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1Q2019 RESULTS PRESENTATION
May 23, 2019
www.mechel.com
This presentation does not constitute or form part of and should
not be construed as, an offer to sell or issue or the solicitation of
an offer to buy or acquire securities of Mechel PAO (Mechel) or
any of its subsidiaries in any jurisdiction or an inducement to enter
into investment activity. No part of this presentation, nor the fact of
its distribution, should form the basis of, or be relied on in
connection with, any contract or commitment or investment
decision whatsoever. Any purchase of securities should be made
solely on the basis of information Mechel files from time to time
with the U.S. Securities and Exchange Commission. No
representation, warranty or undertaking, express or implied, is
made as to, and no reliance should be placed on, the fairness,
accuracy, completeness or correctness of the information or the
opinions contained herein. None of the Mechel or any of its
affiliates, advisors or representatives shall have any liability
whatsoever (in negligence or otherwise) for any loss howsoever
arising from any use of this presentation or its contents or
otherwise arising in connection with the presentation.
This presentation may contain projections or other forward-looking
statements regarding future events or the future financial
performance of Mechel, as defined in the safe harbour 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.
The information and opinions contained in this document are
provided as at the date of this presentation and are subject to
change without notice
Disclaimer
2www.mechel.com1Q 2019 RESULTS PRESENTATION
KEY FINANCIAL RESULTS
Nelli R. Galeeva – Chief Financial Officer
www.mechel.com3 1Q 2019 RESULTS PRESENTATION
Key market drivers
Hard coking coal prices in 1Q and 2Q2019 demonstrate relative stability.
Persisting difficulties with custom clearance of imported coal in Chinese ports
were balanced by disruption of coal supplies from Australia as a result of
interruptions in major ports operations and mine accidents.
As a result 1Q2019 HCC reference price decreased by just $2 to $210 FOB
Australia and average spot price level decreased by 7% to $206 per tonne
compared to 4Q2018 price levels. 2Q2019 HCC reference price shows
another $3 decline compared to 1Q2019 and average spot price will remain at
a level of 1Q2019.
Russian coal market was even more stable as players contract coal supplies
on quarterly basis and short term international price fluctuations do not reflect
in price levels.
Iron ore price growth continues on market fears regarding anticipated
decrease in production at Australian mines, enhanced by forecasted supplies
decline from Brazil.
Turkish market weakness led to billet prices bottomed in January 2019 to
$408 FOB Black Sea. Ramadan standstill in May will further affect semi-
finished products market.
Now the US administration decision dated May 17, 2019, to abolish additional
25% import duties on Turkish steel products (the US used to be the major
market for Turkish steel) will support demand growth for scrap and semi-
finished steel from Turkish steelmakers. It will also decrease competition at
MENA and SEA regions where Turkish producers had to redirect their
products initially intended for sales to the US. This will have positive impact
on billet pricing at FOB Black Sea basis.
Rebar market in 1Q2019 despite traditional seasonal weakness remained in
average on the levels of 4Q2018. By the end of 2Q2019 recovery of market
activity is expected that may lead to prices increase.
Billet FOB Black Sea, US$/t
Source: Metal Courier
HCC prices FOB Australia, US$/t
Source: Bloomberg
www.mechel.com1Q 2019 RESULTS PRESENTATION / KEY MARKET DRIVERS4
210
117 11093 89 81 84 92
200
285
194
170192
237197
188
0
50
100
150
200
250
300
350
Jan-1
5M
ar-
15
Ma
y-1
5Jul-1
5
Sep-1
5N
ov-1
5Jan-1
6M
ar-
16
Ma
y-1
6Jul-1
6
Sep-1
6N
ov-1
6Jan-1
7M
ar-
17
Ma
y-1
7Jul-1
7
Sep-1
7N
ov-1
7Jan-1
8M
ar-
18
Ma
y-1
8Jul-1
8
Sep-1
8N
ov-1
8Jan-1
9M
ar-
19
Ma
y-1
9
HCC spot price (NAMC0031 PLDP Index) HCC quarterly benchmark price
HCC quarterly reference price HCC spot price (HCCAM1 SSYF Index)
212
200
250
300
350
400
450
500
550
Jan-1
5
Apr-
15
Jul-1
5
Oct-
15
Jan-1
6
Apr-
16
Jul-1
6
Oct-
16
Jan-1
7
Apr-
17
Jul-1
7
Oct-
17
Jan-1
8
Apr-
18
Jul-1
8
Oct-
18
Jan-1
9
Apr-
19
207
Consolidated Revenue in 1Q2019 amounted to 74.9 bln RUB, a
slight decrease of 1% compared to 4Q2018. This was a result of
Steel segment Revenue decline by 5% Q-o-Q offset by Mining
segment Revenue increase by 4%.
