442 |
) |
(3,887 |
) |
|
(1,042 |
) |
(3,551 |
) |
|
(421 |
) |
(1,337 |
) |
|
(32 |
) |
(89 |
) |
Net
result on the disposal of non-current assets, impairment of
goodwill and other non-current assets, write-off of accounts
receivables, provision (reversal of provision) for doubtful
accounts and write-off of inventories to net realisable value |
1,253 |
|
1,230 |
|
|
495 |
|
331 |
|
|
508 |
|
360 |
|
|
249 |
|
540 |
|
Loss
(profit) after tax from discontinued operations, net |
- |
|
244 |
|
|
- |
|
(41 |
) |
|
- |
|
270 |
|
|
- |
|
15 |
|
Net result on the
disposal of subsidiaries |
4 |
|
(55 |
) |
|
4 |
|
- |
|
|
- |
|
(55 |
) |
|
- |
|
- |
|
Profit (loss) attributable to non-controlling interests |
688 |
|
862 |
|
|
593 |
|
273 |
|
|
111 |
|
465 |
|
|
(16 |
) |
125 |
|
Income
tax expense (benefit) |
3,627 |
|
(630 |
) |
|
3,123 |
|
821 |
|
|
473 |
|
(1,510 |
) |
|
31 |
|
59 |
|
Pension
service cost and actuarial loss, other related expenses |
64 |
|
83 |
|
|
51 |
|
61 |
|
|
11 |
|
21 |
|
|
2 |
|
1 |
|
Other
fines and penalties |
599 |
|
668 |
|
|
372 |
|
366 |
|
|
159 |
|
295 |
|
|
68 |
|
8 |
|
Gain on
write-off of accounts payable with expired legal term |
(80 |
) |
(18 |
) |
|
(37 |
) |
- |
|
|
(41 |
) |
(18 |
) |
|
(2 |
) |
- |
|
Other
one-off items |
- |
|
- |
|
|
- |
|
- |
|
|
- |
|
- |
|
|
- |
|
- |
|
EBITDA |
40,227 |
|
25,721 |
|
|
34,563 |
|
14,438 |
|
|
6,074 |
|
9,520 |
|
|
966 |
|
2,014 |
|
EBITDA,
margin |
27 |
% |
20 |
% |
|
46 |
% |
26 |
% |
|
7 |
% |
12 |
% |
|
5 |
% |
10 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
Mln rubles |
6m 2017 |
6m 2016 |
|
6m 2017 |
6m 2016 |
|
6m 2017 |
6m 2016 |
|
6m 2017 |
6m 2016 |
Net profit
(loss) attributable to equity shareholders of Mechel
PAO |
4,994 |
|
8,300 |
|
|
10,698 |
|
250 |
|
|
(4,312 |
) |
7,629 |
|
|
(13 |
) |
669 |
|
Add: |
|
|
|
|
|
|
|
|
|
|
|
Impairment of goodwill and other non-current assets |
- |
|
- |
|
|
- |
|
- |
|
|
- |
|
- |
|
|
- |
|
- |
|
Loss
(profit) after tax from discontinued operations, net |
- |
|
244 |
|
|
- |
|
(41 |
) |
|
- |
|
270 |
|
|
- |
|
15 |
|
Net result on the
disposal of subsidiaries |
4 |
|
(55 |
) |
|
4 |
|
- |
|
|
- |
|
(55 |
) |
|
- |
|
- |
|
Effect on loss attributable to non-controlling interests |
- |
|
(40 |
) |
|
- |
|
- |
|
|
- |
|
(40 |
) |
|
- |
|
- |
|
Foreign
exchange (gain) loss, net |
(1,804 |
) |
(17,442 |
) |
|
(1,496 |
) |
(10,009 |
) |
|
(308 |
) |
(7,358 |
) |
|
- |
|
(76 |
) |
Pension
service cost and actuarial loss, other related expenses |
64 |
|
83 |
|
|
51 |
|
61 |
|
|
11 |
|
21 |
|
|
2 |
|
1 |
|
Other
fines and penalties |
599 |
|
668 |
|
|
372 |
|
366 |
|
|
159 |
|
295 |
|
|
68 |
|
8 |
|
Gain on
write-off of accounts payable with expired legal term |
(80 |
) |
(18 |
) |
|
(37 |
) |
- |
|
|
(41 |
) |
(18 |
) |
|
(2 |
) |
- |
|
Other
one-off items |
- |
|
- |
|
|
- |
|
- |
|
|
- |
|
- |
|
|
- |
|
- |
|
Adjusted net
profit (loss), net of income tax |
3,777 |
|
(8,260 |
) |
|
9,592 |
|
(9,374 |
) |
|
(4,491 |
) |
745 |
|
|
55 |
|
618 |
|
Operating
profit |
30,677 |
|
17,200 |
|
|
29,201 |
|
9,858 |
|
|
2,450 |
|
