UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Mechel OAO |
||||
(Translation of registrants name into English) | ||||
RUSSIAN FEDERATION | ||||
(Jurisdiction of incorporation or organization) | ||||
Krasnoarmeyskaya 1, Moscow 125993 Russian Federation |
||||
(Address of principal executive office) |
||||
Indicate by check mark whether the registrant files or will file annual reports under cover of Form 20-F or Form 40-F: [x] Form 20-F [ ] Form 40-F | ||||
Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(1): [ ] | ||||
Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(7): [ ] | ||||
Indicate by check mark whether the registrant by furnishing the information contained in this Form is also thereby furnishing the information to the Commission pursuant to Rule 12g3-2(b) under the Securities Exchange Act of 1934: [ ] Yes [x] No | ||||
If "Yes" is marked, indicate below the file number assigned to the registrant in connection with Rule 12g3-2(b): n/a |
MECHEL REPORTS THE 9M 2015 FINANCIAL RESULTS Full text of the press-release can be found below. Please see Exhibit №1
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. |
Mechel OAO | ||
Date: December 16, 2015 | By: |
Oleg V. Korzhov |
Name: | Oleg V. Korzhov | |
Title: | CEO | |
Exhibit No. | Description | |
|
|
|
1 | MECHEL REPORTS THE 9M 2015 FINANCIAL RESULTS | |
MECHEL REPORTS THE 9M 2015 FINANCIAL RESULTS
Revenue amounted to $3.3 billion
Consolidated EBITDA(a) amounted to $ 587 million
Net loss attributable to shareholders of Mechel OAO amounted to $1.0 billion
Moscow, Russia December 16, 2015 Mechel OAO (MICEX: MTLR, NYSE: MTL), a leading Russian mining and steel group, announces financial results for the 9M 2015.
OAO Mechels Chief Executive Officer Oleg Korzhov commented:
All of our business segments continue to demonstrate stable growth of operational income and positive EBITDA sufficient to service our current debt interest payments. The managements efforts aimed at optimizing the Groups operations and adapting to changing market situations yield positive results. At the same time, low costs of mining and processing coal award us competitive advantages as compared to other global producers. As the ruble weakens, costs are dropping even more when denominated in dollars, which proves a positive impact on our operations economic efficiency. As production remains stable, EBITDA has grown by 20% as compared to the same period last year and by 10% quarter-on-quarter. Operating income has nearly doubled year-on-year, going up by nearly 30% quarter-on-quarter.
We continue constructive talks with our lenders on debt restructuring and see positive dynamics of these negotiations. Meanwhile, the company is holding talks seeking to bring in partners for developing the Elga deposit.
Throughout the accounting period, we have been increasing mining at the Elga project. Record profitability of production at this facility, upheld by the weakening of our national currency, enables Elga to be economically efficient even considering the current production level and coal prices. Stable demand for coal products from Japans and South Koreas export markets combined with growing consumption in India and our own facilities major need of coal is a recipe for this projects long-term success.
Consolidated Results For The 9M 2015
US $ mln. | 9M15 | 9M14 | % | 3Q15 | 2Q15 | % | ||||||||||||||||||
Revenue |
3,275 | 5,022 | -35 | % | 1,003 | 1,159 | -13 | % | ||||||||||||||||
from external
customers |
||||||||||||||||||||||||
Adjusted operating
income |
398 | 170 | 134 | % | 138 | 108 | 28 | % | ||||||||||||||||
EBITDA (a) |
587 | 489 | 20 | % | 197 | 179 | 10 | % | ||||||||||||||||
EBITDA (a), margin |
17.9 | % | 9.7 | % | 19.6 | % | 15.4 | % | ||||||||||||||||
Net (loss) / income |
-1,012 | -1,223 | -17 | % | -773 | 34 | -2.374 | % | ||||||||||||||||
attributable to
shareholders of Mechel
OAO |
||||||||||||||||||||||||
Adjusted net loss |
-265 | -269 | -1 | % | -14 | -152 | -91 | % | ||||||||||||||||
Net debt |
6,454 | 8,2 | -21 | % | 6,454 | 6,974 | -7 | % | ||||||||||||||||
Trade working capital |
-883 | -92 | 860 | % | -883 | -815 | 8 | % | ||||||||||||||||
| Ruble devaluation had a major impact on our dollar-denominated revenue, which has gone down by 13% quarter-on-quarter, but a comparatively small cost inflation enabled us to increase our EBITDA margin to 19.6% in the third quarter. |
| The significant net loss of 773 million dollars in 3Q2015 was 99% due to currency rate differences. |
Mining Segment
Mechel Mining Management Company OOOs Chief Executive Officer Pavel Shtark noted:
Global prices and demand for metallurgical raw materials which are our segments principal product, continued to fall throughout the year. The major decrease in our revenue reflects that. Against this backdrop, we actively optimized our sales policy to lessen the negative impact of market factors. As the domestic market was more profitable, starting from the second quarter we redirected some of our product flow from export to the Russian market and used our own coal in the coke and chemical production as much as possible, with the Elga deposits coal playing a major part in this. Elgas coking coal is actively used in producing coke at the Groups facilities.