1Q2019 EBITDA* went up by 2% compared to 4Q2018 and
amounted to 15.3 bln RUB with EBITDA margin decreased to 20%.
Group generated Profit attributable to equity shareholders of
Mechel PAO of 11.3 bln RUB in 1Q2019 due to ruble appreciation.
www.mechel.com
RUB mln 1Q19 1Q18 % 1Q19 4Q18 %
Revenue 74,856 74,852 0% 74,856 75,571 -1%
Operating profit 10,837 13,383 -19% 10,837 1,978 448%
EBITDA* 15,322 18,436 -17% 15,322 15,021 2%
EBITDA margin, % 20% 25% 20% 20%
Profit
attributable to equity
shareholders
of Mechel PAO
11,336 3,293 244% 11,336 1,631 595%
1Q2019 Financial results summary
5
*Here and further EBITDA is calculated as Adjusted EBITDA in accordance with definition in Press
release Attachment A
1Q 2019 RESULTS PRESENTATION / KEY FINANCIAL RESULTS
In 1Q2019 coal mining volumes decreased by 29% compared to 1Q2018 and
by 19% compared to 4Q2018 as a result of production plan correction aimed to
decrease coal stocks at our mining plants built up amid railcars supply
constrains at the end of 2018.
Pig iron production remained flat Q-o-Q.
Steel production increased by 3% Q-o-Q.
Overall coking coal sales in 1Q2019 decreased by 3% Q-o-Q but sales to third-
parties grew by 3%.
Steam coal sales increased in 1Q2019 by 37% Q-o-Q and third-party sales
jumped by 45% on transportation constraints elimination.
Flat products sales increased by 26% Q-o-Q as a result of flat steel production
ramp-up at Chelyabinsk Metallurgical Plant and due to higher sales of third-
party flat products to machine-building enterprises in Austria and Germany and
to steel structures producers in Croatia.
Long products sales decreased by 2% Q-o-Q on seasonal construction market
weakness.
www.mechel.com
Production (th tonnes)
Sales (th tonnes)
Product 1Q19 1Q18 % 1Q19 4Q18 %
Run-of-mine
Coal3,520 4,965 -29 3,520 4,341 -19
Pig Iron 870 985 -12 870 872 0
Steel 930 1,055 -12 930 905 3
Product 1Q19 1Q18 % 1Q19 4Q18 %
Coking Coal 1,697 1,610 5 1,697 1,747 -3
Steam Coal 1,333 1,611 -17 1,333 971 37
Flat Products 114 138 -17 114 91 26
Long Products 607 686 -11 607 621 -2
1Q2019 Production and sales summary
6 1Q 2019 RESULTS PRESENTATION / KEY FINANCIAL RESULTS
8.9
11.0
1.90.4 0.4
-0.4
-0.2
0,0
2,0
4,0
6,0
8,0
10,0
12,0
EBITDA4Q2018
Prices External salesvolumes
Inter-segmentsales
Cost of sales Other EBITDA1Q2019
Share of Mining segment sales to China decreased to 12% in 1Q2019 from
18% in 4Q2018 (15% in 1Q2018) due to higher sales of Southern Kuzbass
coal to local market on general sales volumes growth. Also there were test
deliveries of Elga coal to South Korea and Yakutugol coal to Malaysia and
Indonesia that further decrease share of China.
External sales volumes growth was the major factor of EBITDA increase in
1Q2019 vs 4Q2018.
