Mechel PAO (MOEX: MTLR, NYSE: MTL), one of the leading
Russian mining and metals companies, announces 1Q2019 operational
results.
Mechel PAO’s Chief Executive Officer
Oleg Korzhov commented on the 1Q2019 operational
results:
“In this accounting period, prices for our key
products remained at fairly high levels. This was due to
insufficient investment into the coal industry worldwide and other
factors, such as the restrictions on Australian coal shipments and
China’s introduction of protective tariffs against US coal. The
stably comfortable price level prompts producers to a greater
output and supply of coal, which shifts the balance of supply and
demand. The price dynamics in 2019 will mostly depend on China as
the leading importer as well the stability of supply from
Australia, Russia and the United States.
“The 19-percent decrease in our coal production
in the first quarter was due to the necessity of reducing our
stockpiles which reached some 1 million tonnes due to a shortage of
gondola railcars in the Russian Railways network in the previous
quarter at Kuzbass and Southern Yakutia production areas. Starting
early this year, the delivery cycle has recovered, reflecting in
the positive dynamics of our sales to third parties (+3% for coking
coal concentrate, +7% for PCI and +45% for thermal coal) and will
have further positive impact on the next quarter’s operational
results. I would like to particularly note the growth of sales from
Elga Coal Complex, which went up by 34%.
“The 45-percent slump in anthracite sales
quarter-on-quarter was due to our decreasing output of this type of
coal at our Southern Kuzbass Coal Company, shifting our production
facilities to coking coal grades.
“We continue implementing the technical upgrade
program for our mining division, which is aimed at increasing
mining output. As part of this program, this year our facilities
will receive over 70 new equipment and transport units. We also
plan to expand our partnership with contractors we bring in to take
part in open pit mining.
“The 7-percent increase in overall sales of iron
ore concentrate in 1Q2019 was due to the increase of output at
Korshunov Mining Plant as well as sales of stockpiles accumulated
in the fourth quarter. In this accounting period, our iron ore
concentrate sales to third parties went up by half.
“Coke sales to third parties went up by 19% in
the first quarter. In this segment, we are actively expanding into
new markets, shipping pilot batches to Spain, Vietnam and
India.
“Mechel’s steel division faces a large-scale
repair campaign this year. Some repairs have already been completed
in the first quarter, but had no impact on operational results as
steel output went up by 3% and pig iron output remained at the
previous quarter’s level. We continue to successfully implement our
strategy of increasing the share of higher-margin products. For
example, the operational plans of Chelyabinsk Metallurgical Plant’s
universal rolling mill for this quarter, the same as the previous
quarter, gives priority to higher-margin sections and expanding its
product range. Demand for channels, some beam types and pit props
is consistently steady. As a result, sales of the universal rolling
mill’s sections went up by 4% quarter-on-quarter. We see the same
trend in our other facilities as well.
“A minor decrease in sales of long rolls (-2%)
quarter-on-quarter was due to the rebar market’s traditional winter
slump. The 18-percent rise in sales of stainless long rolls at
Izhstal fully made up for that. We are gradually recovering our
former position in this business segment distinguished by high
margin levels.
“Flat rolls sales went up by 26% due to a
significant increase in sales of stainless flats (+28%
quarter-on-quarter) and other types of flats (+26%) produced by
Chelyabinsk Metallurgical Plant. In this accounting period,
subsidiaries of our Mechel Service Global network were very
efficient in boosting sales of regular flats produced by third
parties to European Union engineering companies.
“Hardware sales remained roughly at the previous
quarter’s level, with a minor slump due to seasonal demand
fluctuations. At the same time, in 1Q2019 Beloretsk Metallurgical
Plant increased output quarter-on-quarter as orders for the next
accounting period came in, and mastered production of 14 new
product types, including eight types of wire ropes.
“Forgings sales went up by 3% as our export to
Europe increased. In this accounting period, Russian
machinebuilders bought fewer railway axles produced by Urals
Stampings Plant, which had its impact on the overall stampings
sales (-11%).