I must note that mining at the Elga deposit is growing at an outperforming rate. Over these nine months, nearly three million tonnes of coal were mined at the deposit, with the years total nearing to four million tonnes.
The segment demonstrates growth of both the operational income and EBITDA compared to the same period last year and quarter-on-quarter.
US $ mln. | 9M15 | 9M14 | % | 3Q15 | 2Q15 | % | ||||||||||||||||||
Revenue | ||||||||||||||||||||||||
from external customers |
1,055 | 1,604 | -34 | % | 302 | 363 | -17 | % | ||||||||||||||||
Revenue
intersegment |
354 | 447 | -21 | % | 122 | 131 | -7 | % | ||||||||||||||||
EBITDA(a) |
304 | 251 | 21 | % | 102 | 96 | 6 | % | ||||||||||||||||
EBITDA (a), margin |
21.6 | % | 12.2 | % | 24.1 | % | 19.4 | % | ||||||||||||||||
Steel Segment
Mechel-Steel Management Company OOOs Chief Executive Officer Andrey Ponomarev said:
Despite the global economic volatility and difficulties at steel products markets, this year our segment managed to demonstrate stable operational and financial results. Our sales of nearly all key products are growing quarter by quarter. We paid a lot of attention to optimization of our product range, giving up on economically inefficient production and increasing the share of high value-added products. For example, Chelyabinsk Metallurgical Plants universal rolling mill has shipped off some 150,000 tonnes of high-quality rolls this year.
The decreased cost of incoming raw materials, as well as the rubles devaluation, enabled us to significantly improve operational income and EBITDA as compared to the same period last year, while constant effort of controlling costs and optimizing production yielded stable financial results quarter-on-quarter.
US $ mln. | 9M15 | 9M14 | % | 3Q15 | 2Q15 | % | ||||||||||||||||||
Revenue | ||||||||||||||||||||||||
from external customers |
1,895 | 2,904 | -35 | % | 612 | 682 | -10 | % | ||||||||||||||||
Revenue
intersegment |
96 | 173 | -45 | % | 13 | 44 | -70 | % | ||||||||||||||||
EBITDA(a) |
271 | 212 | 28 | % | 83 | 83 | 0.6 | % | ||||||||||||||||
EBITDA(a), margin |
13.6 | % | 6.9 | % | 13.3 | % | 11.4 | % | ||||||||||||||||
Power Segment
Mechel-Energo OOOs Chief Executive Officer Pyotr Pashnin noted:
Throughout this year, we were demonstrating higher results in electricity generation than last year. Minor fluctuations are caused only by seasonal factors in our operations. As a whole, we continue to demonstrate stable operational income and positive EBITDA.
US $ mln. | 9M15 | 9M14 | 3Q15 | 2Q15 | ||||||||||||||||||||
Revenue |
325 | 514 | -37 | % | 89 | 114 | -22 | % | ||||||||||||||||
from external customers |
||||||||||||||||||||||||
Revenue |
183 | 281 | -35 | % | 53 | 64 | -17 | % | ||||||||||||||||
intersegment |
||||||||||||||||||||||||
EBITDA(a) |
12 | 14 | -14 | % | 5 | 0.1 | 4.900 | % | ||||||||||||||||
EBITDA(a), margin |
2.4 | % | 1.8 | % | 3.5 | % | 0.1 | % | ||||||||||||||||
***
The management of Mechel will host a conference call today at 18:00 p.m. Moscow time (3:00 p.m. London time, 10 a.m. New York time) to review Mechels financial results and comment on current operations. The call may be accessed via the Internet at http://www.mechel.com, under the Investor Relations section.
***
Alexey Lukashov
Director of Investor Relations
Mechel OAO
Phone: 7-495-221-88-88
Fax: 7-495-221-88-00
alexey.lukashov@mechel.com
***
Mechel is one of the leading Russian companies. Its business includes three segments: mining, steel and power. Mechel unites producers of coal, iron ore concentrate, steel, rolled products, ferroalloys, hardware, heat and electric power. Mechel products are marketed domestically and internationally.
***
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.
*Please find the calculation of the EBITDA(a) and other measures used here and hereafter in Attachment A
Attachments to the 9M 2015 Earnings Press Release
Attachment A
Non-GAAP financial measures. This press release includes financial information prepared in accordance with accounting principles generally accepted in the United States of America, or US GAAP, as well as other financial measures referred to as non-GAAP. The non-GAAP financial measures should be considered in addition to, but not as a substitute for, the information prepared in accordance with US GAAP.
