Consolidated revenue
– 276.0
bln rubles,
EBITDA* -
66.2 bln rublesNet profit,
attributable to shareholders of Mechel PAO
– 7.1
bln rubles
Mechel PAO (MOEX:MTLR) (NYSE:MTL)
, a
leading Russian mining and steel group, announces financial results
for the full year 2016.
Mechel PAO’s Chief Executive Officer Oleg
Korzhov commented on the 2016 results:
“Last year, markets of steel and steelmaking
commodities have repeatedly surprised us. The year began with a
dynamic surge of steel prices, then the coal market began its
recovery which became a dramatic hike by the end of summer. By
December, coal prices approached historical highs.
“As a result, with stable production and sales
volumes the Group showed an improvement of all financial results by
the year’s end. Our revenue went up by 9% year-on-year, EBITDA was
up by 45% and EBITDA margin reached 24%. It should be noted
separately that for the first time since 2011 the Group earned a
net profit, attributable to shareholders of Mechel PAO, of 7.1 bln
rubles.
“Signing debt restructuring agreements with
Russian state banks, which account for 71% of the company’s debt
portfolio, was a prime achievement. Restructuring conditions put
off the maturity of our main body of debt until 2020 with following
amortization until April 2022. Loan rates were reconsidered and
tied to the key interest rate of the Central Bank of the Russian
Federation. Besides, the new agreements provide for a partial
interest capitalization, which brings down our current debt service
payments.
“The Group’s capital expenditure for 2017 is set
at 12.5 bln rubles.
“All this considered, the cashflow generated by
the Group enables us to service our debt, operate successfully and,
if the current favorable market situation holds, begin to decrease
our debt burden.”
Consolidated Results For The Full Year
2016
Mln rubles |
FY 2016 |
|
FY 2015 |
|
% |
|
4Q’16 |
|
3Q’16 |
|
% |
|
Revenuefrom external customers |
276,009 |
|
253,141 |
|
9 |
% |
79,659 |
|
66,153 |
|
20 |
% |
Operating profit |
42,690 |
|
24,252 |
|
76 |
% |
13,929 |
|
11,561 |
|
20 |
% |
EBITDA |
66,164 |
|
45,730 |
|
45 |
% |
24,593 |
|
15,850 |
|
55 |
% |
EBITDA, margin |
24 |
% |
18 |
% |
|
31 |
% |
24 |
% |
|
Net profit (loss) attributable to shareholders of
Mechel PAO |
7,126 |
|
(115,163 |
) |
|
1,579 |
|
(2,757 |
) |
|
___________________________
* 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:
“Last year, the Group’s mining division
significantly improved its financial results as the global coking
coal market rapidly recovered. The surge in metallurgical coal
prices which began in the middle of the year halted only in
mid-December. Prices for high-quality coking coal topped $300 per
tonne. This means that prices have nearly quadrupled over the year,
rising from historical lows to peak levels last seen in 2011.
“In order to use this favorable market situation
to the fullest, the division re-oriented its sales of coking and
other metallurgical coals to focus on more profitable Asian
markets. If in 1Q2016 72% of our coking coal concentrate went to
export, in 4Q2016 exports accounted for 90% of this product’s
sales, while total sales of coking coal concentrate in 4Q2016
topped 1Q2016 sales by nearly 10%.
“At the same time, our mining facilities
effectively controlled their expenditures and optimized production
processes. Last year we invested a lot of work into shifting
Yakutugol Holding Company’s Dzhebariki-Haya underground mine to
open mining, which is a safer and more profitable mining method.
Open mining at Dzhebariki-Haya began in March 2017. At Elga, which
is our most promising project, coking coal now accounts for 75% of
volumes mined there, which means an increased output of the most
profitable product.
“As a result, last year compared to 2015 our
revenue from sales to third parties went up by 11%, EBITDA was up
by 56% and EBITDA margin to 34%. If we look at the dynamics in the
fourth quarter as compared to the third quarter, revenue went up by
nearly half, EBITDA grew by 88% and EBITDA margin reached 46%.
“In early 2017, coal markets remain favorable.
Despite a persistent slump in coal spot prices, which reached
$150-160 per tonne by mid-February, the first quarter’s benchmark
was $285 per tonne, which enabled us to continue selling a major
part of our coal for high prices. Cataclysmic weather in Australia
in the end of the first quarter and at the outset of the second one
again hiked coal prices to historical highs. Major Australian
mining companies have one by one declared force-majeure, the
world’s largest coal terminals have been closed for days, but the
worst problem lay in the devastation of the railroad
infrastructure. The quarter prices, which have been expected to fix
close to the spot prices in March, have not been fixed. Price
negotiations have been put on hold until the cyclone’s consequences
could be assessed.
“We expect that in 2017 coal mining volumes will
remain stable at last year’s level.”
Mln rubles |
FY 2016 |
|
FY 2015 |
|
% |
|
4Q’16 |
|
3Q’16 |
|
% |
|
Revenue from external customers |
89,647 |
|
80,632 |
|
11 |
% |
29,657 |
|
19,931 |
|
49 |
% |
Revenueinter-segment |
31,907 |
|
28,091 |
|
14 |
% |
9,426 |
|
7,770 |
|
21 |
% |
EBITDA |
41,884 |
|
26,831 |
|
56 |
% |
17,905 |
|
9,541 |
|
88 |
% |
EBITDA, margin |
34 |
% |
25 |
% |
|
46 |
% |
34 |
% |
|
Steel Segment
Mechel-Steel Management Company OOO’s Chief
Executive Officer Andrey Ponomarev noted:
“Last year the division’s financial results
showed confident growth. Considering that the division’s overall
production and sales volume has slightly changed, the chief factors
that had a positive impact on the results were a favorable market
situation and optimization of our product range in favor of
high-margin products.
