) posted a consolidated net loss (as reported) of $2.9 billion for
2013, much higher than a net loss of $1.7 billion registered in
2012. The higher loss was mainly due to over $2 billion of
write-offs associated with discontinued operations.
Adjusted net loss was $734 million for the year, in stark
contrast to a profit of $305 million registered in 2012.
For the fourth quarter, Mechel posted a net loss of $681
million, higher than a loss of $127 million recorded in
third-quarter 2013, but lower than a loss of $1.1 billion logged a
year-ago. Adjusted loss increased to $251 million in the reported
quarter from around $161 million registered in the year-ago quarter
and $85 million in the previous quarter.
The company's shares went down nearly 4% during the trading
hours following the release. The stock is down around 17% so far
Revenues for 2013 came in at roughly $8.6 billion, down 19% from
$10.6 billion in the year-ago period. The decline was attributable
to the company's disposal of unprofitable assets (Romanian
facilities) and interruption of supplies from third parties due to
the end of its partnership with Estar plants.
For the fourth quarter, revenues fell around 25% year over year
and 10% sequentially to roughly $1.9 billion.
The company registered an operating loss of $529 million for
2013 compared with an operating loss of $423 million for 2012.
Adjusted earnings before interest, taxes, depreciation and
amortization (EBITDA) declined 50.4% year over year to $730 million
in 2013. The decrease in consolidated adjusted EBITDA was mainly
due lower prices for the mining division's key products.
The segment's revenues from external customers were $2,784 million
in 2013, down 17.7% from $3,384 million in the year-ago period. The
adjusted EBITDA of the mining segment declined 52% year over year
to $482 million in 2013. The weakness in coking coal markets
significantly affected the division's operations and results
In 2014, Mechel is making considerable progress in cooperating
with its Chinese partners by entering into long-term contracts in
order to receive higher volumes of supply than last year. The
company has also gained access to new metallurgical coal markets by
expanding its client base to include steelmakers in Western
Mechel continued the development of the Elga Coal Complex's
construction. It expects that products from the Elga deposit will
make their first major contribution to the division's operational
results in 2014.
Revenues from the Steel Mining segment decreased 22.8% year over
year to $4,956 million in 2013. The decline resulted from the
disposal of unprofitable assets (Romanian facilities) and
interruption of supplies from third parties due to the end of the
company's partnership with Estar plants. The adjusted EBITDA of the
Steel Mining segment declined 44.4% year over year to $210 million
The segment's revenues from external customers were $82 million in
2013, up 21% from $68 million in 2012 due to an increase in
ferrosilicon sales. The adjusted EBITDA of the segment
increased 60% year over year to $8 million in 2013 due to cuts in
operational and administrative costs, as well as decrease in
expenses in creating a reserve on unrecoverable debt.
The Power segment generated $755 million of revenues from external
customers in 2013, almost at par with 2012 results. The segment's
adjusted EBITDA was down 20% year over year to $33 million.
Capital expenditure for full-year 2013 amounted to $558.1 million,
of which $336.8 million was spent in the Mining segment, $211.5
million in the Steel Mining segment, $4.6 million in the Ferroalloy
segment and $5.2 million in the Power segment. As of Dec 31, 2013,
net debt was at $8.7 billion (down 4% year over year) while cash
and cash equivalents amounted to $269 million (down 8.5% year over
Mechel is a leading domestic steel and coal producer with a strong
position in key businesses, including production of specialty steel
and alloys. The company carries a Zacks #4 Rank (Sell).
Other companies in the steel and related industries with favorable
Zacks Rank include
). While NN sports a Zacks Rank #1 (Strong Buy), ThyssenKrupp and
Timken carry a Zacks Rank #2 (Buy).
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