Mechel Reports 1Q2017 Operational Results
May 31 2017 - 4:00AM
Mechel PAO (MOEX:MTLR) (NYSE:MTL)
, one of
the leading Russian mining and metals companies, announces 1Q2017
operational results.
Production and sales for
1Q2017
Production:
Product
Name |
1Q2017,
thousand tonnes |
1Q2016, thousand tonnes |
% |
1Q2017, thousand tonnes |
4Q2016,
thousand tonnes |
% |
Run-of-mine
coal |
5,074 |
5,663 |
-10 |
5,074 |
5,596 |
-9 |
|
Pig
iron |
1,046 |
1,005 |
+4 |
1,046 |
1,041 |
+1 |
|
Steel |
1,121 |
1,042 |
+8 |
1,121 |
1,125 |
0 |
Sales:
Product
Name |
1Q2017,
thousand tonnes |
1Q2016, thousand tonnes |
% |
1Q2017, thousand tonnes |
4Q2016,
thousand tonnes |
% |
Coking coal
concentrate |
1,996 |
2,221 |
-10 |
1,996 |
2,172 |
-8 |
|
Including coking coal
concentrate supplied to third parties |
1,214 |
1,422 |
-15 |
1,214 |
1,554 |
-22 |
|
PCI |
341 |
521 |
-34 |
341 |
303 |
+13 |
|
Including PCI supplied
to third parties |
341 |
521 |
-34 |
341 |
303 |
+13 |
|
Anthracites |
448 |
420 |
+7 |
448 |
406 |
+10 |
|
Including anthracites
supplied to third parties |
385 |
362 |
+7 |
385 |
354 |
+9 |
|
Steam
coal |
1,589 |
1,713 |
-7 |
1,589 |
1,633 |
-3 |
|
Including steam coal
supplied to third parties |
1,360 |
1,460 |
-7 |
1,360 |
1,384 |
-2 |
|
Iron ore
concentrate |
652 |
684 |
-5 |
652 |
666 |
-2 |
|
Coke |
722 |
705 |
+2 |
722 |
687 |
+5 |
|
Including coke supplied
to third parties |
235 |
234 |
+1 |
235 |
183 |
+28 |
|
Ferrosilicon |
14 |
21 |
-37 |
14 |
20 |
-31 |
|
Long
rolls |
705 |
733 |
-4 |
705 |
732 |
-4 |
|
|
|
|
|
|
|
|
Flat
rolls |
153 |
128 |
+20 |
153 |
143 |
+7 |
|
Hardware |
154 |
158 |
-3 |
154 |
167 |
-8 |
|
Forgings |
14 |
10 |
+36 |
14 |
8 |
+83 |
|
Stampings |
24 |
15 |
+61 |
24 |
20 |
+20 |
|
Electric power
generation (thousand kWh) |
931,916 |
963,434 |
-3 |
931,916 |
904,107 |
+3 |
|
Heat power
generation (Gcal) |
2,087,367 |
2,140,923 |
-3 |
2,087,367 |
1,959,645 |
+7 |
Key investment projects
progressUniversal rolling mill:
|
|
|
|
|
|
|
|
1Q2017,
thousand tonnes |
1Q2016, thousand
tonnes |
% |
1Q2017, thousand
tonnes |
4Q2016,
thousand tonnes |
% |
Rails, beams
and shapes |
157 |
96 |
+63 |
157 |
160 |
-2 |
|
|
|
|
|
|
|
Elga coal
complex:
|
|
|
|
|
|
|
|
1Q2017,
thousand tonnes |
1Q2016, thousand
tonnes |
% |
1Q2017, thousand
tonnes |
4Q2016,
thousand tonnes |
% |
Run-of-mine
coal |
837 |
993 |
-16 |
837 |
842 |
-1 |
|
|
|
|
|
|
|
Mechel PAO’s Chief Executive Officer
Oleg Korzhov commented on the 1Q2017
operational results:
“This accounting period can be considered as
fairly favorable for the global coal market. After the aggressive
price hike in 3Q2016 and 4Q2016, the market went back to the price
level comfortable for most international mining companies. Despite
the slump in spot prices for premium coking coal, which reached
150-170 US dollars per tonne in February, 1Q2017 benchmark FOB
Australia was 285 dollars per tonne, which enabled us to continue
selling some of our coal for fairly high prices.