Mining EBITDA margin increased to 32% in 1Q2019.
www.mechel.com
Revenue, EBITDA margin, RUB Bln
22.7 25.7 24.9 23.6 24.5
9.49.6 9.4 9.1 9.5
33%41%
34%
27%32%
0%
20%
40%
60%
80%
100%
0,0
20,0
40,0
1Q18 2Q18 3Q18 4Q18 1Q19
Inter-segment revenue Revenue EBITDA margin
Revenue breakdown by regions (1Q2019)EBITDA, RUB Bln
Mining segment
Asia w/o China50%
Russia20%
China12%
Europe14%
CIS3%
Middle East1%
7 1Q 2019 RESULTS PRESENTATION / KEY FINANCIAL RESULTS
6.0
3.3
0.2
0.4
-2.0-0.1 -1.2
0,0
1,0
2,0
3,0
4,0
5,0
6,0
7,0
EBITDA4Q2018
Prices External salesvolumes
Inter-segmentsales
Cost of sales Other EBITDA1Q2019
In 1Q2019 Revenue decreased mostly due to lower prices and seasonalconstruction market weakness.
Steel segment EBITDA decreased by 46% Q-o-Q on lower Revenue andhigher cost due to iron ore prices growth.
Segment`s EBITDA margin fell Q-o-Q from 13% to 7%.
www.mechel.com
Revenue, EBITDA margin, RUB Bln
44.2 50.1 49.5 44.1 42.1
1.6
1.4 1.3
1.71.6
14%16% 15%
13%7%
0%
10%
20%
30%
0,0
10,0
20,0
30,0
40,0
50,0
1Q18 2Q18 3Q18 4Q18 1Q19
Inter-segment revenue Revenue EBITDA margin
EBITDA, RUB Bln
Steel segment
Russia67%
Europe19%
CIS12%
Asia2%
8
Revenue breakdown by regions (1Q2019)
1Q 2019 RESULTS PRESENTATION / KEY FINANCIAL RESULTS
0.84
8.9
15,1 14,5 14,6 14,611.0
6.0 3.3
0.2
2.1
-2.7 0.07 0.84 0.2
EBITDA4Q2018
MiningSegment
SteelSegment
PowerSegment
Consolidatedadj.
EBITDA1Q2019
Power Steel Mining Consolidated adj.
23.6
76,5 74,5 74,8
24.5
44.1 42.1
7.9
0.9 -2.0 0.3
8.2
Revenue4Q2018
MiningSegment
SteelSegment
PowerSegment
Revenue1Q2019
Power Steel Mining
Consolidated revenue and EBITDA dynamics
Mining segment Revenue to 3rd parties in 1Q2019 increased by 4%,compared to 4Q2018, on higher coal sales volumes partly offset by weakerprices.
Steel segment Revenue to 3rd parties in 1Q2019 decreased by 5%compared to 4Q2018 on weaker prices.
Power segment Revenue to 3rd parties added 4% in 1Q2019 vs 4Q2018due to higher demand for heat and hot water in winter season andincreased sales at capacity market.
Mining segment EBITDA increased by 23% in 1Q2019 compared to4Q2018 and amounted to 11.0 bln RUB due to higher sales volumes andcosts decrease.
Steel segment EBITDA decreased by 46% Q-o-Q on higher costs andamounted to 3.3 bln RUB.
Power segment EBITDA increased by 41% Q-o-Q and amounted to 0.2 blnRUB.
www.mechel.com
Revenue, RUB Bln
EBITDA, RUB Bln
9 1Q 2019 RESULTS PRESENTATION / KEY FINANCIAL RESULTS
Cash flow & trade working capital
Cash flow from operations completely covers Group's current expenses,
including debt service and lease payments.
In 1Q2019 there was 2.7 bln RUB trade working capital release.
Group’s capital expenditures in 1Q2019 amounted to 1.7 bln RUB, including
0.5 bln RUB of lease payment.