Adjusted EBITDA represents earnings before Depreciation, depletion and amortization, Foreign exchange gain / (loss), Loss from discontinued operations, Interest expense, Interest income, Net result on the disposal of non-current assets, Impairment of goodwill and long-lived assets, Provision for amounts due from related parties, Result of disposed companies (incl. the result from their disposal), Amount attributable to noncontrolling interests, Income taxes and Other one-off items. Adjusted EBITDA margin is defined as adjusted EBITDA as a percentage of our net revenues. Our adjusted EBITDA may not be similar to EBITDA measures of other companies. Adjusted EBITDA is not a measurement under accounting principles generally accepted in the United States and should be considered in addition to, but not as a substitute for, the information contained in our consolidated statement of operations. We believe that our adjusted EBITDA provides useful information to investors because it is an indicator of the strength and performance of our ongoing business operations, including our ability to fund discretionary spending such as capital expenditures, acquisitions and other investments and our ability to incur and service debt. While interest, depreciation and amortization are considered operating costs under generally accepted accounting principles, these expenses primarily represent the non-cash current period allocation of costs associated with long-lived assets acquired or constructed in prior periods. Our adjusted EBITDA calculation is commonly used as one of the bases for investors, analysts and credit rating agencies to evaluate and compare the periodic and future operating performance and value of companies within the metals and mining industry.
Adjusted net income / (loss) represents net income / (loss) before Loss from discontinued operations, Result of disposed companies, Foreign exchange gain / (loss), Impairment of goodwill and long-lived assets and Provision for the amounts due from related parties, including the effect on income tax and amounts attributable to noncontrolling interests and Other one-off items. Our adjusted net income / (loss) may not be similar to adjusted net income / (loss) measures of other companies. Adjusted net income / (loss) is not a measurement under accounting principles generally accepted in the United States and should be considered in addition to, but not as a substitute for, the information contained in our consolidated statement of operations. We believe that our adjusted net income / (loss) provides useful information to investors because it is an indicator of the strength and performance of our ongoing business operations. While impairment of long-lived assets and goodwill and provision for the amounts due from related parties are considered operating costs under generally accepted accounting principles, these expenses represent the non-cash current period allocation of costs associated with assets acquired or constructed in prior periods. Our adjusted net income / (loss) calculation is used as one of the bases for investors, analysts and credit rating agencies to evaluate and compare the periodic and future operating performance and value of companies within the metals and mining industry.
Our calculations of Net debt and trade working capital are presented below:
US $ mln | 30.09.2015 | 30.09.2014 | 30.09.2015 | 30.06.2015 | ||||||||||||
Short-term borrowings and current portion of
long-term debt |
6,206 | 7,608 | 6,206 | 6,742 | ||||||||||||
Long-term debt, net of current portion |
69 | 236 | 69 | 16 | ||||||||||||
Derivative instruments |
| 49 | | | ||||||||||||
less Cash and cash equivalents |
(36 | ) | (71 | ) | (36 | ) | (45 | ) | ||||||||
Net debt, excluding finance lease liabilities |
6,239 | 7,822 | 6,239 | 6,713 | ||||||||||||
Finance lease liabilities, current portion |
214 | 170 | 214 | 261 | ||||||||||||
Finance lease liabilities, non-current portion |
1 | 208 | 1 | | ||||||||||||
Net debt |
6,454 | 8,200 | 6,454 | 6,974 | ||||||||||||
US $ mln |