6,284 |
|
|
404 |
|
1,307 |
|
Add: |
|
|
|
|
|
|
|
|
|
|
|
Impairment of goodwill and other non-current assets |
- |
|
- |
|
|
- |
|
- |
|
|
- |
|
- |
|
|
- |
|
- |
|
Loss on
write-off of property, plant and equipment |
148 |
|
121 |
|
|
62 |
|
109 |
|
|
54 |
|
13 |
|
|
32 |
|
- |
|
Pension
service cost and actuarial loss, other related expenses |
64 |
|
83 |
|
|
51 |
|
61 |
|
|
11 |
|
21 |
|
|
2 |
|
1 |
|
Other
fines and penalties |
599 |
|
668 |
|
|
372 |
|
366 |
|
|
159 |
|
295 |
|
|
68 |
|
8 |
|
Other
one-off items |
- |
|
- |
|
|
- |
|
- |
|
|
- |
|
- |
|
|
- |
|
- |
|
Adjusted
operating profit |
31,488 |
|
18,072 |
|
|
29,686 |
|
10,393 |
|
|
2,674 |
|
6,612 |
|
|
506 |
|
1,316 |
|
*** including
inter-segment operations |
|
|
|
|
|
|
|
|
|
|
|
|
Consolidated Results |
|
Mining
Segment*** |
|
Steel Segment*** |
|
Power Segment*** |
Mln rubles |
2q
2017 |
1q
2017 |
|
2q
2017 |
1q
2017 |
|
2q
2017 |
1q
2017 |
|
2q
2017 |
1q
2017 |
Net (loss)
profit attributable to equity shareholders of Mechel
PAO |
(8,908 |
) |
13,902 |
|
|
(2,163 |
) |
12,858 |
|
|
(6,530 |
) |
2,218 |
|
|
(250 |
) |
237 |
|
Add: |
|
|
|
|
|
|
|
|
|
|
|
Depreciation and depletion |
3,811 |
|
3,417 |
|
|
2,149 |
|
1,928 |
|
|
1,540 |
|
1,379 |
|
|
122 |
|
110 |
|
Foreign
exchange loss (gain), net |
7,876 |
|
(9,679 |
) |
|
4,106 |
|
(5,601 |
) |
|
3,756 |
|
(4,063 |
) |
|
14 |
|
(14 |
) |
Finance
costs including fines and penalties on overdue loans and borrowings
and finance leases payments |
11,704 |
|
12,392 |
|
|
8,664 |
|
9,062 |
|
|
3,348 |
|
3,626 |
|
|
217 |
|
231 |
|
Finance
income |
(315 |
) |
(127 |
) |
|
(554 |
) |
(488 |
) |
|
(267 |
) |
(154 |
) |
|
(19 |
) |
(13 |
) |
Net
result on the disposal of non-current assets, impairment of
goodwill and other non-current assets, write-off of accounts
receivables, provision (reversal of provision) for doubtful
accounts and write-off of inventories to net realisable value |
675 |
|
577 |
|
|
322 |
|
173 |
|
|
210 |
|
298 |
|
|
143 |
|
106 |
|
Net result on the
disposal of subsidiaries |
4 |
|
- |
|
|
4 |
|
- |
|
|
- |
|
- |
|
|
- |
|
- |
|
Profit (loss) attributable to non-controlling interests |
132 |
|
556 |
|
|
202 |
|
392 |
|
|
(51 |
) |
162 |
|
|
(19 |
) |
3 |
|
Income
tax expense (benefit) |
2,088 |
|
1,539 |
|
|
1,689 |
|
1,433 |
|
|
406 |
|
68 |
|
|
(7 |
) |
38 |
|
Pension
service cost and actuarial loss, other related expenses |
32 |
|
32 |
|
|
25 |
|
25 |
|
|
6 |
|
6 |
|
|
1 |
|
1 |
|
Other
fines and penalties |
373 |
|
226 |
|
|
199 |
|
174 |
|
|
113 |
|
44 |
|
|
61 |
|
7 |
|
Gain on
write-off of accounts payable with expired legal term |
(51 |
) |
(29 |
) |
|
(37 |
) |
- |
|
|
(13 |
) |
(28 |
) |
|
(1 |
) |
(1 |
) |
Other
one-off items |
- |
|
- |
|
|
- |
|
- |
|
|
- |
|
- |
|
|
- |
|
- |
|
EBITDA |
17,421 |
|
22,806 |
|
|
14,607 |
|
19,956 |
|
|
2,518 |
|
3,556 |
|
|
261 |
|
705 |
|
EBITDA,
margin |
24 |
% |
29 |
% |
|
43 |
% |
49 |
% |
|
6 |
% |
8 |
% |
|
3 |
% |
6 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
Mln rubles |
2q
2017 |
1q
2017 |
|
2q
2017 |
1q
2017 |
|
2q
2017 |
1q
2017 |
|
2q
2017 |
1q
2017 |