“Last year, the situation on the markets for the
division’s steel products has largely been positive for our
company. Early last year Chinese producers left the billet market,
which boosted prices for finished products. Russia’s long products
market quickly took on the positive impulse from export quotations.
A major rebar shortage on several regional markets also became an
additional growth factor. However, as this surge was not supported
by end demand, the growth was soon checked, and the downslide
persisted until late August. After that prices continued to waver
until the end of the year under the influence of various factors,
but remained at much higher levels than they had been early in the
year.
“The production and sales structure has also
changed. The share of semi-finished products like billets and wire
rod in our sales continued to decline. Instead we increased sales
of high-margin products such as rails and other structural shapes
produced by Chelyabinsk Metallurgical Plant’s universal rolling
mill. In 2016 the mill produced over 500,000 tonnes of high-quality
rolls, including 300,000 tonnes of rails. This year the mill’s load
will increase even further, and the mill will master production of
new types of profiles, including rails compliant with foreign
railroad standards.
“The steel division’s facilities conducted
repairs and equipment modernization and mastered new types of
products as planned. For example, Chelyabinsk Metallurgical Plant
completed capital repairs of its blast furnace #5 as well as
repairs of the key equipment of its oxygen converter workshop which
accounts for over 70% of all steel made by the plant. Beloretsk
Metallurgical Plant mastered production of 12 new types of steel
products, including wire used for import substitution, wire ropes
and steel ribbons for various industries.
“The chief factor impacting our products’ cost
dynamics is the prices for incoming commodities which were
particularly volatile last year. However, within the Group this
factor was compensated by a high level of vertical integration.
“As a result, last year as compared to 2015,
revenue from sales to third parties went up by 11%, EBITDA grew by
35% and EBITDA margin reached 14%. In the fourth quarter compared
to the third quarter, revenue went up by 3%, EBITDA grew by 16% and
EBITDA margin reached 16%.”
Mln rubles |
FY 2016 |
|
FY 2015 |
|
% |
|
4Q’16 |
|
3Q’16 |
|
% |
|
Revenue from external customers |
161,639 |
|
146,032 |
|
11 |
% |
42,739 |
|
41,296 |
|
3 |
% |
Revenueinter-segment |
7,254 |
|
6,972 |
|
4 |
% |
1,958 |
|
1,677 |
|
17 |
% |
EBITDA |
23,172 |
|
17,127 |
|
35 |
% |
7,327 |
|
6,325 |
|
16 |
% |
EBITDA, margin |
14 |
% |
11 |
% |
|
16 |
% |
15 |
% |
|
Power Segment
Mechel-Energo OOO’s Chief Executive Officer Petr
Pashnin noted:
“Last year production and sales of electricity
went down due to several factors, including a warmer weather as
well as constantly high load of hydroelectric power stations which
increased market competition. The decline in sales as well as the
growth of tariffs for electric power transmission increased our
commercial costs and decreased the division’s financial
results.
“In 2016 as compared to 2015, revenue from sales
to third parties went down by 7%, EBITDA by 20% and EBITDA margin
slumped to 4%. In the fourth quarter compared to the third quarter,
revenue went up by 47%. EBITDA demonstrated a major slump as
commercial expenditure and production costs went up.”
Mln rubles |
FY 2016 |
|
FY 2015 |
|
% |
|
4Q’16 |
|
3Q’16 |
|
% |
|
Revenue from external customers |
24,723 |
|
26,477 |
|
-7 |
% |
7,263 |
|
4,925 |
|
47 |
% |
Revenueinter-segment |
15,903 |
|
14,990 |
|
6 |
% |
4,480 |
|
3,524 |
|
27 |
% |
EBITDA |
1,662 |
|
2,090 |
|
-20 |
% |
(440 |
) |
88 |
|
-600 |
% |
EBITDA, margin |
4 |
% |
5 |
% |
|
-4 |
% |
1 |
% |
|
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.
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 2016 Earnings 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 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 leases payments, Finance income, Net result
on the disposal of non-current assets, Impairment of goodwill and
other non-current assets, Write-off of accounts receivables,
Allowance 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
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 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 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) profit 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
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 |
31.12.2016 |
|
31.12.2015 |
|
Interest-bearing loans
and borrowings, excluding interest, fines and penalties on overdue
amounts |
395,571 |
|
444,199 |
|
Interest payable |
16,916 |
|
27,269 |
|
Non-current
interest-bearing loans and borrowings |
11,644 |
|
4,308 |
|
Other non-current
financial liabilities |
36,197 |
|
- |
|
less Cash and cash
equivalents |
(1,689 |
) |
(3,079 |
) |
Net debt, excluding finance lease liabilities, fines and
penalties on overdue amounts |
458,639 |
|
472,697 |
|
|
|
|
Finance lease
liabilities, current portion |
10,175 |
|
13,507 |
|
Finance lease
liabilities, non-current portion |
421 |
|
481 |
|
Net debt, excluding fines and penalties on overdue
amounts |
469,235 |
|
486,685 |
|
|
|
|
|
|
|
Mln rubles |
31.12.2016 |
|
31.12.2015 |
|
Trade and other
receivables |
19,054 |
|
16,013 |
|
Inventories |
35,227 |
|
35,189 |
|
Other current
assets |
6,942 |
|
8,191 |
|
Income tax
receivables |
686 |
|
603 |
|
Trade current assets |
61,909 |
|
59,996 |
|
|
|
|
Trade and other
payables |
40,985 |
|
54,602 |
|
Advances received |
3,815 |
|
3,492 |
|
Provisions and other
current liabilities |
3,515 |
|
2,558 |
|
Tax payable other than
income tax |
9,195 |
|
8,034 |
|
Income tax payable |
2.552 |
|
5,549 |
|
Trade current liabilities |
60,062 |
|
74,235 |
|
|
|
|
Trade working capital |
1,847 |
|
(14,239 |
) |
EBITDA can be reconciled to our consolidated
statement of profit (loss) as follows:
___________________________
** Calculations of Net debt could be differ from indicators
calculated in accordance with loan agreements upon dependence on
definitions in such agreements.