30.09.2015 | 30.09.2014 | 30.09.2015 | 30.06.2015 | ||||||||||||
Accounts receivable, net of allowance for
doubtful accounts |
272 | 471 | 272 | 328 | ||||||||||||
Due from related parties, net of allowance |
5 | 40 | 5 | 9 | ||||||||||||
Inventories |
513 | 867 | 513 | 586 | ||||||||||||
Prepayments and other current assets |
188 | 303 | 188 | 230 | ||||||||||||
Trade current assets |
978 | 1,681 | 978 | 1,153 | ||||||||||||
Trade payable to vendors of goods and services |
419 | 791 | 419 | 523 | ||||||||||||
Advances received |
51 | 109 | 51 | 76 | ||||||||||||
Accrued expenses and other current liabilities |
1,149 | 476 | 1,149 | 1,073 | ||||||||||||
Taxes and social charges payable |
227 | 360 | 227 | 279 | ||||||||||||
Due to related parties |
15 | 37 | 15 | 17 | ||||||||||||
Trade current liabilities |
1,861 | 1,773 | 1,861 | 1,968 | ||||||||||||
Trade working capital |
(883 | ) | (92 | ) | (883 | ) | (815 | ) | ||||||||
Adjusted EBITDA can be reconciled to our consolidated statements of operations as follows:
Consolidated results | Mining Segment ** | Steel Segment** | Power Segment** | ||||||||||||||||||||||||||||||||||||||
US $ thousand | 9m 2015 | 9m 2014 | 9m 2015 | 9m 2014 | 9m 2015 | 9m 2014 | 9m 2015 | 9m 2014 | |||||||||||||||||||||||||||||||||
Net loss | (1,011,861) | (1,222,609) | (632,397) | (858,851) | (364,384) | (360,327) | (14,785) | (15,336) | |||||||||||||||||||||||||||||||||
Add: |
|||||||||||||||||||||||||||||||||||||||||
Depreciation, depletion and amortization |
180,195 | 300,537 | 110,416 | 184,175 | 64,877 | 109,631 | 4,903 | 6,730 | |||||||||||||||||||||||||||||||||
Foreign exchange loss / (gain) |
731,584 | 734,724 | 482,510 | 523,711 | 249,046 | 213,984 | 29 | (2,971 | ) | ||||||||||||||||||||||||||||||||
Interest expense |
735,423 | 570,757 | 404,753 | 291,481 | 311,196 | 277,710 | 28,709 | 25,723 | |||||||||||||||||||||||||||||||||
Interest income |
(1,922 | ) | (2,689 | ) | (7,522 | ) | (16,353 | ) | (2,920 | ) | (9,285 | ) | (715 | ) | (1,208 | ) | |||||||||||||||||||||||||
Net result on the disposal of non-current assets, impairment of
goodwill and long-lived assets and provision for amounts due from
related parties |
1,991 | 22,156 | 1,861 | 5,149 | 432 | 16,648 | (302 | ) | 361 | ||||||||||||||||||||||||||||||||
(Income) / loss from discontinued operations, net of income tax |
(3,412 | ) | 43,806 | 1,552 | 51,811 | (5,291 | ) | (9,549 | ) | 327 | 1,544 | ||||||||||||||||||||||||||||||
Net gain / (loss) attributable to noncontrolling interests |
6,182 | 4,004 | (2,965 | ) | (4,677 | ) | 7,829 | 5,827 | 1,317 | 2,854 | |||||||||||||||||||||||||||||||
Income taxes |
(70,848 | ) | 14,514 | (53,831 | ) | 53,134 | (9,418 | ) | (34,698 | ) | (7,600 | ) | (3,923 | ) | |||||||||||||||||||||||||||
Other one-off items |
20,129 | 23,825 | | 21,439 | 20,129 | 2,383 | | 3 | |||||||||||||||||||||||||||||||||
Adjusted EBITDA |
587,461 | 489,025 | 304,377 | 251,019 | 271,496 | 212,324 | 11,883 | 13,777 | |||||||||||||||||||||||||||||||||
Adjusted EBITDA, margin |
18 | % | 10 | % | 22 | % | 12 | % | 14 | % | 7 | % | 2 | % | 2 | % | |||||||||||||||||||||||||
US $ thousand |
9m 2015 | 9m 2014 | 9m 2015 | 9m 2014 | 9m 2015 | 9m 2014 | 9m 2015 | 9m 2014 | |||||||||||||||||||||||||||||||||
Net loss |
(1,011,861 | ) | (1,222,609 | ) | (632,397 | ) | (858,851 | ) | (364,384 | ) | (360,327 | ) | (14,785 | ) | (15,336 | ) | |||||||||||||||||||||||||
Add: |
|||||||||||||||||||||||||||||||||||||||||
(Recovery of provision) / provision for amounts due from related parties |
(193 | ) | 15,598 | (243 | ) | 418 | 354 | 14,953 | (304 | ) | 227 | ||||||||||||||||||||||||||||||
(Income) / loss from discontinued operations, net of income tax |
(3,412 | ) | 43,806 | 1,552 | 51,811 | (5,291 | ) | (9,549 | ) | 327 | 1,544 | ||||||||||||||||||||||||||||||
Effect on net (loss) / income attributable to noncontrolling interests |
(1,050 | ) | 4,170 | (2 | ) | | (1,048 | ) | 4,170 | | | ||||||||||||||||||||||||||||||
Foreign exchange loss / (gain) |