Net (loss)
profit attributable to equity shareholders of Mechel
PAO |
(8,908 |
) |
13,902 |
|
|
(2,163 |
) |
12,858 |
|
|
(6,530 |
) |
2,218 |
|
|
(250 |
) |
237 |
|
Add: |
|
|
|
|
|
|
|
|
|
|
|
Impairment of goodwill and other non-current assets |
- |
|
- |
|
|
- |
|
- |
|
|
- |
|
- |
|
|
- |
|
- |
|
Net
result on the disposal of subsidiaries |
4 |
|
- |
|
|
4 |
|
- |
|
|
- |
|
- |
|
|
- |
|
- |
|
Effect on loss
attributable to non-controlling interests |
- |
|
- |
|
|
- |
|
- |
|
|
- |
|
- |
|
|
- |
|
- |
|
Foreign exchange loss (gain), net |
7,876 |
|
(9,679 |
) |
|
4,106 |
|
(5,601 |
) |
|
3,756 |
|
(4,063 |
) |
|
14 |
|
(14 |
) |
Pension
service cost and actuarial loss, other related expenses |
32 |
|
32 |
|
|
25 |
|
25 |
|
|
6 |
|
6 |
|
|
1 |
|
1 |
|
Other
fines and penalties |
373 |
|
226 |
|
|
199 |
|
174 |
|
|
113 |
|
44 |
|
|
61 |
|
7 |
|
Gain on
write-off of accounts payable with expired legal term |
(51 |
) |
(29 |
) |
|
(37 |
) |
- |
|
|
(13 |
) |
(28 |
) |
|
(1 |
) |
(1 |
) |
Other
one-off items |
- |
|
- |
|
|
- |
|
- |
|
|
- |
|
- |
|
|
- |
|
- |
|
Adjusted net
(loss) profit, net of income tax |
(674 |
) |
4,452 |
|
|
2,134 |
|
7,456 |
|
|
(2,668 |
) |
(1,823 |
) |
|
(175 |
) |
230 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating
profit (loss) |
12,588 |
|
18,089 |
|
|
11,945 |
|
17,256 |
|
|
683 |
|
1,767 |
|
|
(73 |
) |
478 |
|
Add: |
|
|
|
|
|
|
|
|
|
|
|
Impairment of goodwill and other non-current assets |
- |
|
- |
|
|
- |
|
- |
|
|
- |
|
- |
|
|
- |
|
- |
|
Loss on
write-off of property, plant and equipment |
77 |
|
71 |
|
|
27 |
|
35 |
|
|
49 |
|
5 |
|
|
1 |
|
31 |
|
Pension
service cost and actuarial loss, other related expenses |
32 |
|
32 |
|
|
25 |
|
25 |
|
|
6 |
|
6 |
|
|
1 |
|
1 |
|
Other
fines and penalties |
373 |
|
226 |
|
|
199 |
|
174 |
|
|
113 |
|
44 |
|
|
61 |
|
7 |
|
Other
one-off items |
- |
|
- |
|
|
- |
|
- |
|
|
- |
|
- |
|
|
- |
|
- |
|
Adjusted
operating profit (loss) |
13,070 |
|
18,418 |
|
|
12,196 |
|
17,490 |
|
|
851 |
|
1,822 |
|
|
(10 |
) |
517 |
|
*** including
inter-segment operations |
|
|
|
|
|
|
|
|
|
|
|
Attachment B
INTERIM CONDENSED CONSOLIDATED STATEMENT OF PROFIT (LOSS)
AND OTHER COMPREHENSIVE INCOME (LOSS) |
(All amounts are in
millions of Russian rubles) |
|
6 months ended June 30, |
|
|
2017* |
|
2016* |
|
|
(unaudited) |
|
(unaudited) |
Continuing
operations |
|
|
|
|
Revenue |
|
149,384 |
|
|
130,197 |
|
Cost of sales |
|
(80,608 |
) |
|
(72,175 |
) |
Gross
profit |
|
68,776 |
|
|
58,022 |
|
|
|
|
|
|
Selling and
distribution expenses |
|
(27,723 |
) |
|
(28,167 |
) |
Loss on write-off of
property, plant and equipment |
|
(148 |
) |
|
(121 |
) |
Provision for doubtful
accounts |
|
(321 |
) |
|
(543 |
) |
Taxes other than income
taxes |
|
(2,556 |
) |
|
(3,168 |
) |
Administrative and
other operating expenses |
|
(7,718 |
) |
|
(9,100 |
) |
Other operating
income |
|
367 |
|
|
277 |
|
Total selling,
distribution and operating income and (expenses), net |
|
(38,099 |
) |
|
(40,822 |
) |
Operating
profit |
|
30,677 |
|
|
17,200 |
|
|
|
|
|
|
Finance income |
|
442 |
|
|