|
Consolidated Results |
|
|
Mining Segment
*** |
|
|
Steel Segment*** |
|
|
Power Segment*** |
|
In millions of Russian rubles |
12m 2016 |
|
12m 2015 |
|
|
12m 2016 |
|
12m 2015 |
|
|
12m 2016 |
|
12m 2015 |
|
|
12m 2016 |
|
12m 2015 |
|
Net profit
(loss) attributable to shareholders of Mechel PAO |
7,126 |
|
(115,163 |
) |
|
1,797 |
|
(71,120 |
) |
|
6,399 |
|
(41,438 |
) |
|
(517 |
) |
(2,286 |
) |
Add: |
|
|
|
|
|
|
|
|
|
|
|
Depreciation and depletion |
13,714 |
|
14,085 |
|
|
7,912 |
|
9,106 |
|
|
5,435 |
|
4,650 |
|
|
367 |
|
329 |
|
Foreign
exchange (gain) loss, net |
(25,947 |
) |
71,106 |
|
|
(14,960 |
) |
49,872 |
|
|
(10,904 |
) |
21,122 |
|
|
(83 |
) |
111 |
|
Finance
costs, including fines and penalties on overdue loans and
borrowings and finance leases payments |
54,240 |
|
60,452 |
|
|
39,345 |
|
33,880 |
|
|
17,411 |
|
25,645 |
|
|
1,078 |
|
2,173 |
|
Finance
income |
(1,176 |
) |
(183 |
) |
|
(2,482 |
) |
(1,030 |
) |
|
(2,234 |
) |
(344 |
) |
|
(54 |
) |
(55 |
) |
Net
result on the disposal of non-current assets, impairment of
goodwill and other non-current assets, write-off of accounts
receivables, allowance for doubtful accounts and write-off of
inventories to net realisable value |
8,447 |
|
4,772 |
|
|
2,584 |
|
900 |
|
|
5,389 |
|
2,122 |
|
|
474 |
|
1,751 |
|
Loss
(profit) after tax from discontinued operations, net |
426 |
|
(932 |
) |
|
- |
|
(764 |
) |
|
406 |
|
(168 |
) |
|
20 |
|
- |
|
Net result on the
disposal of subsidiaries |
(194 |
) |
19 |
|
|
- |
|
- |
|
|
(194 |
) |
19 |
|
|
- |
|
- |
|
Profit (loss) attributable to non-controlling interests |
1,706 |
|
535 |
|
|
511 |
|
(444 |
) |
|
1,056 |
|
812 |
|
|
139 |
|
166 |
|
Income
tax expense (benefit) |
4,893 |
|
8,322 |
|
|
5,019 |
|
5,632 |
|
|
(265 |
) |
2,794 |
|
|
139 |
|
(103 |
) |
Pension
service cost and actuarial loss, other related expenses |
(171 |
) |
50 |
|
|
(198 |
) |
125 |
|
|
26 |
|
(81 |
) |
|
2 |
|
6 |
|
Other
fines and penalties |
1,396 |
|
1,598 |
|
|
556 |
|
707 |
|
|
742 |
|
890 |
|
|
98 |
|
- |
|
Gain on
write-off of accounts payable with expired legal term |
(115 |
) |
(224 |
) |
|
(19 |
) |
(33 |
) |
|
(95 |
) |
(190 |
) |
|
(1 |
) |
(1 |
) |
Other
one-off items |
1,819 |
|
1,293 |
|
|
1,819 |
|
- |
|
|
- |
|
1,293 |
|
|
- |
|
- |
|
EBITDA |
66,164 |
|
45,730 |
|
|
41,884 |
|
26,831 |
|
|
23,172 |
|
17,127 |
|
|
1,662 |
|
2,090 |
|
EBITDA,
margin |
24 |
% |
18 |
% |
|
34 |
% |
25 |
% |
|
14 |
% |
11 |
% |
|
4 |
% |
5 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
In millions of Russian rubles |
12m 2016 |
|
12m 2015 |
|
|
12m 2016 |
|
12m 2015 |
|
|
12m 2016 |
|
12m 2015 |
|
|
12m 2016 |
|
12m 2015 |
|
Net profit
(loss) attributable to shareholders of Mechel PAO |
7,126 |
|
(115,163 |
) |
|
1,797 |
|
(71,120 |
) |
|
6,399 |
|
(41,438 |
) |
|
(517 |
) |
(2,286 |
) |
Add: |
|
|
|
|
|
|
|
|
|
|
|
Impairment of goodwill and other non-current assets |
5,202 |
|
1,460 |
|
|
1,336 |
|
- |
|
|
3,866 |
|
16 |
|
|
- |
|
1,444 |
|
Loss
(profit) after tax from discontinued operations, net |
426 |
|
(932 |
) |
|
- |
|
(764 |
) |
|
406 |
|
(168 |
) |
|
20 |
|
- |
|
Net result on the
disposal of subsidiaries |
(194 |
) |
19 |
|
|
- |
|
- |
|
|
(194 |
) |
19 |
|
|
- |
|
- |
|
Effect on (loss) profit attributable to non-controlling
interests |
(109 |
) |
585 |
|
|
- |
|
- |
|
|
(109 |
) |
560 |
|
|
- |
|
25 |
|
Foreign
exchange (gain) loss, net |
(25,947 |
) |
71,106 |
|
|
(14,960 |
) |
49,872 |
|
|
(10,904 |
) |
21,122 |
|
|
(83 |
) |
111 |
|
Pension
service cost and actuarial loss, other related expenses |
(171 |
) |
50 |
|
|
(198 |
) |