“Ferrosilicon sales went down by 14%
quarter-on-quarter. This was due to the fact that we were forward
with a major contract with a Japanese client, fulfilling our
obligations early in the fourth quarter, supplying a total of some
5,000 tonnes of ferrosilicon.
“Electricity generation in the first quarter
largely remained at the previous quarter’s level. Heat generation
went up by 12% due to lower temperatures in this accounting
period.”
Production and sales for
1Q2019
Production:
Product Name |
1Q2019,thousandtonnes |
1Q2018,thousandtonnes |
% |
1Q2019,thousandtonnes |
4Q2018,thousandtonnes |
% |
Run-of-Mine
Coal |
3,520 |
4,965 |
-29 |
3,520 |
4,341 |
-19 |
|
Pig Iron |
870 |
985 |
-12 |
870 |
872 |
0 |
|
Steel |
930 |
1,055 |
-12 |
930 |
905 |
+3 |
Electric power generation
(thousand kWh) |
897,722 |
916,235 |
-2 |
897,722 |
882,525 |
+2 |
Heat power generation (Gcal) |
2,020,629 |
2,212,714 |
-9 |
2,020,629 |
1,799,234 |
+12 |
Sales:
Product Name |
1Q2019,thousandtonnes |
1Q2018,thousandtonnes |
% |
1Q2019,thousandtonnes |
4Q2018,thousandtonnes |
% |
Coking coal
concentrate |
1,697 |
1,610 |
+5 |
1,697 |
1,747 |
-3 |
Including coking coal concentrate
supplied to third parties |
1,023 |
887 |
+15 |
1,023 |
990 |
+3 |
PCI |
261 |
313 |
-17 |
261 |
245 |
+7 |
PCI supplied to third
parties |
261 |
313 |
-17 |
261 |
245 |
+7 |
Anthracites |
158 |
319 |
-50 |
158 |
291 |
-45 |
Including anthracites supplied to
third parties |
130 |
267 |
-51 |
130 |
244 |
-47 |
Thermal
coal |
1,333 |
1,611 |
-17 |
1,333 |
971 |
+37 |
Including thermal coal supplied
to third parties |
1,187 |
1,356 |
-12 |
1,187 |
819 |
+45 |
Iron ore
concentrate |
612 |
351 |
+74 |
612 |
574 |
+7 |
Coke |
652 |
629 |
+4 |
652 |
609 |
+7 |
Including coke supplied to third
parties |
231 |
168 |
+38 |
231 |
195 |
+19 |
Ferrosilicon |
17 |
18 |
-8 |
17 |
20 |
-14 |
Long rolls |
607 |
686 |
-11 |
607 |
621 |
-2 |
Flat rolls |
114 |
138 |
-17 |
114 |
91 |
+26 |
Hardware |
142 |
146 |
-3 |
142 |
143 |
-1 |
Forgings |
12 |
12 |
+1 |
12 |
11 |
+3 |
Stampings |
29 |
34 |
-15 |
29 |
33 |
-11 |
|
Key investment projects progress
Universal rolling mill:
|
|
|
|
|
|
|
|
1Q2019,thousandtonnes |
1Q2018,thousandtonnes |
% |
1Q2019,thousandtonnes |
4Q2018,thousandtonnes |
% |
Sales of rails |
31 |
53 |
-42 |
31 |
61 |
-50 |
Sales of sections |
73 |
69 |
+6 |
73 |
71 |
+4 |
|
|
|
|
|
|
|
Elga coal
complex:
|
|
|
|
|
|
|
|
1Q2019,thousandtonnes |
1Q2018,thousandtonnes |
% |
1Q2019,thousandtonnes |
4Q2018,thousandtonnes |
% |
Run-of-mine coal |
845 |
1,197 |
-29 |
845 |
1,024 |
-17 |
Coal
sales |
806 |
853 |
- 6 |
806 |
603 |
+34 |
|
|
|
|
|
|
|
Mechel PAOEkaterina VidemanTel: + 7 495 221 88
88ekaterina.videman@mechel.com
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.
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