Mechel ups Q4 2017 EBITDA 16% to 22 bln rubles, consistent with forecast
MOSCOW. April 5 (Interfax) - Mechel saw its EBITDA in Q4 2017 grow 16% quarter-on-quarter to 22 billion rubles, the mining and metals company said in a statement.
These results practically coincided with the expectations of analysts from Aton Capital and BKS: their median forecast had been 21.78 billion rubles.
The company's EBITDA margin was 29% compared with 26% in the prior quarter.
Mechel revenue in Q4 2017 grew 4% to 76.3 billion rubles. Operating profit was slumped 32% to 10.75 billion rubles. According to estimates by Aton Capital, free cash flow in Q4 was 8.3 billion rubles, up twofold quarter-on-quarter.
Mechel's annual revenue was up 8% to 299.1 billion rubles, with operating profit up 34% to 57.2 billion rubles. EBITDA in 2017 was 81.1 billion rubles, up 23%. EBITDA margin was 27% compared with 24% a year prior.
The revenue of Mechel's mining division was up 10% quarter-on-quarter to 25.44 billion rubles, and 12% year-on-year to 100.13 billion rubles. Its EBITDA indicator in Q4 2017 grew 10% to 14.1 billion rubles or 47% in the year to 61.4 billion rubles. EBITDA margin was 43% in 2017 compared with 34% in the prior year.
Despite a reduction in coal production and sales of coal products, the division's results were buoyed by favorable market conditions: In 2017, the average price on quarterly contracts for high-quality hard coking coal was some $210 per tonne FOB Australia, which is $96 or 84% higher than in 2016, Mechel-Mining CEO Pavel Shtark said. "Late 2017 was characterized by upward price dynamics for high-quality coking coal. In November 2017 prices again topped $200 and remained over this level until the end of March 2018. As a result, contract prices for premium coking coal demonstrated further growth in Q1 2018 and reached $237 per tonne," Shtark said.
Mechel's steel division posted revenue growth in 2017 of 7% to 172.76 billion rubles and a 2% reduction in Q4 to 43.38 billion rubles. This was largely due to changes in production and sales structure. The company almost entirely gave up on selling billets and wire rod and reduced rebar sales by 11%. At the same time, rail sales went up by 18%, sales of the universal rolling mill's other structural shapes by 33%, stainless long steel by 16%, flat steel by 17%, forgings by 18% and stampings by 28%.
The division's EBITA in Q4 2017 was up 9% to 6.64 billion rubles and down 19% in the year to 18.8 billion rubles. The reduction in annual EDIBTA was prompted by weak markets and high commodity prices in H1 2017. In the third quarter the market situation improved and remained stable until the year's end.
Mechel's power segment posted revenue growth of 6% in the year to 26.22 billion rubles, with EBITDA up 39% to 2.3 billion rubles.
Mechel's capital investment, including leasing, totaled 11 billion rubles in 2017 for an increase of 25% over the previous year. The company's plans for 2018 include a further increase in capital investment, Mechel head Oleg Korzhov was quoted as saying in the statement.