www.mechel.com
CASH FLOW, RUB Bln
FREE CASH FLOW for 1Q2019, RUB BlnTrade working capital management, RUB Bln
68.9 68.9 67.0 69.8 71.3
(57.9) (54.2) (52.4) (57.2) (61.4)
11.014.7 14.6 12.6 9.9
31.03.2018 30.06.2018 30.09.2018 31.12.2018 31.03.2019
Trade current assets Trade current liabilities Trade working capital
10
0.41.4
14.0
-0.6
-12.0
-0.4
Cash net ofoverdrafts asof 31.12.2018
Net Operatingactivities
Net Investingactivities
Net Financingactivities
Effect ofexchange rate
changes
Cash net ofoverdrafts asof 31.03.2019
14.0
5.71.4
0.4
-7.6
-1.1
-4.3
Cash flow fromOperations
Net interestexpenses, incl
overdue interestand capitalized
Capitalexpenditures
(excludinglease)
Net investingactivity
Free Cash Flow Net Settelmentof loan,lease
and otherobligations
Free Cash Flowto Firm
1Q 2019 RESULTS PRESENTATION / KEY FINANCIAL RESULTS
Debt structure & net debt / EBITDA ratio dynamics
www.mechel.com
13.7
11.0
6.65.3 5.2 5.1 5.6 5.7
0,0
5,0
10,0
15,0
20,0
25,0
30,0
0
100 000
200 000
300 000
400 000
500 000
600 000
FY'14 FY'15 FY'16 FY'17 1H'18 9M'18 FY'18 1Q'19
LeaseLong-term borrowingsInterest payableShort-term borrowings and current portion of long-term borrowingsNet Debt*/EBITDA
RUB
406 bln
RUB
487 blnRUB
433 bln
* excluding GPB option on Elga, fines, penalties other non-current financial liabilities
11
RUB
426 bln
RUB
431 blnRUB
421 bln Portion of restructured debt reached 92%; ruble portion of debt amounts
to 65%; and Russian state-owned banks hold 88% of our debt portfolio.
Net leverage increased to 5.7 on lower EBITDA.
Average interest rate through the debt portfolio as of May 2019 is 8.2%
per annum; average paid interest rate amounts to 7,9% per annum.
In 1Q2019 Group repaid 4.3 bln RUB of debt, including capitalized
interest.
RUB
423 bln
Russian state-owned Banks88%
ECA 8%
Bonds2%
Others2%
Restructured loans92%
In restructuring8%
RUB65%
USD13%
EUR22%
1Q 2019 RESULTS PRESENTATION / KEY FINANCIAL RESULTS
RUB
411 bln
APPENDIX
www.mechel.com12 1Q 2019 RESULTS PRESENTATION
2,8
97
1,3
91
2,2
13*
4,2
65
2,6
66
1,6
36
2,2
72*
2,9
46
2,9
00
2,1
31
1,9
88*
2,4
99
3,1
86
2,3
86
2,7
48*
3,4
41
3,1
19
3,1
01
1,8
02*
2,9
26
Coal SKCC Coal YU Coal Elga* Iron ore
1Q18 2Q18 3Q18 4Q18 1Q19
1,7
43
1,6
23
1,7
02
2,4
43
1,3
84
52%
19%
10%
10%
9%
4Q2018 1Q2019
Other
Depreciation andamortisation
Energy
Staff costs
Raw materials and goodsfor resale
44%
24%
11%
11%
10%
www.mechel.com
Cash costs, RUB/tonne COS structure
Average sales prices FCA, RUB/tonneRevenue, EBITDA margin, RUB Bln
Mining segment
22,7 25,7 24,9 23,6 24,5
9,49,6 9,4
9,1 9,5
33%41%
34%27%
32%
0%
50%
100%
0,0
10,0
20,0
30,0
40,0
1Q18 2Q18 3Q18 4Q18 1Q19
Inter-segment revenue Revenue EBITDA margin
12,5
39
6,6
92
5,1
63
1,4
23 6,7
87
13,4
15
7,3
33
5,5
26
1,5
74 7
,067
13,3
26
7,0
29
6,0
54
1,0
16
5,3
60
13,7
74
8,0
08
6,0
44
2,1
39
4,7
24
14,7
35
7,7
77
5,5
60
1,6
60
4,8
68
Coke Coking coal Anthracite andPCI
Steam coal Iron ore
1Q18 2Q18 3Q18 4Q18 1Q19
15.8 bln RUB16.2 bln RUB
13
Coking coal concentrate produced on Elga
* Coking coal concentrate produced on Elga and Southern Kuzbass Coal Company washing facilities
1Q 2019 RESULTS PRESENTATION / APPENDIX
www.mechel.com
Revenue breakdown by regions
1Q2019
Revenue breakdown by products