125 |
|
|
26 |
|
(81 |
) |
|
2 |
|
6 |
|
Other
fines and penalties |
1,396 |
|
1,598 |
|
|
556 |
|
707 |
|
|
742 |
|
890 |
|
|
98 |
|
- |
|
Gain on
write-off of accounts payable with expired legal term |
(115 |
) |
(224 |
) |
|
(19 |
) |
(33 |
) |
|
(95 |
) |
(190 |
) |
|
(1 |
) |
(1 |
) |
Other
one-off items |
1,819 |
|
1,293 |
|
|
1,819 |
|
- |
|
|
- |
|
1,293 |
|
|
- |
|
- |
|
Net (loss)
profit, net of income tax |
(10,567 |
) |
(40,208 |
) |
|
(9,669 |
) |
(21,213 |
) |
|
137 |
|
(17,978 |
) |
|
(481 |
) |
(701 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
Operating
profit |
42,690 |
|
24,252 |
|
|
31,012 |
|
16,005 |
|
|
11,531 |
|
8,526 |
|
|
701 |
|
39 |
|
Add: |
|
|
|
|
|
|
|
|
|
|
|
Impairment of goodwill and other non-current assets |
5,202 |
|
1,460 |
|
|
1,336 |
|
- |
|
|
3,866 |
|
16 |
|
|
- |
|
1,444 |
|
Loss on
write-off of property, plant and equipment |
1,953 |
|
691 |
|
|
863 |
|
199 |
|
|
1,089 |
|
492 |
|
|
1 |
|
- |
|
Pension
service cost and actuarial loss, other related expenses |
(171 |
) |
50 |
|
|
(198 |
) |
125 |
|
|
26 |
|
(81 |
) |
|
2 |
|
6 |
|
Other
fines and penalties |
1,396 |
|
1,598 |
|
|
556 |
|
707 |
|
|
742 |
|
890 |
|
|
98 |
|
- |
|
Other one-off
items |
1,819 |
|
1,293 |
|
|
1,819 |
|
- |
|
|
- |
|
1,293 |
|
|
- |
|
- |
|
Adjusted
operating profit |
52,889 |
|
29,344 |
|
|
35,388 |
|
17,036 |
|
|
17,254 |
|
11,136 |
|
|
802 |
|
1,489 |
|
***
including inter-segment operations |
|
Consolidated Results |
|
|
Mining Segment
*** |
|
|
Steel segment*** |
|
|
Power Segment*** |
|
In millions of Russian rubles |
4q 2016 |
|
3q 2016 |
|
|
4q 2016 |
|
3q 2016 |
|
|
4q 2016 |
|
3q 2016 |
|
|
4q 2016 |
|
3q 2016 |
|
Net profit
(loss) attributable to shareholders of Mechel PAO |
1,579 |
|
(2,757 |
) |
|
4,232 |
|
(2,682 |
) |
|
(1,652 |
) |
415 |
|
|
(801 |
) |
(385 |
) |
Add: |
|
|
|
|
|
|
|
|
|
|
|
Depreciation and depletion |
3,692 |
|
3,456 |
|
|
2,099 |
|
2,025 |
|
|
1,488 |
|
1,344 |
|
|
105 |
|
87 |
|
Foreign
exchange (gain) loss, net |
(6,209 |
) |
(2,296 |
) |
|
(3,240 |
) |
(1,711 |
) |
|
(2,954 |
) |
(592 |
) |
|
(15 |
) |
7 |
|
Finance
costs, including fines and penalties on overdue loans and
borrowings and finance leases payments |
10,993 |
|
13,447 |
|
|
7,211 |
|
9,984 |
|
|
4,199 |
|
5,059 |
|
|
272 |
|
256 |
|
Finance
income |
2,787 |
|
(76 |
) |
|
1,477 |
|
(409 |
) |
|
622 |
|
(1,519 |
) |
|
(1 |
) |
- |
|
Net
result on the disposal of non-current assets, impairment of
goodwill and other non-current assets, write-offs of accounts
receivables, allowance for doubtful accounts and write-offs
of inventories to net realisable value |
6,629 |
|
588 |
|
|
1,752 |
|
494 |
|
|
5,000 |
|
34 |
|
|
(124 |
) |
58 |
|
Loss
(profit) after tax from discontinued operations, net |
84 |
|
99 |
|
|
84 |
|
(43 |
) |
|
- |
|
137 |
|
|
- |
|
5 |
|
Net result on the
disposal of subsidiaries |
(3 |
) |
(136 |
) |
|
- |
|
- |
|
|
(3 |
) |
(136 |
) |
|
- |
|
- |
|
Profit (loss) attributable to non-controlling interests |
551 |
|
291 |
|
|
214 |
|
25 |
|
|
320 |
|
270 |
|
|
17 |
|
(3 |
) |
Income
tax expense (benefit) |
2,471 |
|
3,057 |
|
|
2,325 |
|
1,877 |
|
|
100 |
|
1,146 |
|
|
46 |
|
34 |
|
Pension
service cost and actuarial loss, other related expenses |
(295 |
) |
41 |
|
|
(289 |
) |
30 |
|
|
(6 |
) |
10 |
|
|
- |
|
1 |
|
Other
fines and penalties |
549 |
|
179 |
|
|
237 |
|
(46 |
) |
|
250 |
|
197 |
|
|
62 |
|
28 |
|
Gain on
write-off of accounts payable with expired legal term |
(54 |
) |
(43 |
) |
|
(16 |
) |
(3 |
) |
|
(37 |
) |
(40 |
) |
|
(1 |
) |
- |
|
Other
one-off items |
1,819 |
|
- |
|
|
1,819 |