731,584 | 734,724 | 482,510 | 523,711 | 249,046 | 213,984 | 29 | (2,971 | ) | ||||||||||||||||||||||||||||||||
Accrual of income taxes for 2009-2010 |
| 131,250 | | 131,250 | | | | | |||||||||||||||||||||||||||||||||
Other one-off items |
20,129 | 23,825 | | 21,439 | 20,129 | 2,383 | | 3 | |||||||||||||||||||||||||||||||||
Adjusted net loss, net of income tax |
(264,803 | ) | (269,236 | ) | (148,580 | ) | (130,222 | ) | (101,194 | ) | (134,386 | ) | (14,733 | ) | (16,533 | ) | |||||||||||||||||||||||||
Operating income / (loss) |
376,314 | 128,996 | 189,509 | 25,558 | 179,923 | 84,285 | 7,175 | 7,248 | |||||||||||||||||||||||||||||||||
Add: |
|||||||||||||||||||||||||||||||||||||||||
(Recovery of provision) / provision for amounts due from related parties |
(193 | ) | 15,598 | (243 | ) | 418 | 354 | 14,953 | (304 | ) | 227 | ||||||||||||||||||||||||||||||
Loss on write-off of property, plant and equipment |
2,108 | 4,278 | 989 | 2,560 | 1,119 | 1,718 | | | |||||||||||||||||||||||||||||||||
Other one-off items |
20,127 | 21,439 | | 21,439 | 20,127 | | | | |||||||||||||||||||||||||||||||||
Adjusted operating income / (loss) |
398,356 | 170,311 | 190,255 | 49,975 | 201,523 | 100,956 | 6,871 | 7,475 | |||||||||||||||||||||||||||||||||
**including intersegment operations |
|||||||||||||||||||||||||||||||||||||||||
Consolidated results | Mining Segment ** | Steel Segment** | Power Segment** | ||||||||||||||||||||||||||||||||||||||
US $ thousand |
3Q 2015 | 2Q 2015 | 3Q 2015 | 2Q 2015 | 3Q 2015 | 2Q 2015 | 3Q 2015 | 2Q 2015 | |||||||||||||||||||||||||||||||||
Net (loss) / income |
(772,623 | ) | 33,969 | (539,954 | ) | 52,631 | (233,185 | ) | (9,181 | ) | (6,593 | ) | (9,050 | ) | |||||||||||||||||||||||||||
Add: |
|||||||||||||||||||||||||||||||||||||||||
Depreciation, depletion and amortization |
56,630 | 65,170 | 34,388 | 40,475 | 20,689 | 22,905 | 1,553 | 1,790 | |||||||||||||||||||||||||||||||||
Foreign exchange loss / (gain) |
766,967 | (189,078 | ) | 527,658 | (141,705 | ) | 238,148 | (47,678 | ) | 1,160 | 305 | ||||||||||||||||||||||||||||||
Interest expense |
243,789 | 235,473 | 158,237 | 115,881 | 80,579 | 112,599 | 7,390 | 9,970 | |||||||||||||||||||||||||||||||||
Interest income |
(640 | ) | (563 | ) | (2,085 | ) | (2,114 | ) | (728 | ) | (1,166 | ) | (243 | ) | (260 | ) | |||||||||||||||||||||||||
Net result on the disposal of non-current assets, impairment of
goodwill and long-lived assets and provision for amounts due from
related parties |
424 | (239 | ) | (108 | ) | (1,085 | ) | 824 | 853 | (293 | ) | (8 | ) | ||||||||||||||||||||||||||||
(Income) / loss from discontinued operations, net of income tax |
(6,790 | ) | 3,359 | (116 | ) | 1,081 | (6,739 | ) | 2,180 | 65 | 99 | ||||||||||||||||||||||||||||||
Net (loss) / gain attributable to noncontrolling interests |
(7,774 | ) | 6,349 | (9,872 | ) | 5,233 | (63 | ) | 1,580 | 2,161 | (464 | ) | |||||||||||||||||||||||||||||
Income taxes |
(82,628 | ) | 24,320 | (66,363 | ) | 26,038 | (16,376 | ) | 518 | 108 | (2,235 | ) | |||||||||||||||||||||||||||||
Other one-off items |
(3 | ) | 5 | | | (3 | ) | 5 | | | |||||||||||||||||||||||||||||||
Adjusted EBITDA |
197,352 | 178,765 | 101,785 | 96,435 | 83,146 | 82,615 | 5,308 | 147 | |||||||||||||||||||||||||||||||||
Adjusted EBITDA, margin |
20 | % | 15 | % | 24 | % | 20 | % | 13 | % | 11 | % | 4 | % | 0 | % | |||||||||||||||||||||||||
US $ thousand |
3Q 2015 | 2Q 2015 | 3Q 2015 | 2Q 2015 | 3Q 2015 | 2Q 2015 | 3Q 2015 | 2Q 2015 | |||||||||||||||||||||||||||||||||
Net (loss) / income |
(772,623 | ) | 33,969 | (539,955 | ) | 52,631 | (233,185 | ) | (9,181 | ) | (6,593 | ) | (9,050 | ) | |||||||||||||||||||||||||||
Add: |
|||||||||||||||||||||||||||||||||||||||||
(Recovery of provision) / provision for amounts due from related parties |
(424 | ) | (191 | ) | (55 | ) | (187 | ) | (73 | ) | 4 | (296 | ) | (8 | ) | ||||||||||||||||||||||||||
(Income) / loss from discontinued operations, net of income tax |
(6,790 | ) | 3,359 | (116 | ) | 1,081 | (6,739 | ) | 2,180 | 65 | 99 | ||||||||||||||||||||||||||||||
Effect on net (loss) / income attributable to noncontrolling interests |