3,887 |
|
Finance costs including
fines and penalties on overdue loans and borrowings and finance
leases payments of RUB 428 million, RUB 4,567 million for the 6
months ended June 30, 2017 and 2016, respectively |
|
(24,096 |
) |
|
(29,800 |
) |
Foreign exchange gain
(loss), net |
|
1,804 |
|
|
17,442 |
|
Share of profit of
associates, net of provision |
|
11 |
|
|
16 |
|
Other income |
|
541 |
|
|
168 |
|
Other expenses |
|
(70 |
) |
|
(137 |
) |
Total other
income and (expenses), net |
|
(21,368 |
) |
|
(8,424 |
) |
Income before
tax from continuing operations |
|
9,309 |
|
|
8,776 |
|
|
|
|
|
|
Income tax (expense)
benefit |
|
(3,627 |
) |
|
630 |
|
Income for the
period from continuing operations |
|
5,682 |
|
|
9,406 |
|
|
|
|
|
|
Discontinued
operations |
|
|
|
|
Loss after tax for the
period from discontinued operations, net |
|
- |
|
|
(244 |
) |
Profit for the
period |
|
5,682 |
|
|
9,162 |
|
|
|
|
|
|
Attributable
to: |
|
|
|
|
Equity shareholders of
Mechel PAO |
|
4,994 |
|
|
8,300 |
|
Non-controlling
interests |
|
688 |
|
|
862 |
|
|
|
|
|
|
Other
comprehensive income |
|
|
|
|
Other comprehensive
income to be reclassified to profit or loss in subsequent periods,
net of income tax: |
|
28 |
|
|
1,077 |
|
Exchange differences on
translation of foreign operations |
|
27 |
|
|
1,085 |
|
Net gain (loss) on
available for sale financial assets |
|
1 |
|
|
(8 |
) |
Other
comprehensive income for the period, net of tax |
|
28 |
|
|
1,077 |
|
Total
comprehensive income, net of tax |
|
5,710 |
|
|
10,239 |
|
|
|
|
|
|
Attributable
to: |
|
|
|
|
Equity shareholders of
Mechel PAO |
|
5,022 |
|
|
9,377 |
|
Non-controlling
interests |
|
688 |
|
|
862 |
|
|
|
|
|
|
|
|
INTERIM CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL
POSITION |
(All amounts are in
millions of Russian rubles) |
|
|
|
|
|
|
June 30,
2017* |
|
December 31, 2016 |
|
|
(unaudited) |
|
|
Assets |
|
|
|
|
Current
assets |
|
|
|
|
Cash and cash
equivalents |
|
2,951 |
|
|
1,689 |
|
Trade and other
receivables |
|
18,938 |
|
|
19,054 |
|
Inventories |
|
36,748 |
|
|
35,227 |
|
Income tax
receivables |
|
582 |
|
|
686 |
|
Other current financial
assets |
|
26 |
|
|
167 |
|
Other current
assets |
|
7,430 |
|
|
6,942 |
|
Total current
assets |
|
66,675 |
|
|
63,765 |
|
|
|
|
|
|
Non-current
assets |
|
|
|
|
Property, plant and
equipment |
|
202,254 |
|
|
204,353 |
|
Mineral licenses |
|
35,167 |
|
|
36,099 |
|
Non-current financial
assets |
|
205 |
|
|
235 |
|
Investments in
associates |
|
275 |
|
|
265 |
|
Deferred tax
assets |
|
1,514 |
|
|
1,502 |
|
Goodwill |
|
18,344 |
|
|
18,355 |
|
Other non-current
assets |
|
804 |
|
|
891 |
|
Total
non-current assets |
|
258,563 |
|
|
261,700 |
|
Total
assets |
|
325,238 |
|
|
325,465 |
|
|
|
|
|
|
Equity and
liabilities |
|
|
|
|
Current
liabilities |
|
|
|
|
Interest-bearing loans
and borrowings, including interest payable, fines and penalties on
overdue amounts of RUB 40,287 million and RUB 38,594 million as of
June 30, 2017 and December 31, 2016, respectively |
|
430,916 |
|
|
434,165 |
|
Trade and other
payables |
|
38,186 |
|
|
40,985 |
