Production and sales for 9M 2012
Mechel OAO’s Chief Executive Officer Evgeny Mikhel commented on the company’s 1M 2012 operational results:
“The Group’s production results demonstrated stability in our key business areas. Consistent with our previously- announced plans, Mechel continues to increase coal mining volumes, growing them by 5% in this year’s first nine months as compared to the same period last year. This is largely due to increased mining at Yakutugol Holding Company’s Neryungrinsky Open Pit. Mechel’s sales of PCI increased by 42% and anthracites by 14%, due to the strategy of increasing the share of metallurgical coals in the mining division’s overall sales. As a part of the company’s steam coal was processed into PCI, steam coal sales decreased by 11%. Iron ore concentrate supplied to the Group’s enterprises decreased by 80% due to a change in Korshunov Mining Plant’s sales structure, as most of the plant’s products are currently sold to China.
“In the steel division, production of steel increased by 13% and pig iron by 16% as compared to last year’s figures, when production volumes were reduced due to major repairs of the blast furnace #5 at Chelyabinsk Metallurgical Plant and simultaneous replacement of converter #2. Within nine months of 2012, production volumes returned to their earlier level.
“Our sales network Mechel Service Global also demonstrated a positive product sales dynamics compared to the same period last year. This was achieved due to the program of optimizing inventories in order to release additional cash. Sales of flat rolls increased by 4%, longs — by 6%, and hardware — by 2%. The Russian markets’ stable demand for steel products for the construction sector helped improve those results. At the same time, complications on the European markets as well as decreased consumption of quality rolls in the Russian engineering and machine-building industry had a negative impact on our sales of stampings and forgings — sales of forgings and stampings decreased by 13% and 6%, respectively.
“In the ferroalloys division, active inventory sales led to a significant increase of ferrochrome sales, which were up by 23% compared to the same period last year. The 15-percent decrease in nickel sales was due to lower production volumes following a weaker market. Ferrosilicon sales are steadily growing as the modernized furnace #4 at Bratsk Ferroalloy Plant is nearing its planned capacity.
“As a result of these nine months, the Group’s power division enterprises increased generation and sales volumes of heat and electricity. Production of heat grew by 13% due to expansion of the company’s activities in the regions of its presence, as well as new markets. Electricity production remains as planned, with a 9-percent increase due to higher demand for Southern Kuzbass Power Plant’s output.”
Mechel is one of the leading Russian companies. Its business includes four segments: mining, steel, ferroalloy and power. Mechel unites producers of coal, iron ore concentrate, nickel, ferrochrome, ferrosilicon, steel, rolled products, hardware, heat and electric power. Mechel products are marketed domestically and internationally.