Russia’s Mechel sees lower profit in H1, mining sector hit hardest

Russia’s Mechel sees lower profit in H1, mining sector hit hardest

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Mechel, one of the leading Russian mining and steel groups, has announced its financial results for the first half of the current year, which in contrast to the production volumes, have been notably hit by Covid-19 pandemic. Accordingly, coronavirus-related restrictions worldwide have affected the structure of demand and consequently, the company’s sales margins.

In the January-June period this year, Mechel saw a net profit of RUB 10.2 billion ($139.24 million at $1 = RUB 73.25), having declined by 20 percent year on year. This was the result of increased foreign exchange losses on currency liabilities caused by a significant ruble devaluation in the reporting period. In the given period, Mechel’s sales revenues decreased by eleven percent year on year to RUB 131.8 billion ($1.8 billion). The operating profit of the company fell by 75 percent year on year, to RUB 5.67 billion ($77.4 million).

In the first half of the current year, the revenue of Mechel’s mining segment fall by 21 percent year on year, to RUB 35.28 billion ($481.6 million), while the division’s EBITDA in the given period declined by 43 percent year on year, totaling RUB 13.34 billion ($182.1 million). Such a significant decrease was mostly a result of weaker prices for all types of coal products. Meanwhile, the company’s revenues from steel segment in the first half of the current year amounted to RUB 82.4 billion ($1.125 billion), down seven percent year on year. EBITDA of steel segment in the given period also went down by seven percent year on year, to RUB 7.098 billion ($96.9 million). Lower prices for construction products were the main contributing factor for that.

Overall, the company’s EBITDA in the first half of the current year amounted to RUB 22.013 billion ($300.5 million), falling by 29 percent compared to the corresponding period of the previous year, SteelOrbis has learned.

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