|
- |
|
|
- |
|
- |
|
|
- |
|
- |
|
EBITDA |
24,593 |
|
15,850 |
|
|
17,905 |
|
9,541 |
|
|
7,327 |
|
6,325 |
|
|
(440 |
) |
88 |
|
EBITDA,
margin |
31 |
% |
24 |
% |
|
46 |
% |
34 |
% |
|
16 |
% |
15 |
% |
|
-4 |
% |
1 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
In millions of Russian rubles |
4q 2016 |
|
3q 2016 |
|
|
4q 2016 |
|
3q 2016 |
|
|
4q 2016 |
|
3q 2016 |
|
|
4q 2016 |
|
3q 2016 |
|
Net profit
(loss) attributable to shareholders of Mechel PAO |
1,579 |
|
(2,757 |
) |
|
4,232 |
|
(2,682 |
) |
|
(1,652 |
) |
415 |
|
|
(801 |
) |
(385 |
) |
Add: |
|
|
|
|
|
|
|
|
|
|
|
Impairment of goodwill and other non-current assets |
4,828 |
|
374 |
|
|
962 |
|
374 |
|
|
3,866 |
|
- |
|
|
- |
|
- |
|
Loss
(profit) after tax from discontinued operations, net |
85 |
|
99 |
|
|
84 |
|
(43 |
) |
|
1 |
|
137 |
|
|
- |
|
5 |
|
Net
result on the disposal of subsidiaries |
(3 |
) |
(136 |
) |
|
- |
|
- |
|
|
(3 |
) |
(136 |
) |
|
- |
|
- |
|
Effect on loss
attributable to non-controlling interests |
(48 |
) |
(22 |
) |
|
- |
|
- |
|
|
(48 |
) |
(22 |
) |
|
- |
|
- |
|
Foreign exchange (gain) loss, net |
(6,209 |
) |
(2,296 |
) |
|
(3,240 |
) |
(1,711 |
) |
|
(2,954 |
) |
(592 |
) |
|
(15 |
) |
7 |
|
Pension
service cost and actuarial loss, other related expenses |
(295 |
) |
41 |
|
|
(289 |
) |
30 |
|
|
(6 |
) |
10 |
|
|
- |
|
1 |
|
Other
fines and penalties |
549 |
|
179 |
|
|
237 |
|
(46 |
) |
|
250 |
|
197 |
|
|
62 |
|
28 |
|
Gain on
write-off of accounts payable with expired legal term |
(54 |
) |
(43 |
) |
|
(16 |
) |
(3 |
) |
|
(37 |
) |
(40 |
) |
|
(1 |
) |
- |
|
Other
one-off items |
1,819 |
|
- |
|
|
1,819 |
|
- |
|
|
- |
|
- |
|
|
- |
|
- |
|
Net profit
(loss), net of income tax |
2,251 |
|
(4,561 |
) |
|
3,789 |
|
(4,081 |
) |
|
(583 |
) |
(31 |
) |
|
(755 |
) |
(344 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
Operating
profit (loss) |
13,929 |
|
11,561 |
|
|
14,096 |
|
7,061 |
|
|
535 |
|
4,705 |
|
|
(506 |
) |
(99 |
) |
Add: |
|
|
|
|
|
|
|
|
|
|
|
Impairment of goodwill and other non-current assets |
4,828 |
|
374 |
|
|
962 |
|
374 |
|
|
3,866 |
|
- |
|
|
- |
|
- |
|
Loss on
write-off of property, plant and equipment |
1,649 |
|
182 |
|
|
570 |
|
182 |
|
|
1,079 |
|
- |
|
|
1 |
|
- |
|
Pension
service cost and actuarial loss, other related expenses |
(295 |
) |
41 |
|
|
(289 |
) |
30 |
|
|
(6 |
) |
10 |
|
|
- |
|
1 |
|
Other
fines and penalties |
549 |
|
179 |
|
|
237 |
|
(46 |
) |
|
250 |
|
197 |
|
|
62 |
|
28 |
|
Other
one-off items |
1,819 |
|
- |
|
|
1,819 |
|
- |
|
|
- |
|
- |
|
|
- |
|
- |
|
Adjusted
operating profit (loss) |
22,479 |
|
12,337 |
|
|
17,395 |
|
7,601 |
|
|
5,724 |
|
4,912 |
|
|
(443 |
) |
(70 |
) |
*** including
inter-segment operations |
|
|
|
|
|
|
|
|
|
|
|
Attachment B
CONSOLIDATED STATEMENT OF PROFIT (LOSS) AND OTHER
COMPREHENSIVE INCOME (LOSS) for the year ended
December 31, 2016(All amounts are in millions
of Russian rubles, unless stated otherwise)
|
|
Year ended December 31, 2016 |
|
|
Year ended December 31, 2015
**** |
|
|
Continuing
operations |
|
|
|
|
|
Revenue |
|
276,009 |
|
|
253,141 |
|
|
Cost of goods sold |
|
(146,322 |
) |
|
(151,334 |
) |
|
Gross
profit |
|
129,687 |
|
|
101,807 |
|
|
|
|
|
|
|
|
Selling and
distribution expenses |
|
(56,233 |
) |
|
(51,117 |
) |
|
Loss on write-off of
property, plant and equipment |
|
(1,953 |
) |
|
(691 |
) |
|
Impairment of goodwill
and other non-current assets |
|
(5,202 |
) |
|
(1,460 |
) |
|
Allowance for doubtful
accounts |
|
(758 |
) |
|
(1,507 |
) |
|
Taxes other than income
taxes |
|
(5,913 |
) |
|
(5,853 |
) |
|
Administrative and