|
Advances received |
|
4,432 |
|
|
3,815 |
|
Provisions |
|
3,121 |
|
|
3,496 |
|
Pension
obligations |
|
990 |
|
|
944 |
|
Finance lease
liabilities |
|
8,232 |
|
|
10,175 |
|
Income tax payable |
|
3,632 |
|
|
2,552 |
|
Taxes and similar
charges payable other than income tax |
|
8,971 |
|
|
9,195 |
|
Other current financial
liabilities |
|
618 |
|
|
- |
|
Other current
liabilities |
|
44 |
|
|
19 |
|
Total current
liabilities |
|
499,142 |
|
|
505,346 |
|
|
|
|
|
|
Non-current
liabilities |
|
|
|
|
Interest-bearing loans
and borrowings |
|
10,209 |
|
|
11,644 |
|
Provisions |
|
3,770 |
|
|
3,420 |
|
Pension
obligations |
|
3,583 |
|
|
3,501 |
|
Finance lease
liabilities |
|
775 |
|
|
421 |
|
Deferred tax
liabilities |
|
16,938 |
|
|
16,282 |
|
Other non-current
liabilities |
|
- |
|
|
159 |
|
Other non-current
financial liabilities |
|
38,735 |
|
|
36,740 |
|
Income tax payable |
|
151 |
|
|
540 |
|
Total
non-current liabilities |
|
74,161 |
|
|
72,707 |
|
Total
liabilities |
|
573,303 |
|
|
578,053 |
|
|
|
|
|
|
Equity |
|
|
|
|
Common shares |
|
4,163 |
|
|
4,163 |
|
Preferred shares |
|
833 |
|
|
833 |
|
Additional paid-in
capital |
|
28,326 |
|
|
28,326 |
|
Accumulated other
comprehensive income |
|
876 |
|
|
848 |
|
Accumulated
deficit |
|
(290,306 |
) |
|
(294,444 |
) |
Equity
attributable to equity shareholders of Mechel PAO |
|
(256,108 |
) |
|
(260,274 |
) |
Non-controlling
interests |
|
8,043 |
|
|
7,686 |
|
Total
equity |
|
(248,065 |
) |
|
(252,588 |
) |
Total equity
and liabilities |
|
325,238 |
|
|
325,465 |
|
|
|
|
|
|
|
|
INTERIM CONDENSED CONSOLIDATED STATEMENT OF CASH
FLOWS |
(All amounts are in
millions of Russian rubles) |
|
6 months ended June 30, |
|
|
2017* |
|
2016* |
|
|
(unaudited) |
|
(unaudited) |
Cash Flows from
Operating Activities |
|
|
|
|
Profit for the
period |
|
5,682 |
|
|
9,162 |
|
Less loss after tax for
the period from discontinued operations, net |
|
- |
|
|
(244 |
) |
Income for the
period from continuing operations |
|
5,682 |
|
|
9,406 |
|
Adjustments to
reconcile income from continuing operations to net cash provided by
operating activities: |
|
|
|
|
Depreciation |
|
6,334 |
|
|
5,745 |
|
Depletion and
amortization |
|
894 |
|
|
822 |
|
Foreign exchange (gain)
loss, net |
|
(1,804 |
) |
|
(17,442 |
) |
Deferred income
taxes |
|
646 |
|
|
(252 |
) |
Provision for doubtful
accounts |
|
321 |
|
|
543 |
|
Write-off of accounts
receivable |
|
18 |
|
|
210 |
|
Write-off of
inventories to net realisable value |
|
631 |
|
|
386 |
|
Revision in estimated
cash flows of rehabilitation provision |
|
- |
|
|
(12 |
) |
Loss on write-off of
property, plant and equipment |
|
148 |
|
|
121 |
|
Loss on disposal of
non-current assets |
|
134 |
|
|
10 |
|
Gain on write-off of
accounts payable with expired legal term |
|
(80 |
) |
|
(16 |
) |
Pension service cost
and actuarial loss, other related expenses |
|
64 |
|
|
83 |
|
Finance income |
|
(442 |
) |
|
(3,887 |
) |
Finance costs,
including fines and penalties on overdue loans and borrowings and
finance lease payments |
|
24,096 |
|
|
29,800 |
|
Gain on royalty and