(693 | ) | 43 | (2 | ) | | (691 | ) | 43 | | | ||||||||||||||||||||||||||||||
Foreign exchange loss / (gain) |
766,967 | (189,078 | ) | 527,658 | (141,705 | ) | 238,148 | (47,678 | ) | 1,160 | 305 | ||||||||||||||||||||||||||||||
Accrual of income taxes for 2009-2010 |
| | | | | | | | |||||||||||||||||||||||||||||||||
Other one-off items |
(3 | ) | 5 | | | (3 | ) | 5 | | | |||||||||||||||||||||||||||||||
Adjusted net loss, net of income tax |
(13,566 | ) | (151,893 | ) | (12,470 | ) | (88,181 | ) | (2,543 | ) | (54,627 | ) | (5,664 | ) | (8,654 | ) | |||||||||||||||||||||||||
Operating income / (loss) |
138,260 | 107,332 | 67,577 | 54,045 | 59,523 | 55,360 | 4,051 | (1,644 | ) | ||||||||||||||||||||||||||||||||
Add: |
|||||||||||||||||||||||||||||||||||||||||
(Recovery of provision) / provision for amounts due from related parties |
(424 | ) | (191 | ) | (55 | ) | (187 | ) | (73 | ) | 4 | (296 | ) | (8 | ) | ||||||||||||||||||||||||||
Loss on write-off of property, plant and equipment |
428 | 993 | 369 | 97 | 58 | 896 | | | |||||||||||||||||||||||||||||||||
Other one-off items |
| | | | | | | | |||||||||||||||||||||||||||||||||
Adjusted operating income / (loss) |
138,264 | 108,134 | 67,891 | 53,955 | 59,508 | 56,260 | 3,755 | (1,652 | ) | ||||||||||||||||||||||||||||||||
**including intersegment operations
Consolidated Balance Sheets | ||||||||
(in thousands of U.S. dollars, except share amounts) | ||||||||
September 30, 2015 | December 31, 2014 | |||||||
(unaudited) | ||||||||
ASSETS |
||||||||
Cash and cash equivalents |
$ | 35,841 | $ | 70,800 | ||||
Accounts receivable, net of allowance for doubtful accounts
of $56,279 as of September 30, 2015 and $68,493 as of December 31, 2014 |
272,144 | 330,371 | ||||||
Due from related parties, net of allowance of $1,370,788 as of
September 30, 2015 and $1,458,296 as of December 31, 2014 |
5,183 | 9,303 | ||||||
Inventories |
512,850 | 640,671 | ||||||
Deferred income taxes |
102,028 | 91,223 | ||||||
Current assets of discontinued operations |
| 151,602 | ||||||
Prepayments and other current assets |
188,308 | 238,314 | ||||||
Total current assets |
1,116,354 | 1,532,284 | ||||||
Long-term investments in related parties |
5,606 | 6,142 | ||||||
Other long-term investments |
3,616 | 4,060 | ||||||
Property, plant and equipment, net |
3,324,369 | 3,944,427 | ||||||
Mineral licenses, net |
593,640 | 719,951 | ||||||
Other non-current assets |
21,859 | 30,453 | ||||||
Deferred income taxes |
51,490 | 72,966 | ||||||
Goodwill |
343,575 | 403,207 | ||||||
Total assets |
5,460,509 | 6,713,490 | ||||||
LIABILITIES AND EQUITY |
||||||||
Short-term borrowings and current portion of long-term debt |
6,206,063 | 6,678,549 | ||||||
Accounts payable and accrued expenses: |
||||||||
Trade payable to vendors of goods and services |
419,207 | 537,004 | ||||||
Advances received |
50,722 | 81,599 | ||||||
Accrued expenses and other current liabilities |
1,149,179 | 811,345 | ||||||
Taxes and social charges payable |
227,323 | 215,251 | ||||||
Unrecognized income tax benefits |
14,505 | 31,444 | ||||||
Due to related parties |
14,792 | 15,494 | ||||||
Asset retirement obligations, current portion |
7,642 | 3,478 | ||||||
Deferred income taxes |
8,039 | 7,893 | ||||||
Current liabilities of discontinued operations |
| 150,033 | ||||||
Pension obligations, current portion |
16,265 | 18,656 | ||||||
Dividends payable |
1,535 | 1,843 | ||||||
Finance lease liabilities, current portion |
213,937 | 270,980 | ||||||
Total current liabilities |
8,329,209 | 8,823,569 | ||||||
Long-term debt, net of current portion |
69,089 | 166,532 | ||||||
Asset retirement obligations, net of current portion |
37,488 | 43,712 | ||||||
Pension obligations, net of current portion |
53,372 | 60,222 | ||||||
Deferred income taxes |
104,830 | 179,987 | ||||||
Finance lease liabilities, net of current portion |
533 | 2,813 | ||||||
Due to related parties |
28 | 38 | ||||||
Other long-term liabilities |
4,355 | 81,288 | ||||||
EQUITY |
||||||||