“The 8-percent decrease in coking coal
concentrate sales as compared to 4Q2016 was due to two factors.
First, in 4Q2016 we exported all our available coal reserves,
including storage stockpiles, to Asia Pacific to profit by the
market situation and ensure that our clients’ requests would be
met. Second, in 1Q2017 concentrate sales went down due to a
temporary change in mining structure at Neryungrinsky Open Pit,
where regular steam coal’s share increased and coking coal’s share
decreased accordingly.
“PCI sales went up by 13% due to fulfillment of
our contractual obligations to customers in Japan and South Korea,
where we shipped a total of 300,000 tonnes of product. The
10-percent increase of anthracite sales was due to stable demand
for this type of coal from Asian customers. In order to get maximum
profit from our trade transactions, we continue to re-direct
anthracite sales from Europe to Asia due to more profitable deal
conditions. As for steam coal, the insignificant three-percent
slump in sales was due to technical reasons — a major shipment to
China has been put off until the next accounting period as the
cargo vessel was late arriving to port. Nevertheless, in 1Q2017 we
increased steam coal sales to Asia Pacific by 5% and in particular
to China — by 22% quarter-on-quarter.
“In 1Q2017 we saw a hike in European demand for
coke, which enabled us to increase sales to Germany and Turkey and
generally increase sales to third parties by 28%.
“The steel division’s operations in this
accounting period were stable, with pig iron and steel production
maintained at the level of the previous quarter. In March,
Chelyabinsk Metallurgical Plant’s oxygen converter workshop
produced over 350,000 tonnes of steel, an absolute record since the
workshop’s launch. We continue to increase production of
high-margin products at the universal rolling mill, it is one of
our company’s chief priorities. In March, the universal rolling
mill produced over 65,000 tonnes of rolls, which is a maximum
monthly production volume since the mill’s launch.
“The four-percent decrease in long rolls sales
was primarily due to weak domestic demand for rebar and a price
decrease that followed. We have accumulated sufficient stockpiles
of these products in our sales network’s storages and intend to
sell them in the following accounting periods when conditions are
more beneficial, especially as the new construction season comes
on.
“Flat rolls sales went up by 7% as Chelyabinsk
Metallurgical Plant’s business portfolio expanded and our European
sales network Mechel Service Global’s subsidiaries landed new
contracts.
“The eight-percent decrease in hardware sales
was due to negative dynamics on the domestic hardware market.
Nevertheless, our Beloretsk Metallurgical Plant is quick to respond
to market demands, and in 1Q2017 the plant significantly increased
sales of high value-added hardware. Sales of strands for concrete
products, used in construction industry, showed the best increase,
by 32%.
“Bratsk Ferroalloys Plant’s ferrosilicon sales
to the group’s enterprises and third parties went down by 31% due
to the decrease in exports as some shipments were transferred to
2Q2017.
“The 83-percent increase in forgings sales was
due to a stronger demand in the European Union and weaker
competition from other suppliers of similar products, as well as
resumption of forgings supplies to Turkey. The 20-percent increase
in stampings sales was due to Russian wagon makers increasing their
orders for car axles. As Urals Stampings Plant takes measures to
build long-term ties with wagon-building companies, we expect a
further increase in orders for car axles to come this year.
“The three-percent increase in electricity
generation was due to the completion of repairs to Southern Kuzbass
Power Plant’s boiler equipment. Heat generation went up by 7% as
temperature in the Chelyabinsk Region dropped below expected levels
in this accounting period, as well as the group’s chief production
facilities increased consumption of industrial steam.”
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.
Mechel PAO
Ekaterina Videman
Tel: + 7 495 221 88 88
ekaterina.videman@mechel.com
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