Mechel · RUS:MTLR
Mechel — Q1 2009 Earnings Presentation
15 slides from Mechel's earnings presentation, Jul 10, 2009
Slide 1: 2009 First Quarter Results Presentation
2009 First Quarter Results Presentation July 10, 2009
Slide 2: Disclaimer
Disclaimer This presentation does not constitute or form part of and should not be construed as, an offer to sell or issue or the solicitation of an offer to buy or acquire securities of Mechel OAO (Mechel) or any of its subsidiaries in any jurisdiction or an inducement to enter into investment acti
Slide 3: Financial Review
Financial Review 3
Slide 4: Improving Financial Performance
Improving Financial Performance Revenue, EBITDA and Net profit Revenue (lhs) EBITDA (lhs) Operating margin (rhs) Improved gross result: Net profit (lhs) EBITDA margin (rhs) $ Million gross margin grew to 32% 4,000 60% 3,231 gross profit rose by 9% to $375 mln 3,000 2,328 37% 3,021 34% 37% 40% 2,000
Slide 5: Segments Overview
Segments Overview Operating profit by segments $ Million 80 High degree of diversification and vertical 62 integration helps mitigate risk and provides 60 50 stability 40 20 12 14 Despite market and production downturn 0 Mining segment demonstrate positive result Steel Mining Ferroalloy Power Cons.a
Slide 6: Steel Segment Performance
Steel Segment Performance Revenue, EBITDA $ Million 2,000 58 100% Revenue virtually stable at $643 mln 74 1,750 75% 28% fall in COGS 1,500 50% 66 28% 24% 25% Increase in physical sales volumes across all 1,250 25% 22% 20% major products 1,000 15% 1,825 -12% 0% 1,743 80 750 42 -25% SG&A expenses fell
Slide 7: Steel Segment Performance
Steel Segment Performance External sales structure $1,261 mn $643 mn 55% of the Group’s revenue 100% 13% 23% 2% 80% 14% Increase in export sales supports production 4% 8% 17% 60% 8% Increased sales of high quality constructional 9% 3% and stainless help on margin while increased 40% 29% sales of sem
Slide 8: Mining Segment Performance
Mining Segment Performance Revenue, EBITDA $ Million Despite sharp fall in prices the gross margin 5,000 60% 50% 52% still at 53% of revenue 49% 46% 50% 4,000 41% Cash cost of coking coal concentrate at 48% 38% 40% Yakutugol temporarily rose as a result of 3,000 sharp production decrease 33% 30% 2,0
Slide 9: Mining Segment Performance
Mining Segment Performance External sales structure Iron ore prices gain support $504 mn $344 mn 100% Sales of iron ore concentrate increased 6% 7% 12% 4% supported by demand in China 80% Change in geography of sales support positive 60% 46% 64% result: 40% Share of Russia fell to 27% 20% 41% Growth
Slide 10: Ferroalloys Segment Performance
Ferroalloys Segment Performance Revenue, EBITDA $ Million Revenue increased by almost 70% 250 100% 75% Chrome sales increased 127%, FeSi – 97% 200 53 50% 3933% 22% SG&A expenses fell to 17% of the revenue 150 48 25% 24% from 41% in the 4Q08 21% -5% 0% 100 -12% -25% Operating loss reduced 5 x to $25
Slide 11: Power Segment Performance
Power Segment Performance Revenue, EBITDA $ Million Winter season helps the sales – gross margin 400 20% at healthy 30% 350 12% 15% SG&A expenses fell from 32% to 24% of 300 10% 7% 10% 5% revenue 250 99 5% 1% 1% 6% 85 82 4% Reduction of cash cost q-o-q ensures high 200 74 0% -2% 73 margins 150 -2% -
Slide 12: Cash Generation Capacity
Cash Generation Capacity Net Cash Flow $ Million 4,000 Release of $129 mln from the working capital 2007 2008 3Q08 4Q08 1Q09 helped to maintain the cash flow positive 3,000 2,550 2,230 2,000 1,299 980 Investment CAPEX is financed through long- 1,000 905 727 305 179 term debt instruments 40 0 0 (128)
Slide 13: Debt Profile
Debt Profile Debt profile $ Million Current cash - $725 mln – sufficient to 6,000 Short-term debt Long-term debt secure working capital and repayment 5,000 financing 1,564 4,000 1,989 Additional liquidity source – RUR 30 bln 3,000 1,313 1-year registered commercial papers 1,057 2,000 773 Imminent re
Slide 14: Debt Profile
Debt Profile Loans repayment schedule as after refinancing in July, 2009 repayment capex finance facilities $ Million repayment of Mechel OAO RUR 5 bln bond 2,000 repayment of Gazprombank US$1bln loan repayment of Yakutugol PXF facility 1,750 repayment of Oriel syndicated facility renewable working
Slide 15: Financial Results Overview
Financial Results Overview US$ million unless 1Q09 4Q08 Change, % otherwise stated Revenue 1,179 1,370 -14% Cost of sales (804) (1,027) -22% Gross margin 31.8% 25.0% Operating profit 14 (251) 105% Operating margin 1.2% 18.3% EBITDA (474) (817) 42% EBITDA margin -40.2% -59.7% Net Income (691) (497) -