Common shares (10 Russian rubles par value;
497,969,086 shares authorized, 416,270,745 shares issued and outstanding
as of September 30, 2015 and December 31, 2014) |
133,507 | 133,507 | ||||||
Preferred shares (10 Russian rubles par value;
138,756,915 shares authorized, 83,254,149 shares issued and outstanding
as of September 30, 2015 and December 31, 2014) |
25,314 | 25,314 | ||||||
Additional paid-in capital |
834,172 | 834,136 | ||||||
Accumulated other comprehensive income |
1,518,881 | 972,381 | ||||||
Accumulated deficit |
(5,787,863 | ) | (4,763,413 | ) | ||||
Equity attributable to shareholders of Mechel OAO |
(3,275,989 | ) | (2,798,075 | ) | ||||
Noncontrolling interests |
137,594 | 153,404 | ||||||
Total equity |
(3,138,395 | ) | (2,644,671 | ) | ||||
Total liabilities and equity |
5,460,509 | 6,713,490 | ||||||
Consolidated Statements of Operations and Comprehensive Income | ||||||||||||
(Loss) | ||||||||||||
(in thousands of U.S. dollars) | 9 months ended September 30, | |||||||||||
2015 | 2014 | |||||||||||
(unaudited) | (unaudited) | |||||||||||
Revenue, net (including related party amounts of $66,275 and $87,270
during 9 months 2015 and 2014, respectively) |
$ | 3,274,862 | $ | 5,021,781 | ||||||||
Cost of goods sold (including related party amounts of $46,227 and
$91,026 during 9 months 2015 and 2014, respectively) |
(1,884,277 | ) | (3,250,217 | ) | ||||||||
Gross profit |
1,390,585 | 1,771,564 | ||||||||||
Selling, distribution and operating expenses: |
||||||||||||
Selling and distribution expenses |
(697,088 | ) | (1,136,715 | ) | ||||||||
Taxes other than income tax |
(75,497 | ) | (134,852 | ) | ||||||||
Accretion expense |
(5,226 | ) | (3,969 | ) | ||||||||
Loss on write-off of property, plant and equipment |
(2,108 | ) | (4,278 | ) | ||||||||
Recovery of provision (provision) for amounts due from related parties |
193 | (15,598 | ) | |||||||||
Provision for doubtful accounts |
(21,434 | ) | (28,715 | ) | ||||||||
General, administrative and other operating expenses, net |
(213,111 | ) | (318,441 | ) | ||||||||
Total selling, distribution and operating expenses, net |
(1,014,271 | ) | (1,642,568 | ) | ||||||||
Operating income |
376,314 | 128,996 | ||||||||||
Other income and (expense): |
||||||||||||
Income from equity investments |
326 | 67 | ||||||||||
Interest income |
1,922 | 2,689 | ||||||||||
Interest expense |
(735,423 | ) | (570,757 | ) | ||||||||
Foreign exchange loss |
(731,584 | ) | (734,724 | ) | ||||||||
Other income (expenses), net |
8,506 | 13,444 | ||||||||||
Total other income and (expense), net |
(1,456,253 | ) | (1,289,281 | ) | ||||||||
Loss from continuing operations, before income tax |
(1,079,939 | ) | (1,160,285 | ) | ||||||||
Income tax benefit (expense) |
70,848 | (14,514 | ) | |||||||||
Net loss from continuing operations |
(1,009,091 | ) | (1,174,799 | ) | ||||||||
Income (loss) from discontinued operations, net of income tax |
3,412 | (43,806 | ) | |||||||||
Net loss |
(1,005,679 | ) | (1,218,605 | ) | ||||||||
Less: Net income attributable to noncontrolling interests |
(6,182 | ) | (4,004 | ) | ||||||||
Net loss attributable to shareholders of Mechel OAO |
(1,011,861 | ) | (1,222,609 | ) | ||||||||
Less: Dividends on preferred shares |
(75 | ) | (123 | ) | ||||||||
Net loss attributable to common shareholders of Mechel OAO |
(1,011,936 | ) | (1,222,732 | ) | ||||||||
Net loss |
(1,005,679 | ) | (1,218,605 | ) | ||||||||
Currency translation adjustment |
516,036 | 191,524 | ||||||||||
Change in pension benefit obligation |
(4,130 | ) | (6,328 | ) | ||||||||
Adjustment of available-for-sale securities |
140 | 307 | ||||||||||
Comprehensive loss |
(493,633 | ) | (1,033,102 | ) | ||||||||
Comprehensive income attributable to noncontrolling interests |
15,759 | 45,325 | ||||||||||
Comprehensive loss attributable to shareholders of Mechel OAO |
(477,874 | ) | (987,777 | ) | ||||||||
Consolidated Statements of Cash Flows | ||||||||
(in thousands of U.S. dollars) | 9 months ended September 30, | |||||||
2015 | 2014 | |||||||
(unaudited) | (unaudited) | |||||||