other operating expenses |
|
(18,791 |
) |
|
(17,300 |
) |
|
Other operating
income |
|
1,853 |
|
|
373 |
|
|
Total selling,
distribution and operating income and (expenses), net |
|
(86,997 |
) |
|
(77,555 |
) |
|
Operating
profit |
|
42,690 |
|
|
24,252 |
|
|
|
|
|
|
|
|
Finance income |
|
1,176 |
|
|
183 |
|
|
Finance costs including
fines and penalties on overdue loans and borrowings and finance
leases payments of RUB 6,013 million and RUB 19,167 million for the
periods ended December 31, 2016 and 2015, respectively |
|
(54,240 |
) |
|
(60,452 |
) |
|
Foreign exchange gain
(loss), net |
|
25,947 |
|
|
(71,106 |
) |
|
Share of (loss) profit
of associates, net of provision |
|
(17 |
) |
|
|
− |
|
|
Other income |
|
598 |
|
|
342 |
|
|
Other expenses |
|
(2,003 |
) |
|
(347 |
) |
|
Total other
income and (expense), net |
|
(28,539 |
) |
|
(131,380 |
) |
|
Income (loss)
before tax from continuing operations |
|
14,151 |
|
|
(107,128 |
) |
|
|
|
|
|
|
|
Income tax (expense)
benefit |
|
(4,893 |
) |
|
(8,322 |
) |
|
Income (loss)
for the year from continuing operations |
|
9,258 |
|
|
(115,450 |
) |
|
|
|
|
|
|
|
Discontinued
operations |
|
|
|
|
|
(Loss) profit after tax
for the year from discontinued operations, net |
|
(426 |
) |
|
822 |
|
|
Profit (loss)
for the year |
|
8,832 |
|
|
(114,628 |
) |
|
Attributable
to: |
|
|
|
|
|
Equity shareholders of
Mechel PAO |
|
7,126 |
|
|
(115,163 |
) |
|
Non-controlling
interests |
|
1,706 |
|
|
535 |
|
|
|
|
|
|
|
|
Other comprehensive income |
|
|
|
|
|
Other
comprehensive income to be reclassified to profit or loss in
subsequent periods, net of income tax: |
|
430 |
|
|
295 |
|
|
|
Exchange
differences on translation of foreign operations |
|
431 |
|
|
287 |
|
|
|
Net (loss)
gain on available for sale financial assets |
|
(1 |
) |
|
8 |
|
|
|
|
|
|
|
|
|
|
Other
comprehensive loss not to be reclassified to profit or loss in
subsequent periods, net of income tax: |
|
(23 |
) |
|
|
(194 |
) |
|
|
Re-measurement losses on defined benefit plans |
|
(23 |
) |
|
|
(194 |
) |
|
|
Other comprehensive income for the year, net of
tax |
|
407 |
|
|
101 |
|
|
|
Total comprehensive income (loss) for the year, net of
tax |
|
9,239 |
|
|
(114,527 |
) |
|
|
Attributable to: |
|
|
|
|
|
|
Equity
shareholders of Mechel PAO |
|
7,529 |
|
|
(115,064 |
) |
|
|
Non-controlling interests |
|
1,710 |
|
|
537 |
|
|
|
Earnings (loss) per share |
|
|
|
|
|
|
Weighted
average number of common shares |
|
416,270,745 |
|
|
416,270,745 |
|
|
|
Basic and
diluted, profit (loss) for the year attributable to ordinary equity
holders of the parent |
|
17.12 |
|
|
(276.65 |
) |
|
|
Earnings
(loss) per share from continuing operations (Russian rubles per
share), basic and diluted |
|
17.99 |
|
|
(278.44 |
) |
|
|
(Loss)
earnings per share from discontinued operations (Russian rubles per
share) |
|
(0.87 |
) |
|
1.79 |
|
|
|
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
as of December 31, 2016(All amounts
are in millions of Russian rubles)
|
|
December 31, 2016 |
|
December 31, 2015
**** |
Assets |
|
|
|
|
Current
assets |
|
|
|
|
Cash and cash
equivalents |
|
1,689 |
|
|
3,079 |
|
Trade and other
receivables |
|
19,054 |
|
|
16,013 |
|
Inventories |
|
35,227 |
|
|
35,189 |
|
Income tax
receivables |
|
686 |
|
|
603 |
|
Other current financial
assets |
|
167 |
|
|
45 |
|
Other current
assets |
|
6,942 |
|
|
8,191 |
|
Total current
assets |
|
63,765 |
|
|
63,120 |
|
|
|
|
|
|
Non-current
assets |
|
|
|
|
Property, plant and
equipment |
|
204,353 |
|
|
215,844 |
|
Mineral licenses |
|
36,099 |
|
|
38,517 |
|
Non-current financial