1Q2019
Revenue breakdown by products
4Q2018
Revenue breakdown by regions
4Q2018
Mining segment
Coking coal42%
Anthracites and PCI
14%
Steam coal 15%
Middlings5%
Coke17%
Coking products
2%
Other2%
Iron ore3%
Asia w/o China50%
Russia20%
China12%
Europe14%
Middle East1%
CIS 3%
Coking coal45%
Anthracites and PCI
19%
Steam coal7%
Middlings6%
Coke14%
Coking products
3%
Other3% Iron ore
3%
Asia w/o China45%
Russia17%
China18%
Europe15%
Middle East2%
CIS3%
RUB
24.5
bln
RUB
23.6
bln
14 1Q 2019 RESULTS PRESENTATION / APPENDIX
74%
10%
11%4%
1%
4Q18 1Q19
Other
Depreciation
Energy
Staff costs
Raw materials andpurchased goods
74%
10%
11%4% 1%
www.mechel.com
Cash costs, RUB/tonneCOS structure
Average sales prices FCA, RUB/tonneRevenue, EBITDA margin, RUB Bln
Steel segment
44.2 50.1 49.5 44.1 42.1
1.6
1.4 1.3
1.71.6
14%16% 15%
13%
7%
0%
10%
20%
30%
40%
0,0
20,0
40,0
1Q18 2Q18 3Q18 4Q18 1Q19
Inter-segment revenue Revenue EBITDA margin
22,8
72
21,3
46
22,0
87
27,3
04
32,2
57
23,7
09
21,1
47
22,4
68
27,7
26
39,4
22
24,4
78
22
,46
2
23,6
88 3
0,9
82 3
8,4
08
26,2
68
23
,33
3
24,5
38
35,2
51 4
2,9
73
25
,82
5
24,3
94
25,3
17 31,3
43
44,6
01
Billets Wire rod Rebar Carbon flat Railway rails
1Q18 2Q18 3Q18 4Q18 1Q19
36.6 bln RUB35.7 bln RUB
15
29,7
16
46,3
67
41,2
84
34
,47
0
44,2
36
83,3
12
32,9
85 4
7,2
86
45,2
81
38,7
43
45,5
97
86,4
35
34,6
12 4
8,0
56
44,3
91
36
,22
5
45,9
83
85,1
70
33,6
18
49,6
74
46,6
41
35,9
99
45,1
67
83,8
56
31,3
10
47,2
55
44,3
56
36,9
90
42,3
03
78,5
45
Rebar Hardware Carbon flat Railway rails Structuralshapes
Ferrosilicon
1Q18 2Q18 3Q18 4Q18 1Q19
1Q 2019 RESULTS PRESENTATION / APPENDIX
www.mechel.com
Revenue breakdown by regions
1Q2019
Revenue breakdown by products
1Q2019
Revenue breakdown by products
4Q2018
Revenue breakdown by regions
4Q2018
Steel segment
Rebar25%
Carbon long products
15%
Hardware16%
Forgings and stampings
9%
Carbon flat12%
Stainless flat2%
Ferrosilicon2%
Railway rails3%
Structural shapes7%
Other9%
Russia67%
Europe19%
CIS12%
Asia2%
RUB
42.1
bln
16
Rebar25%
Carbon long products
15%
Hardware16%
Forgings and stampings
9%
Carbon flat10%
Stainless flat1%
Ferrosilicon3%
Railway rails5%
Structural shapes8%
Other8%
Russia71%
Europe17%
CIS10%
Asia2%
RUB
44.1
bln
1Q 2019 RESULTS PRESENTATION / APPENDIX
www.mechel.com
Average electricity sales prices and cash costs, RUB/ th KWh COS structure
Revenue, EBITDA margin, RUB Bln
1Q2019 Revenue demonstrated 4% growth Q-on-Q as a result of seasonallyhigher demand for heat and hot water and increased sales at capacitymarket.
1Q2019 EBITDA grew by 41% compared to 4Q2018 on higher sales to bothexternal and internal customers.
Power segment
94%
3%
1%
2%
4Q18 1Q19
Other
Depreciation
Staff costs
Raw materials and goodsfor resale including energy
94%
3%
1%
2%
940 8931,066 1,024 1,009
2,6452,471 2,505
2,377 2,479
1Q18 2Q18 3Q18 4Q18 1Q19
Cash costs Sales price
7.9 6.4 5.6 7.9 8.2
4.0
3.63.6
4.3 4.4
6% 5%2% 2% 2%
-10%
0%
10%
20%
30%
40%
0,0
2,0
4,0
6,0
8,0
10,0
12,0
1Q18 2Q18 3Q18 4Q18 1Q19
Inter-segment revenue Revenue EBITDA margin
9.2 bln RUB9.0 bln RUB
17 1Q 2019 RESULTS PRESENTATION / APPENDIX
Mechel is a global mining and metals company
www.mechel.com
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