Cash Flows from Operating Activities |
||||||||
Net loss |
$ | (1,005,679 | ) | $ | (1,218,605 | ) | ||
(Income) loss from discontinued operations, net of income tax |
(3,412 | ) | 43,806 | |||||
Net loss from continuing operations |
(1,009,091 | ) | (1,174,799 | ) | ||||
Adjustments to reconcile net loss from continuing operations
to net cash provided by operating activities: |
||||||||
Depreciation |
159,605 | 262,201 | ||||||
Depletion and amortization |
20,590 | 38,336 | ||||||
Foreign exchange loss |
731,584 | 734,724 | ||||||
Deferred income taxes |
(69,417 | ) | (116,707 | ) | ||||
Provision for doubtful accounts |
21,434 | 28,715 | ||||||
Change in inventory reserves |
2,857 | 88 | ||||||
Accretion expense |
5,226 | 3,969 | ||||||
Loss on write-off of property, plant and equipment |
2,108 | 4,278 | ||||||
Income from equity investments |
(326 | ) | (67 | ) | ||||
(Recovery of provision) provision for amounts due from
related parties |
(193 | ) | 15,598 | |||||
Non-cash interest on pension liabilities |
2,943 | 4,736 | ||||||
Loss on sale of property, plant and equipment |
50 | 2,569 | ||||||
Gain on sale of investments |
| (14,811 | ) | |||||
Gain on accounts payable with expired legal term |
(2,655 | ) | (602 | ) | ||||
Gain on forgiveness of fines and penalties |
(17 | ) | (14 | ) | ||||
Amortization of loan origination fee |
23,033 | 43,712 | ||||||
Pension service cost, amortization of prior service cost and
actuarial (gain) loss, other expenses |
6,058 | 3,451 | ||||||
Other |
6,628 | | ||||||
Changes in working capital items: |
||||||||
Accounts receivable |
19,006 | 20,195 | ||||||
Inventories |
48,460 | 363,918 | ||||||
Trade payable to vendors of goods and services |
(33,437 | ) | 62,679 | |||||
Advances received |
(18,819 | ) | (264 | ) | ||||
Accrued taxes and other liabilities |
415,126 | 465,080 | ||||||
Settlements with related parties |
5,106 | (41,647 | ) | |||||
Other current assets |
(10,045 | ) | 40,296 | |||||
Unrecognized income tax benefits |
(14,406 | ) | (28,387 | ) | ||||
Net operating cash flows of discontinued operations |
(4,914 | ) | (18,001 | ) | ||||
Net cash provided by operating activities |
306,494 | 699,246 | ||||||
Cash Flows from Investing Activities |
||||||||
Acquisition of DEMP, less cash acquired |
(59,163 | ) | (64,476 | ) | ||||
Proceeds from disposal of securities |
| 15,599 | ||||||
Loans issued and other investments |
(55 | ) | (2 | ) | ||||
Proceeds from disposal of TPP Rousse, less cash disposed of |
1,143 | 1,454 | ||||||
Proceeds from disposal of Invicta, less cash disposed of |
| 690 | ||||||
Proceeds from disposal of Bluestone, less cash disposed of |
1,502 | | ||||||
Proceeds from loans issued |
349 | 1,334 | ||||||
Proceeds from disposals of property, plant and equipment |
5,084 | 23,780 | ||||||
Purchases of mineral licenses and other related payments |
(1,052 | ) | | |||||
Purchases of property, plant and equipment |
(114,407 | ) | (417,360 | ) | ||||
Net investing cash flows of discontinued operations |
| 2,662 | ||||||
Net cash used in investing activities |
(166,599 | ) | (436,319 | ) | ||||
Cash Flows from Financing Activities |
||||||||
Proceeds from borrowings |
44,724 | 2,060,438 | ||||||
Repayment of borrowings |
(171,614 | ) | (2,417,434 | ) | ||||
Dividends paid |
(71 | ) | (122 | ) | ||||
Dividends paid to noncontrolling interest |
(35 | ) | (147 | ) | ||||
Acquisition of noncontrolling interest in subsidiaries |
(7 | ) | (40,043 | ) | ||||
Repayment of obligations under finance lease |
(25,213 | ) | (33,047 | ) | ||||
Sale leaseback proceeds |
| 15,273 | ||||||
Net financing cash flows of discontinued operations |
| (2,024 | ) | |||||
Net cash used in financing activities |
(152,216 | ) | (417,106 | ) | ||||
Effect of exchange rate changes on cash and cash equivalents |
(24,254 | ) | (48,299 | ) | ||||
Net decrease in cash and cash equivalents |
(36,575 | ) | (202,478 | ) | ||||
Cash and cash equivalents at beginning of period |
72,416 | 274,539 | ||||||
Cash and cash equivalents at end of period |
35,841 | 72,062 | ||||||