December 03, 2008

Mechel 2006 net up by 58.3% YoY

Mechel OAO announced results for 2006 as under

	2005	2006	Change
Revenue	3804.995	4397.811	15.6%
Net operating income	515.728	725.698	40.7%
Net operating margin	13.6%	16.5%
Net income	381.180	603.249	58.3%
EBITDA	726.252	1068.258	47.1%
EBITDA Margin	19.1%	24.3%

In million USD

Revenue from Mechel's steel segment increased 13% in 2006 to USD 3.1 billion or 69.6% of consolidated net revenue from USD 2.7 billion or 71.2% of consolidated net revenue in 2005. The output of major categories in this segment is as under

Category	2006	Change
Coke	2.57	-1%
Pig iron	3.631	8%
Steel	5.95	1%
Rolled products	4.714	2%
Hardware	0.611	10%

In million tonnes

Mining segment revenue for 2006 totaled USD 1.3 billion, or 30.4% of consolidated net revenue, an increase of 22% over segment revenue of USD 1.1 billion or 28.8% of consolidated net revenue, in the 2005. The output of major categories in this segment is as under

Category	2006	Change
Coal	17.013	9%
Coking coal	9.697	13%
Steam coal	7.316	4%
Iron ore concentrate	4.976	10%
Nickel	0.014	14%

In million tonnes

Mr Alexey Ivanushkin COO of Mechel commented "The past year was the best in Mechel's history, as we continued our steady development of the Company, guided by our strategy of increasing mining segment output and raising profitability of our steel segment operations. The investment projects implemented to date started to bear fruit, as reflected in the Company's performance. Backed by predominantly positive trends in key markets and the actions we have taken to improve our operations, Mechel has achieved record financial results. Also, our results for the year once again demonstrate the advantages of Mechel's integrated structure and diversified operations that combine mining and steel production assets, which enabled the Company to capitalize on positive trends in pricing for metals products while offsetting unfavorable pricing dynamics in coal markets during 2006."

Recent Highlights as per release of Mechel are as under
1. In December of 2006, Mechel announced the commissioning of a new continuous casting machine at its subsidiary Chelyabinsk Metallurgical Plant, with the annual capacity of over 1 million tonnes of billets.
2. Through a series of private transactions and public offerings, Mr Igor Zyuzin increased his stake in Mechel to 68.2% as of December 31, 2006.
3. In January of 2007, Mechel announced the early closure of the privatization contract for its Romanian steel plant, Mechel Targoviste, having completely met all its investment obligations under this contract.
4. In March of 2007, Mechel announced the commissioning of a new continuous casting machine at its Romanian steel plant Mechel Targoviste. The investments in the continuous caster reconstruction and infrastructure amounted to approximately USD 14 million
5 In March of 2007, Mechel announced the acquisition of a controlling stake of 93.35% of Southern Kuzbass Power Plant OAO. The transaction amount totaled approximately USD 265 million.
6. In April of 2007, Mechel announced the early completion of its obligations under the privatization contract for its Romanian steel plant, Mechel Campia Turzii, having completely met all its investment obligations under this contract.
7. In May of 2007, Mechel announced the commissioning of a new berthing wall and warehouse areas at its subsidiary, Trade Port Posiet OAO. The commissioning will enable the port to accept and handle 40,000 tonne Handymax class ships as early as this year.
8. In May of 2007, Mechel announced the acquisition of a 49% stake of Kuzbass Power Sales Company OAO. The transaction amount totaled approximately USD 44.0 million. Together with 1.2% of the shares owned by Mechel previously, its stake in Kuzbass Power Sales Company has increased to 50.2%.
9. In June of 2007 Mechel announced an agreement with Danieli to provide for the modernization of Mechel's steel operations. The agreement between Mechel and Danieli, will include the re-equipment of CMP's electric arc furnace No.6 with fundamental modernization of its continuous caster to multiply its productivity by 3.5 times to 4 times, to 1.2 million tonnes of slabs annually.