Steel and coal miner
) revealed the decisions taken by its board of directors at a
meeting. The primary agenda of the board meeting was to draw an
effective strategy to improve the company's financial performance
and increase its shareholder value. The company reaffirmed its
prior strategy of further emphasizing on mining and full-cycle
ARCELOR MITTAL (MT): Free Stock Analysis Report
MECHEL OAO ADS (MTL): Free Stock Analysis
To read this article on Zacks.com click here.
Mechel OAO will also focus on producing high value-added products,
including specialty steel, stainless steel and hardware. The
company aims to improve its operational efficiency and develop
promising investment projects.
Mechel also announced its intention to sell a minority stake in its
mining division, Mechel Mining OAO, to a strategic partner. The
company will, however, not divest more than 25% in the division.
In June 2012, the company released its first quarter 2012 results
with consolidated net income of $218.0 million, a 29.5% decline
from last year's $309.2 million. Revenues in the quarter came in at
$3.0 billion, up 3.4% from $2.9 billion posted in the year-ago
The company's margins were unimpressive as operating income dropped
30% from last year to $314 million and adjusted earnings before
interest, taxes, depreciation and amortization (EBITDA) declined
18.2% to $463.4 million in the quarter.
Mechel is a leading domestic steel and coal producer with a strong
position in key markets, including specialty steel and alloys. The
company has the largest coal reserve base in Russia and is mainly
focusing on growth and cost-cutting measures. The company primarily
Mechel owns and controls essential infrastructure, including ports,
rolling stock and power plants, which provide access to the export
markets. However, as mentioned earlier, Mechel could be handicapped
because of its high debt and interest burden, and might not be able
to keep up with its huge capital spending program.
Mechel has a short-term Zacks #3 Rank, which translates into a
short-term (1 to 3 months) Hold rating. We currently have a Neutral
recommendation (more than 6 months) on the shares of the