assets |
|
235 |
|
|
194 |
|
Investments in
associates |
|
265 |
|
|
284 |
|
Deferred tax
assets |
|
1,502 |
|
|
1,492 |
|
Goodwill |
|
18,355 |
|
|
21,378 |
|
Other non-current
assets |
|
891 |
|
|
1,243 |
|
Total
non-current assets |
|
261,700 |
|
|
278,952 |
|
Total
assets |
|
325,465 |
|
|
342,072 |
|
|
|
|
|
|
Equity and
liabilities |
|
|
|
|
Current
liabilities |
|
|
|
|
Interest-bearing loans
and borrowings, including interest payable, fines and penalties on
overdue amounts of RUB 38,594 million and RUB 47,475 million as of
December 31, 2016 and 2015, respectively |
|
434,165 |
|
|
491,674 |
|
Trade and other
payables |
|
40,985 |
|
|
54,602 |
|
Advances received |
|
3,815 |
|
|
3,492 |
|
Provisions |
|
3,496 |
|
|
2,532 |
|
Pension
obligations |
|
944 |
|
|
1,120 |
|
Finance lease
liabilities |
|
10,175 |
|
|
13,507 |
|
Income tax payable |
|
2,552 |
|
|
5,549 |
|
Taxes and similar
charges payable other than income tax |
|
9,195 |
|
|
8,034 |
|
Other current
liabilities |
|
19 |
|
|
26 |
|
Total current
liabilities |
|
505,346 |
|
|
580,536 |
|
|
|
|
|
|
Non-current
liabilities |
|
|
|
|
Interest-bearing loans
and borrowings |
|
11,644 |
|
|
4,308 |
|
Provisions |
|
3,420 |
|
|
3,439 |
|
Pension
obligations |
|
3,501 |
|
|
3,746 |
|
Finance lease
liabilities |
|
421 |
|
|
481 |
|
Deferred tax
liabilities |
|
16,282 |
|
|
11,090 |
|
Other non-current
liabilities |
|
159 |
|
|
189 |
|
Other non-current
financial liabilities |
|
36,740 |
|
|
− |
|
Income tax
payables |
|
540 |
|
|
137 |
|
Total
non-current liabilities |
|
72,707 |
|
|
23,390 |
|
Total
liabilities |
|
578,053 |
|
|
603,926 |
|
|
|
|
|
|
Equity |
|
|
|
|
Common shares |
|
4,163 |
|
|
4,163 |
|
Preferred shares |
|
833 |
|
|
833 |
|
Additional paid-in
capital |
|
28,326 |
|
|
28,322 |
|
Accumulated other
comprehensive income |
|
848 |
|
|
445 |
|
Accumulated
deficit |
|
(294,444 |
) |
|
(301,565 |
) |
Equity
attributable to equity shareholders of Mechel PAO |
|
(260,274 |
) |
|
(267,802 |
) |
|
|
|
|
|
Non-controlling
interests |
|
7,686 |
|
|
5,948 |
|
Total
equity |
|
(252,588 |
) |
|
(261,854 |
) |
Total equity
and liabilities |
|
325,465 |
|
|
342,072 |
|
CONSOLIDATED STATEMENT OF CASH FLOWS
for the year ended December 31,
2016(All amounts are in millions of Russian
rubles, unless stated otherwise)
|
|
Year ended December 31, |
|
|
2016 |
|
|
2015 **** |
|
Cash flows from
operating activities |
|
|
|
|
|
Net
profit (loss) |
|
8,832 |
|
|
(114,628 |
) |
|
Loss (profit) from
discontinuing operations, net of income tax |
|
426 |
|
|
(822 |
) |
|
Net profit (loss)
from continuing operations |
|
9,258 |
|
|
(115,450 |
) |
|
|
|
|
|
|
|
Adjustments to
reconcile net profit (loss) from continuing operations to net
cash provided by operating activities: |
|
|
|
|
|
Depreciation |
|
11,813 |
|
|
12,397 |
|
|
Depletion and
amortization |
|
1,901 |
|
|
1,688 |
|
|
Foreign exchange (gain)
loss |
|
(25,947 |
) |
|
71,106 |
|
|
Deferred income
taxes |
|
5,104 |
|
|
7,946 |
|
|
Allowance for doubtful
accounts |
|
758 |
|
|
1,507 |
|
|
Write-off of accounts
receivable |
|
113 |
|
|
247 |
|
|
Write-off of
inventories to net realisable value |
|
364 |
|
|
1,003 |
|
|
Revision in estimated
cash flows of rehabilitation provision |
|
(375 |
) |
|
(47 |
) |
|
Loss on write-off of
property, plant and equipment |
|
1,953 |
|
|
691 |
|
|
Impairment of goodwill
and non-current assets |
|
5,202 |
|
|
1,460 |
|
|
Loss on sale of
property, plant and equipment |
|
57 |
|
|
102 |
|
|
Gain on sale of
investments |
|
(186 |
) |
|
− |
|
|
Gain on write-off of
accounts payable with expired legal term |
