Higher Coal Prices Help Mechel Achieve Third Quarter Net Income

Russian coal and steel producer Mechel said higher prices for its products provided net profit in the third quarter after losses a year earlier. Higher coal prices are underpinned by Mechel, which borrowed heavily even before the Russian economic crisis in 2014 and then struggled to keep debt repayments.

The company, controlled by businessman Igor Zyuzin, has since restructured the bulk of its debt, but has yet to begin paying off large debts. According to him, net profit for July-September amounted to 6.1 billion rubles (105 million US dollars), compared with a net loss of 2.8 billion rubles in the same period a year earlier.

“The steel market, which was weak in the first half of this year, returned to normal by mid-year due to rising steel prices and stabilization of raw material costs for steel production,” Chief Executive Oleg Korzhov said in a statement.

Mechel reported that its third-quarter revenue grew 11 percent year-on-year to RUB 73.4 billion, while EBITDA increased 19 percent to RUB 18.9 billion. ...

Its net debt, excluding fines for late payments, was RUB 463.8 billion ($ 7.9 billion) at the end of September, which has remained largely unchanged since the beginning of 2017.

Earlier, Mechel said that its production declined in January-September, and in the third quarter, sales of coking coal concentrate were affected by an unstable supply of railcars on the Russian Railways network.