Mechel Reports 1Q2021 Operational Results

Mechel Reports 1Q2021 Operational Results

Moscow, Russia – May 20, 2021 – Mechel PAO (MOEX: MTLR, NYSE: MTL), one of the leading Russian mining and metals companies, announces 1Q2021 operational results.

Mechel PAO’s Chief Executive Officer Oleg Korzhov commented on operational results.

“Our operational dynamics in 1Q2021 were largely what they were due to conditions our company worked in last year, caused by both external and internal factors. Even as the decrease in debt leverage due to restructuring and partial repayment of our loans had its positive impact, starting in April-May Mechel felt the lack of cash flow sufficient for financing our operations as needed. This was due to a major slump in coal and steel prices because of the pandemic. Underfunding of our operations in the second half of last year led to a major reduction in stripping and negative dynamics in coal mining and sales in 1Q2021 accordingly. The steel division had a similar situation.

“I would like to note that this year, due to a significant improvement in market trends, we managed to provide ample funding for our repair programs, which had a positive effect. In April alone, sales of most of our products demonstrated results nearly equal to half of those of the entire first quarter. For example, last month we sold approximately 500,000 tonnes of coking coal concentrate — which is 53% of the amount sold in the entire reporting period.

“The 23-percent decrease in sales of coking coal concentrate was due to reduced mining of this type of coals caused by insufficient stripping volumes in 4Q2020 at our facilities in Yakutia and Kuzbass. The same cause became the determining factor for the negative dynamics of PCI (-33%) and anthracite (-4%) sales. At the same time, we have tried as much as possible to meet our contractual obligations. I would like to use this opportunity to offer my deepest gratitude to our partners for their understanding and constructive approach.

“Thermal coal sales were conducted in accordance with our contractual obligations to the Far Eastern Generating Company and the Republic of Sakha (Yakutia)’s housing and utilities infrastructure. The remaining thermal coal was exported, primarily to China.

“Iron ore concentrate sales went down by 36% due to the technical health of Korshunov Mining Plant’s mining and transport equipment. At the same time, we managed to remedy the situation in 1Q2021, and in April iron ore shipments amounted to 42% of the entire volume sold in the reporting period.

“In 4Q2020, our sales company Mechel Carbon shipped two shiploads of coke totaling 100,000 tonnes from our accumulated stock to one of our key clients. This fact reflected on the coke sales dynamics in the following quarter (-19%).

“As intra-Group supplies of raw materials for steelmaking declined, pig iron output went down by 13% quarter-on-quarter, and steel output slumped by 15%. The reporting period was characterized by a confident growth of average prices on steel products, which offset the negative sales dynamics.

“Sales of long rolls went down by 7% quarter-on-quarter. As for the universal rolling mill’s output, the 31-percent decrease in rail sales was due to our shipping the remaining rails intended for construction of Moscow’s new metro stations in 4Q2020, ahead of schedule. Sales of the universal rolling mill’s sections went down by 16% due to the seasonal slump in demand for beams. The mill has formed an additional stockpile of construction products, which will enable us to increase sales in the next reporting period. We pay extra attention to sales of stainless long rolls, which have picked up and demonstrated a 22-percent growth quarter-on-quarter.

“Flat roll sales went down by 8% due to ongoing repairs at Chelyabinsk Metallurgical Plant.

“Hardware sales went down by 17% due to a traditional slump in demand for wire and other hardware in the first quarter. We have begun preparations for the new construction season well in advance, ensuring a wide range of hardware in our Mechel Service sales network’s storage facilities.

“Forgings sales went up by 3% as some of the volumes sold in 4Q2020 were actually shipped in this reporting period. Stampings sales grew by 87% due to improved demand from wagonbuilding companies.

“In 1Q2021, our power division’s facilities produced 3% less electricity year-on-year due to a larger volume of repairs. Heat generation went up by 12% year-on-year and by 17% quarter-on-quarter due to temperature factors and increased steam consumption by the Group’s enterprises.” 

Production: 

Product Name

1Q2021, thousand tonnes

1Q2020, thousand tonnes

%

1Q2021, thousand tonnes

4Q2020, thousand tonnes

%

Run-of-Mine Coal*

2,642

4,279

-38

2,642

2,816

-6

Pig Iron

771

872

-11

771

883

-13

Steel

849

876

-3

849

1,000

-15

Electric power generation (thousand kWh)

854,503

884,354

-3

854,503

855,671

0

Heat power generation (Gcal)

2,063,718

1,836,563

+12

2,063,718

1,763,468

+17


Sales: 

Product Name

1Q2021, thousand tonnes

1Q2020, thousand tonnes

%

1Q2021, thousand tonnes

4Q2020, thousand tonnes

%

Coking Coal Concentrate*

876

1,424

-38

876

1,140

-23

Including coking coal concentrate supplied to third parties

487

1,048

-54

487

720

-32

PCI

254

445

-43

254

378

-33

Including PCI supplied

to third parties

254

445

-43

254

378

-33

Anthracites

360

268

+34

360

377

-4

Including anthracites supplied to third parties

320

212

+51

320

339

-6

Thermal Coals*

977

882

+11

977

1,167

-16

Including thermal coals supplied to third parties

701

619

+13

701

896

-22

Iron Ore Concentrate

327

572

-43

327

513

-36

Including iron ore concentrate supplied to third parties

8

7

+15

8

8

0

Coke

616

623

-1

616

756

-19

Including coke supplied to third parties

238

198

+20

238

336

-29

Ferrosilicon

18

13

+42

18

16

+10

Including ferrosilicon supplied to third parties

13

8

+63

13

13

0

Long Rolls

564

648

-13

564

607

-7

Flat Rolls

105

124

-15

105

115

-8

Hardware

117

133

-12

117

141

-17

Forgings

9

12

-29

9

9

+3

Stampings

12

23

-46

12

7

+87

 *Excluding volumes produced by Elga Coal Complex which is no longer part of the Group. 

Universal Rolling Mill: 

Product Name

1Q2021, thousand tonnes

1Q2020, thousand tonnes

%

1Q2021, thousand tonnes

4Q2020, thousand tonnes

%

Sales of rails

17

116

-86

17

24

-31

Sales of sections

82

76

+8

82

98

-16


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Mechel PAO
Ekaterina Videman
Tel: + 7 495 221 88 88
ekaterina.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.