|
(115 |
) |
|
(222 |
) |
|
Curtailment and
remeasurement of pension obligations |
|
(325 |
) |
|
(142 |
) |
|
Pension service cost
and actuarial loss, other related expenses |
|
154 |
|
|
192 |
|
|
Finance income |
|
(1,176 |
) |
|
(183 |
) |
|
Finance costs including
fines and penalties on overdue loans and borrowings and finance
leases payments of RUB 6,013 million and RUB 19,167 million for the
periods ended December 31, 2016 and 2015, respectively |
|
54,240 |
|
|
60,452 |
|
|
VEB commissions
write-off |
|
1,411 |
|
|
− |
|
|
Provision for
non-recoverable advances to pension funds |
|
408 |
|
|
− |
|
|
Other |
|
(70 |
) |
|
480 |
|
|
|
|
|
|
|
|
Changes in working
capital items: |
|
|
|
|
|
Trade and other
receivables |
|
(5,542 |
) |
|
4,597 |
|
|
Inventories |
|
(1,070 |
) |
|
1,873 |
|
|
Trade and other
payables |
|
(4,259 |
) |
|
(8,125 |
) |
|
Advances received |
|
588 |
|
|
(664 |
) |
|
Taxes payable and other
current liabilities |
|
2,368 |
|
|
(1,465 |
) |
|
Other current
assets |
|
(883 |
) |
|
997 |
|
|
Income taxes paid |
|
(2,101 |
) |
|
(1,437 |
) |
|
Net operating cash
flows of discontinued operations |
|
(436 |
) |
|
(136 |
) |
|
Net cash
provided by operating activities |
|
53,207 |
|
|
38,867 |
|
|
Cash flows from
investing activities |
|
|
|
|
|
Proceeds from disposal
of securities |
|
− |
|
|
143 |
|
|
Loans issued and other
investments |
|
(133 |
) |
|
(6 |
) |
|
Interest received |
|
128 |
|
|
25 |
|
|
Royalty payments
associated with disposal of Bluestone |
|
103 |
|
|
101 |
|
|
Proceeds from disposal
of other subsidiaries |
|
145 |
|
|
76 |
|
|
Purchases
of available for sale securities |
|
(4 |
) |
|
− |
|
|
Proceeds from loans
issued |
|
31 |
|
|
15 |
|
|
Proceeds from disposals
of property, plant and equipment |
|
285 |
|
|
405 |
|
|
Purchases of property,
plant and equipment |
|
(4,742 |
) |
|
(5,076 |
) |
|
Purchases of mineral
licenses and other related payments |
|
− |
|
|
(71 |
) |
|
Interest paid,
capitalized |
|
(782 |
) |
|
(830 |
) |
|
Net investing cash
flows of discontinued operations |
|
− |
|
|
− |
|
|
Net cash used
in investing activities |
|
(4,969 |
) |
|
(5,218 |
) |
|
|
|
|
|
|
|
Cash flows from
financing activities |
|
|
|
|
|
Proceeds from
borrowings |
|
4,002 |
|
|
13,875 |
|
|
Repayment of
borrowings |
|
(42,322 |
) |
|
(11,896 |
) |
|
Dividends paid |
|
(5 |
) |
|
(4 |
) |
|
Dividends paid to
non-controlling interest |
|
(2 |
) |
|
(1 |
) |
|
Interest paid |
|
(33,872 |
) |
|
(28,910 |
) |
|
Acquisition of
non-controlling interest in subsidiaries |
|
− |
|
|
(1 |
) |
|
Proceeds from sale of
49% share in Elga coal complex, with put-option granted.... |
|
34,300 |
|
|
− |
|
|
Repayment of
obligations under finance lease |
|
(3,238 |
) |
|
(2,677 |
) |
|
Deferred consideration
paid for the acquisition of subsidiaries in prior periods |
|
(4,732 |
) |
|
(4,819 |
) |
|
Net cash used
in financing activities |
|
(45,869 |
) |
|
(34,433 |
) |
|
|
|
|
|
|
|
Effect of exchange rate
changes on cash and cash equivalents |
|
(1,807 |
) |
|
331 |
|
|
Net increase
(decrease) in cash and cash equivalents |
|
562 |
|
|
(453 |
) |
|
|
|
|
|
|
|
Cash and cash
equivalents at the beginning of period |
|
3,079 |
|
|
4,074 |
|
|
Cash and cash
equivalents net of overdrafts at
the beginning of period |
|
891 |
|
|
1,344 |
|
|
Cash and cash
equivalents at the end of period |
|
1,689 |
|
|
3,079 |
|
|
Cash and cash
equivalents net of overdrafts at the end of
period |
|
1,453 |
|
|
891 |
|
|
|
|
|
|
|
|
****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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