21 Apr 2010 19:12

Mechel 2009 net profit plunges 93%; analysts expected losses

MOSCOW. April 21 (Interfax) - Mechel coal and steel group saw net profit in 2009 drop 93% to $73.7 million under US GAAP, the company said in a statement.

Analysts told Interfax in a consensus forecast that Mechel would post losses of $207 million.

Net profit in the fourth quarter of 2009 was $413.5 million.

Revenue last year tumbled 42% to $5.75 billion and EBITDA fell 50% to $998 million.

The results include a gain of $494 million from "remeasurement of fair value of CVR contingent liability" in connection with the purchase of the Bluestone Group, the statement says.

The company plans capital expenditures in 2010 totaling $1.4 billion. It plans capital expenditures of $3.7 billion in 2010-2012, including $2.1 billion in the mining segment and $1.4 billion in the metals segment.

Mechel confirmed that it would extract first coal at the Elga deposit this year, Senior Vice President Vladimir Polin said in a conference call on Wednesday. The company also plans to build the second stage of the Sibirginsk mine, where coking coal production is projected to double.

Net debt amounted to $5.6 billion at year-end. Overall debt was $6 billion.

The company had $415 million in cash and equivalents at year-end. The debt will be serviced from generated cash flow and the capital expenditures - from borrowing.

The company converted $480 million in short-term debt into long-term debt in the first quarter of 2010.

Key financial indicators for the fourth quarter ($ mln):

Indicator Q4 Q3 Change, %
Revenue 1 720 1 574 9.3
Operating profit 131 155 -15
EBITDA 683 420 62.5
EBITDA margin (%) 39.7 26.7
Net profit 414 132 Over 200%

General Director Igor Zyuzin is Mechel's chief beneficiary. The free float (ADR) is 25%.