) announced that it will discontinue production at its Southern
Urals Nickel Plant OAO, owing to persistent slowdown in demand
for nickel and bleak outlook for its recovery in the near future.
The decision of halting production was taken to minimize losses
for the company. The company will undergo all the regulations
that are set forth by the Russian Federation's law for the
Earlier, the board of directors of Mechel approved an asset
restructuring program and the company intends to dispense with
the Southern Urals Nickel Plant OAO, as per this program. The
plant's equipments will be prepared for shutdown for long period
in such a way that when acquired, the new owner can resume
production within acceptable time and with minimal loss.
Employees affected by the shutdown will be offered about 1,500
jobs at Mechel Group's enterprises, as per the measures required
by the labor law and the collective labor agreement and
guarantees set by the multi-lateral agreement between the
Orenburg Region's government, Orsk's city administration, Mechel
OAO and the plant's management and trade union
Few days ago, Mechel released its third quarter 2012 results.
The company posted consolidated net income of $54.9 million for
the quarter compared with $25.7 million in the year-ago quarter,
representing a roughly 114% surge. Revenues for the quarter came
in at roughly $2.71 billion, down 15.4% from $3.21 billion in the
The company registered an operating income of $126.7 million
in the quarter compared with $529.5 million a year ago, leading
to a contraction in operating margin. Adjusted earnings before
interest, taxes, depreciation and amortization (EBITDA) declined
44.7% year over year to $374.8 million in the quarter.
Mechel remains focused on improving its core divisions, such
as mining and full-cycle steelmaking, and has adopted several
measures to cut costs and increase sales. Its cost containment
initiatives contributed to a marked improvement in its bottom
line in the third quarter.
Mechel competes with
), and retains a short-term (more than 3 months) Zacks #3 Rank,
which translates to a Hold rating. We currently have a long-term
(more than 6 months) Neutral recommendation on its shares.
ARCELOR MITTAL (MT): Free Stock Analysis
MECHEL OAO ADS (MTL): Free Stock Analysis
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