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Mechel: 2013 not bring good luck

20 May 2014
Mechel: 2013 not bring good luck

At the end of last year, net losses pursuing mining and metals group Mechel, whose owner is businessman Igor Zyuzin, has grown almost twice and amounted to neither more nor less — 3 billion USD. This unpleasant situation is due to considerable write-offs made after the realization of the plants, which was undertaken with the aim of imposing repayment of the debt. The difficult financial situation in the «Mechel» caused by the impressive investment of funds in the steel and coal projects. However, the projected profit was not obtained due to the sudden collapse of the market associated with the rapid decline in the growth rate of the economy worldwide. In the end, instead of the expected tide of funds, «Mechel» had to deal with the sale of the owned enterprises, while reducing investment. And coal project developed in Yakutia, required the introduction of additional partners.

According to General Director O. Korzhov in 2013, a new developed strategy demanded major changes in the group structure. It is understandable — the current situation requires taking quick decisive action, because the financial performance last year, plunged into despondency. Income decreased by 19%, which amounted to 8.6 billion USD, and the profit obtained along with the required tax payments, amortization, depreciation and other expenses decreased to USD 730 million, which is significantly affected by the falling prices for coal and iron ore. As follows from the explanations provided by the company, a decrease in income due to the implementation of the enterprises in Romania and the rupture of agreements with «Estar», owned by businessman Vadim Varshavsky, and «Mechel» does not disclose the reasons why the partnership broke up.

Despite the fact that the company «Mechel» in the past year twice reduced capital expenditure (up to USD 558 million), net debt by the end of last month amounted to 8.6 billion USD. Adjusted net loss for the 4th quarter of 2013 compared with the previous quarter increased 3 times, which amounted to 251 million USD — this performance is not surprising, if we recall the reduced demand and falling prices for steel and coal. However, analysts had hoped that figure will be considerably less than the 155 million USD. The annual net financial loss incurred by the company amounted to 2.9 billion USD.

14 May 2014
21 May 2014