other proceeds associated with disposal of Bluestone |
|
(462 |
) |
|
(10 |
) |
Other |
|
162 |
|
|
82 |
|
Changes in working
capital items: |
|
|
|
|
Trade and other
receivables |
|
(334 |
) |
|
(5,247 |
) |
Inventories |
|
(2,474 |
) |
|
(1,714 |
) |
Trade and other
payables |
|
(2,247 |
) |
|
1,318 |
|
Advances received |
|
597 |
|
|
65 |
|
Taxes payable and other
current liabilities |
|
2,525 |
|
|
1,090 |
|
Other current
assets |
|
(424 |
) |
|
(973 |
) |
Income tax paid |
|
(2,360 |
) |
|
(545 |
) |
Net operating cash
flows from discontinued operations |
|
- |
|
|
(306 |
) |
|
|
|
|
|
Net cash
provided by operating activities |
|
31,625 |
|
|
19,277 |
|
|
|
|
|
|
Cash Flows from
Investing Activities |
|
|
|
|
Loans issued and other
investments |
|
(5 |
) |
|
(11 |
) |
Interest received |
|
123 |
|
|
1 |
|
Proceeds from disposal
of subsidiaries |
|
82 |
|
|
3 |
|
Royalty and other
proceeds associated with disposal of Bluestone |
|
462 |
|
|
10 |
|
Proceeds from loans
issued and other investments |
|
142 |
|
|
28 |
|
Proceeds from disposals
of property, plant and equipment |
|
58 |
|
|
97 |
|
Purchases of property,
plant and equipment |
|
(3,102 |
) |
|
(989 |
) |
Interest paid,
capitalized |
|
(188 |
) |
|
(243 |
) |
Net cash used
in investing activities |
|
(2,428 |
) |
|
(1,104 |
) |
|
|
|
|
|
Cash Flows from
Financing Activities |
|
|
|
|
Proceeds from loans and
borrowings |
|
6,179 |
|
|
4,140 |
|
Repayment of loans and
borrowings |
|
(15,984 |
) |
|
(36,071 |
) |
Interest paid,
including fines and penalties |
|
(15,869 |
) |
|
(17,203 |
) |
Proceeds from sales of
49% share in Elga coal complex, with put-option granted |
|
- |
|
|
34,300 |
|
Repayment of
obligations under finance lease |
|
(1,983 |
) |
|
(968 |
) |
Deferred payments
for acquisition of assets |
|
(108 |
) |
|
- |
|
Deferred consideration
paid for the acquisition of subsidiaries in prior periods |
|
(1,545 |
) |
|
(2,652 |
) |
Net cash used
in financing activities |
|
(29,310 |
) |
|
(18,454 |
) |
|
|
|
|
|
Effect of exchange rate
changes on cash and cash equivalents |
|
(268 |
) |
|
12 |
|
|
|
|
|
|
Net decrease in
cash and cash equivalents |
|
(381 |
) |
|
(269 |
) |
|
|
|
|
|
Cash and cash
equivalents at beginning of period |
|
1,689 |
|
|
3,079 |
|
Cash and cash
equivalents net of overdrafts at beginning of period |
|
1,453 |
|
|
891 |
|
Cash and cash
equivalents at end of period |
|
2,951 |
|
|
2,822 |
|
Cash and cash
equivalents net of overdrafts at end of period |
|
1,072 |
|
|
622 |
|
*These interim condensed consolidated financial
statements were prepared by Mechel PAO in accordance with IFRS and
have not been audited by the independent auditor. If these interim
condensed consolidated financial statements are audited in the
future, the audit could reveal differences in our consolidated
financial results and we cannot assure that any such differences
would not be material.There were certain reclassifications to
conform with the current period presentation.
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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