Mechel · RUS:MTLR
Mechel — Q1 2006 Earnings Presentation
13 slides from Mechel's earnings presentation, Jul 21, 2006
Slide 1: 2006 First Quarter Results Presentation
2006 First Quarter Results Presentation July 21, 2006
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: Introduction and Overview
“ MECHEL ——e Introduction and Overview
Slide 4: Results Overview
Results Overview Net income was $62.88 million in the first quarter of 2006 on revenues of $853.5 million Consolidated EBITDA margin of 15.8% Actions to further expand mining segment Efficiency improvement programs in the steel segment yielding results Maintained leadership in core product
Slide 5: 1Q 2006: Mining Segment
1Q 2006: Mining Segment Operating income of $29.28 million on revenues of $289.45 Revenue breakdown by product, 1Q06 million; Operating margin of 8.0% Other 5% EBITDA margin of 15.9% (EBITDA margin for 1Q 2005 was corrected for comparison with other companies, margin is Steam coal calculated out
Slide 6: 1Q 2006: Steel Segment
1Q 2006: Steel Segment Revenue by region, 1Q06 Revenues from 3rd parties of $564.06 million in 1Q06 CIS 5% EBITDA margin of 13.4% (EBITDA margin for 1Q 2005 was corrected for comparison with other companies, margin is calculated out of consolidated revenues of Europe* the segment, including inte
Slide 7: 2006: Strategy
2006: Strategy Management focus on profitability of operations Mining Expand the mining segment, both through organic growth and acquisitions Maintain control over costs Steel Focus on improving profitability of steel operations through cost control and efficiency gains as primary goals going
Slide 8: Financial Review
“ MECHEL Financial Review
Slide 9: Financial performance
Financial performance Revenues EBITDA* 4 000 3 805 3 636 1 000 908 30% 3 000 800 726 (US$m) 2 028 (US$m) 2 000 600 1 314 341 20% 1 020 400 207 854 1 000 200 106 134 0 0 10% 2001 2002 2003 2004 2005 1Q06 2001 2002 2003 2004 2005 1Q06 EBITDA EBITDA margin Net profit * Total assets 600 543 44% 5 000 3
Slide 10: Segment operations
Segment operations Mining segment Steel segment 1 400 60% 3 000 60% 450 57 337 1 200 50% 2 500 50% 1 000 450 40% 2 000 40% 800 42 (US$m) (US$m) 30% 1 500 30% 2 757 2 710 600 1 095 39 185 20% 1 000 20% 878 400 1 614 70 76 5 10% 500 1 012 10% 200 414 289 340 564 303 680 0 0% 0 0% 2001 2002 2003 2004 2
Slide 11: Strong balance sheet to support growth
Strong balance sheet to support growth Sound cash flow generation Operating cashflow Strong balance sheet 800 40% US$129m net debt position provides 600 619 30% significant financial flexibility to: 400 20% — Fund capex program 200 296 131 10% 35 119 — Pursue value enhancing M&A 0 81 0% opport
Slide 12: Disciplined approach to spending
Disciplined approach to spending 2006-2010 Capex program 2006-2010 Capex breakdown US$m Comments Mining Coal 680 Mine development: Olzherassky, Erunakovskaya-1, Mining Steel Sibirginsky 68% 32% Construction of Sibirginsky washing plant Mining equipment Iron ore 70 Mine development: Krasnoyar
Slide 13: Compelling investment case
Compelling investment case Low-cost vertically Strong mining business: integrated producer, 2nd largest coking coal almost fully self- producer and the largest sufficient in key raw exporter materials NYSE-listed, Strong platform for Commitment to highest growth supported by corporate governance con